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Co-Founder & CEO movingo
Editor
Author
Iakov Kukushkin
Copywriter, Journalist
𖡡 Dubai
⏱ 11 min read
Sept 03, 2026
Small businesses in the UAE have three more years of 0% Corporate Tax ahead. Small Business Relief (SBR), originally set to expire at the end of 2026, has now been extended to cover tax periods ending before 1 January 2029, under Ministerial Decision No. 131 of 2026. But, that wasn't the only change.
Here we will cover what has changed, who still qualifies, and how Free Zone companies should consider Small Business Relief versus Qualifying Free Zone Person (QFZP) status. We'll also give you some examples and a checklist to help you get ready for the extended window.
Here we will cover what has changed, who still qualifies, and how Free Zone companies should consider Small Business Relief versus Qualifying Free Zone Person (QFZP) status. We'll also give you some examples and a checklist to help you get ready for the extended window.
Key Takeaways
- Ministerial Decision No. 131 of 2026 extends Small Business Relief to tax periods ending on or before 31 December 2029, three years beyond the original 2026 sunset.
- The AED 3 million revenue threshold and every other condition stay unchanged.
- Qualifying Free Zone Persons, large MNE Group members, and anyone who has ever exceeded AED 3 million in a tax period cannot claim it.
- A Corporate Tax return is still required every period, relief or not.
- Free Zone businesses under the threshold should compare Small Business Relief against QFZP status before committing to either route.
- What is Small Business Relief in the UAE?
- What has changed under Ministerial Decision No. 131 of 2026
- Why the UAE extended the relief to 2029
- Who can benefit from Small Business Relief?
- Who cannot claim Small Business Relief?
- Free Zone companies: Small Business Relief vs Qualifying Free Zone Person (QFZP)
- Does Small Business Relief mean you don't need to file a Corporate Tax return?
- The AED 3 million threshold explained
- How to claim Small Business Relief?
- Worked examples: Three real-world scenarios
- Common mistakes businesses make with Small Business Relief
- Small Business Relief 2026–2029 readiness checklist
- Need help with Small Business Relief or your wider Corporate Tax position?
- Small Business Relief FAQ
What is Small Business Relief in the UAE?
Small Business Relief is a Corporate Tax break built for small businesses. It allows a UAE resident who earns up to AED 3 million to be treated as if they have no taxable income for the tax period, resulting in an effective 0% Corporate Tax rate.
We've created a comprehensive guide packed with information on SBR: verything about Small Business Relief under Corporate Tax in UAE
What has changed under Ministerial Decision No. 131 of 2026
💡 The main change: the sunset date has been moved three years later — to 2029.
Ministerial Decision No. 131 of 2026, issued by the Ministry of Finance on 7 August 2026, only moves the sunset date. The revenue threshold, election mechanism, and every other condition set out stay the same.
Businesses can still only claim the relief for tax periods commencing on or after 1 June 2023. If you need assistance filling out your tax return for SBR or prefer to leave it to professionals who can do it accurately and on time, we are here to help you.
Why the UAE extended the relief to 2029
The Ministry of Finance frames the extension as part of its ongoing effort to support small businesses and start-ups, strengthen the business environment, and help entrepreneurs grows.
The context is straightforward: SMEs make up more than 94 % of the UAE's businesses and contribute more than 60 % to its non-oil gross domestic product. Keeping compliance costs low for that segment fits the UAE's broader push to grow non-oil sectors of the economy.
This decision reinforces the UAE's position as a leading global investment destination. The ministry also ties the move to building a competitive tax system geared toward sustainable economic development.
The context is straightforward: SMEs make up more than 94 % of the UAE's businesses and contribute more than 60 % to its non-oil gross domestic product. Keeping compliance costs low for that segment fits the UAE's broader push to grow non-oil sectors of the economy.
This decision reinforces the UAE's position as a leading global investment destination. The ministry also ties the move to building a competitive tax system geared toward sustainable economic development.
Who can benefit from Small Business Relief?
A UAE resident person, whether a natural person (freelancer or sole establishment) or a juridical person (an onshore company), can elect Small Business Relief for a tax period if:
- ✅ Revenue for the current tax period and every previous tax period since 1 June 2023 has stayed at or below AED 3 million.
- ✅ The business is not a Qualifying Free Zone Person.
- ✅ The business is not a member of a Multinational Enterprise (MNE) Group with consolidated group revenue above AED 3.15 billion.
- ✅ The election is not part of an arrangement to artificially separate a business purely to stay under the threshold.
Startups, freelancers, and small trading or service companies are the main beneficiaries, since the relief removes the need to calculate taxable income under full Corporate Tax rules while revenue stays under the cap.
