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Ministerial Decision 131 of 2026 extends UAE Small Business Relief to tax periods ending by 31 Dec 2029. Who qualifies, who is excluded and how to claim.
The short answer: Small Business Relief now runs to 31 December 2029
Yes. Ministerial Decision No. 131 of 2026 extends UAE Small Business Relief to tax periods ending on or before 31 December 2029, up from 31 December 2026. A resident business with revenue of AED 3 million or less in that period and every earlier period can elect to be treated as having no taxable income, so it pays no corporate tax. It must still register and file a corporate tax return to claim it.
One point that causes confusion: the FTA's Small Business Relief guide, dated August 2023, still shows the old 2026 end date. That is because it predates the decision. If you check it, you will see a different year from the law now in force.
What Ministerial Decision 131 of 2026 changed, and what it did not
The change is a single sentence. MD 131 of 2026 replaces Clause 2 of Article 2 of Ministerial Decision 73 of 2023. Under the new wording, the AED 3 million threshold applies to tax periods starting on or after 1 June 2023 and continues for later periods ending on or before 31 December 2029. The old wording stopped at 31 December 2026.
The Minister of State for Financial Affairs signed the decision on 29 July 2026. The Ministry of Finance announced it on 7 August 2026, and it took effect the day after publication.
Nothing else changed. The relief extension leaves these rules exactly as they were:
the AED 3 million revenue threshold, which was not raised
the exclusions for certain businesses
the anti-abuse rule on artificial separation
the requirement to register and file a return
The test is when your tax period ends:
Tax period ends | Covered? |
|---|---|
31 Dec 2026 | Yes |
31 Mar 2029 | Yes |
31 Dec 2029 | Yes |
31 Mar 2030 | No (ends after 31 Dec 2029) |
If you run a March year end, your final eligible period is the one ending 31 March 2029.
Who qualifies: the AED 3 million revenue test
To claim the relief, you must meet two conditions.
First, you must be a resident person. That covers companies and individuals carrying on a business.
Second, your revenue must be AED 3 million or less in the current tax period and in every previous tax period. Revenue means gross income: all your sales plus other income, such as proceeds from selling assets. It is measured under accepted accounting standards and at arm's length, so you cannot keep revenue low by underpricing sales to a related party.
Profit does not matter. A business with AED 2.9 million of revenue and a high margin qualifies. A business with AED 3.1 million of revenue and a loss does not.
The test is also one-way. Once your revenue goes over AED 3 million in any period, you lose the relief for all later periods, even if revenue falls back under the limit. If you are close to the line, watch for one-off asset sales that could push you over.
The FTA's own illustration shows what is at stake. Corporate tax is 0% on taxable income up to AED 375,000 and 9% above it (more on how the UAE corporate tax rate works). Take three businesses, each with AED 2.8 million of revenue:
Profit of AED 800,000: would owe AED 38,250
Profit of AED 1,000,000: would owe AED 56,250
Profit of AED 1,500,000: would owe AED 101,250
With the relief, all three pay nothing.
Who cannot claim it
Meeting the revenue test is not enough if you fall into one of these groups:
Qualifying Free Zone Persons: a free zone company that keeps the 0% rate cannot also claim this relief. There is no choice between the two. A free zone company that is not a QFZP can claim it if it meets the conditions. See how free zone companies keep the 0% rate.
Large multinational group members: businesses in a group with consolidated revenue above AED 3.15 billion that must file country-by-country reports.
Artificially separated businesses: a business split to keep each part under AED 3 million. Under MD 73 Article 6, this is treated as obtaining a corporate tax advantage under the general anti-abuse rule.
The FTA describes three types of artificial separation:
Functional: splitting drinks and food sales in one restaurant into separate entities
Geographical: putting each café in a chain into its own company
Temporal: short-lived companies that stop trading when revenue nears the limit, with a new one taking over
The FTA asks whether the split had a genuine commercial reason and whether substantially the same business is being carried on. If it decides the separation is artificial, you repay the tax that would have been due plus possible penalties.
Using more than one company is not, by itself, artificial separation. A group with a trading company and a separately run consultancy, each with its own staff, premises and customers, is in a very different position from a single shop split into three licences on paper.
How to claim it in your corporate tax return
The relief is not automatic. You must claim it every period, and these are the steps:
Register for corporate tax on EmaraTax and get a TRN. Registration is free. Late registration carries an AED 10,000 penalty. Our EmaraTax guide walks through the screens.
Keep revenue records. These include bank statements, sales ledgers, invoices, and order and delivery records. They are how you prove you stayed under AED 3 million. Corporate tax records must be kept for seven years after the end of the tax period.
File your corporate tax return within nine months of the end of the tax period. For a year ended 31 December 2025, that means by 30 September 2026.
Tick the Small Business Relief election in the return, every period. Once you elect, the return is simplified.
Two points catch people out. Being eligible does not remove your obligation to file. And if you submit a return without the election, you cannot claim the relief later for that period.
Late returns cost AED 500 a month for months 1 to 12, then AED 1,000 a month after that. Our article on UAE corporate tax deadlines and late penalties has the full schedule.
What you give up by electing, and when not to
Electing treats you as having no taxable income for that period. That also switches off several other parts of the regime for that period:
Tax losses: you cannot create or use them. Losses from earlier years carry forward to a later year in which you do not elect.
Net interest expenditure: it is not deducted or carried forward in that period.
Other exemptions and reliefs: these do not apply.
Transfer pricing: you do not need transfer pricing documentation, but related-party dealings must still be at arm's length. See transfer pricing below the thresholds.
For most profitable small businesses, electing is the obvious choice. The calculation changes in two situations. If you have a genuine loss this year, not electing lets you record it and carry it forward. If you have large losses brought forward, you may prefer to keep them available for a later year. Neither option is automatically better, so run the numbers both ways before you file.
One more benefit applies at this size. If your revenue is AED 3 million or less, you may prepare your accounts on the cash basis under MD 114 of 2023, which keeps bookkeeping simpler.
Cosmos keeps the books and files UAE corporate tax and VAT returns through an FTA-registered tax agent, and also offers payroll and fractional CFO support. For a business under the limit, that means filing the return with the Small Business Relief election and tracking revenue so you know before it crosses AED 3 million. If your next return is due, book a call with Cosmos before you file, while the election is still open.
FAQ
Has UAE Small Business Relief been extended? Yes. Ministerial Decision No. 131 of 2026 extends it to tax periods ending on or before 31 December 2029. The previous end date was 31 December 2026.
Do I still need to file a corporate