Who cannot claim Small Business Relief?
A handful of categories are excluded regardless of revenue:
-
Qualifying Free Zone Persons
Free Zone company that has elected and qualifies for the 0 % QFZP regime cannot also claim Small Business Relief; the two are mutually exclusive (more on this below). -
Members of large MNE Groups
Any Constituent Company of a group with consolidated revenue above AED 3.15 billion is excluded, even if that specific UAE entity's own revenue is small. -
Businesses that split artificially
If the Federal Tax Authority (FTA) determines that a business was separated into smaller entities mainly to stay under AED 3 million, it can apply anti-abuse rules and deny the relief. -
Anyone who has ever exceeded the threshold
Because the test looks at the current tax period and every previous one, a single tax period above AED 3 million permanently disqualifies the business from ever claiming Small Business Relief again, even if revenue later falls back below the cap.
Let's see if your business is subject to these requirements.
Free Zone companies: Small Business Relief vs Qualifying Free Zone Person (QFZP)
A UAE Free Zone company that has not qualified for, or chosen not to pursue, QFZP status is still considered a resident, and can therefore claim Small Business Relief if its revenue remains at or below AED 3 million.
💡 Note: SBR cannot combine with the QFZP regime, so Free Zone businesses approaching this decision should compare the two. For the full QFZP conditions, see our Corporate Tax guide for Free Zone companies.
For a small business in the Free Zone, under AED 3 million is usually the lighter-touch option. Once the revenue grows beyond that cap, or there is 0% tax on qualifying income without an upper limit, it is worth investing in QFZP to comply with regulations.
Does Small Business Relief mean you don't need to file a Corporate Tax return?
In short, no. Electing Small Business Relief changes what you owe, but not whether you have to file.
Every taxable person, including one claiming the relief, must still register for Corporate Tax and submit a return for each tax period, since the election itself is made on that return. What the relief removes is the need to calculate taxable income under the full Corporate Tax rules, along with the obligation to prepare detailed financial statements in most cases.
Businesses electing the relief also give up other reliefs and deductions for that period, including tax loss relief and net interest expenditure carry-forward, and they lose the ability to claim those later even if they stop claiming Small Business Relief.
Businesses electing the relief also give up other reliefs and deductions for that period, including tax loss relief and net interest expenditure carry-forward, and they lose the ability to claim those later even if they stop claiming Small Business Relief.
The AED 3 million threshold explained
The AED 3 million figure is a revenue threshold, not a profit threshold. It is important to keep this figure separate from the AED 375,000 profit bracket, which is taxed at 0% under the standard Corporate Tax rate structure. A business can have AED 2.9 million in revenue and a thin profit margin, or vice versa. The AED 3 million test only considers revenue, as measured by the accounting standards already in use (typically IFRS or IFRS for SMEs).
The test also looks back across every tax period since 1 June 2023, not just the current one, which makes the threshold a one-way gate: cross it once, and Small Business Relief is off the table permanently, as covered above.
The test also looks back across every tax period since 1 June 2023, not just the current one, which makes the threshold a one-way gate: cross it once, and Small Business Relief is off the table permanently, as covered above.
How to claim Small Business Relief?
Claiming the relief is a matter of getting the sequence right, not filling in a separate application:
-
Confirm resident person status and revenue.
Check that the business is a UAE resident person and that revenue for the current and all previous tax periods is at or below AED 3 million. -
Rule out the exclusions.
Confirm the business is not a Qualifying Free Zone Person, not part of a large MNE Group, and has not been flagged under the artificial-separation rule. -
Make the election in the Corporate Tax return.
The relief is claimed through EmaraTax when filing the return for that tax period, within the normal filing deadline. -
Keep supporting records.
Even without full financial statements, the FTA can request evidence of revenue, so invoices, bank records, and basic bookkeeping should stay in order.
Getting the revenue calculation or the exclusion checks wrong is the most common reason businesses lose the relief on audit. We handle the eligibility check, the EmaraTax election, and the recordkeeping behind it, so you file with confidence rather than guesswork.
Worked examples: Three real-world scenarios
Scenario 1 — New startup under the threshold
A freelance design studio incorporates in a Dubai Free Zone in early 2026 without pursuing QFZP status, and closes its first tax period with AED 850,000 in revenue. Well under AED 3 million and not a Qualifying Free Zone Person, it elects Small Business Relief on its Corporate Tax return and is treated as having zero taxable income, with no full financial statements required.
As long as revenue stays under the cap, it can keep electing the relief through tax periods ending on or before 31 December 2029. Freelancers weighing this against a sole establishment structure can start with our Corporate Tax guide for freelancers.
As long as revenue stays under the cap, it can keep electing the relief through tax periods ending on or before 31 December 2029. Freelancers weighing this against a sole establishment structure can start with our Corporate Tax guide for freelancers.
Scenario 2 — Growing business approaching AED 3 million
A mainland trading company reports AED 2.4 million in revenue in one tax period and AED 2.9 million in the next, both under the cap, so it keeps claiming Small Business Relief. The following period, a large one-off contract pushes revenue to AED 3.2 million.
That single period above the threshold makes it ineligible for that period, and permanently afterwards, even if revenue later drops back below AED 3 million, because the test looks at all previous periods too. From here on, it calculates and files Corporate Tax under the standard rules like any other taxable person.
That single period above the threshold makes it ineligible for that period, and permanently afterwards, even if revenue later drops back below AED 3 million, because the test looks at all previous periods too. From here on, it calculates and files Corporate Tax under the standard rules like any other taxable person.
Scenario 3 — Free Zone business choosing between SBR and QFZP
A logistics company operating from a Free Zone has AED 2.2 million in revenue, most of it from qualifying activities with other Free Zone businesses. It could pursue QFZP status for 0 % tax on that income with no revenue cap, but that means annual audited financial statements and ongoing transfer pricing compliance. Given its size, it instead elects Small Business Relief: simpler recordkeeping, no mandatory audit, and the same practical 0 % outcome while revenue stays under AED 3 million. It plans to revisit QFZP once growth makes the audit and substance requirements worth the investment.
Common mistakes businesses make with Small Business Relief
-
Treating the relief as automatic
It must be elected on the Corporate Tax return every eligible tax period; skipping the election means the standard rules apply by default. -
Skipping the Corporate Tax return
Some assume 0 % tax means no filing obligation, then face late-filing penalties they did not expect. -
Missing the "previous periods" rule
Assuming a dip back under AED 3 million after one bad (or good) year restores eligibility, when one breach is permanent. -
Confusing revenue with profit
Basing the AED 3 million check on net profit instead of gross revenue. -
Ignoring the MNE Group exclusion
A small UAE subsidiary of a large international group can be excluded even with modest local revenue, since the test looks at the group's consolidated revenue. -
Assuming QFZP and Small Business Relief can be combined
They cannot; a Qualifying Free Zone Person relies on the QFZP regime, not Small Business Relief.
Small Business Relief 2026–2029 readiness checklist
-
Confirm current and all previous tax periods' revenue is at or below AED 3 million.
-
Confirm the business is not a Qualifying Free Zone Person or part of a large MNE Group.
-
Register for Corporate Tax if not already registered.
-
Elect Small Business Relief on the Corporate Tax return for each eligible tax period, on time.
-
Keep invoices, bank statements, and basic revenue records on file.
-
Reassess eligibility every period: one period above AED 3 million ends the relief for good.
-
Model Corporate Tax under the standard rules once revenue nears AED 3 million, so the transition is not a surprise.
Reviewed by Zarifa Alieva, ACCA — Chief Accountant and Senior Corporate Tax Consultant at movingo, KHDA-approved UAE tax specialist with expertise in Corporate Tax compliance, FTA VAT registration and reporting, IFRS financial reporting, and audit & assurance for Free Zone and Mainland businesses in Dubai.
Reviewed on: 09/03/2026 · Full bio →
Reviewed on: 09/03/2026 · Full bio →
Need help with Small Business Relief or your wider Corporate Tax position?
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- Bookkeeping: clean records, ready if the FTA asks for them.
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Small Business Relief FAQ
No, a resident person must actively elect it on the Corporate Tax return for each tax period; it does not apply by default.
Only to Free Zone companies that are not Qualifying Free Zone Persons. A QFZP cannot also claim Small Business Relief.
You lose eligibility for that tax period and permanently afterwards, because the revenue test looks at the current period and every previous one.
Yes, the election for the relief is made through the Corporate Tax return. Every taxable person must register and file, regardless of whether they receive the relief.
No, the AED 3 million threshold is based on gross revenue rather than net profit under the accounting standards applied by the business.
Not if the company is a Constituent Company of an MNE Group with consolidated group revenue above AED 3.15 billion, even if that entity's own UAE revenue is small.
Sources
- Ministry of Finance: Announcement of Small Business Relief extension to 31 December 2029
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
- Federal Tax Authority: Small Business Relief (Corporate Tax)
- The National: UAE extends corporate tax relief for small businesses until 2029
- The National: 'Huge relief' — UAE small businesses welcome corporate tax reprieve
- Gulf News: UAE Ministry of Finance extends Small Business Relief for Corporate Tax until end-2029
- Zawya: Ministry of Finance announces extension of small business relief for corporate tax purposes until 31 December 2029
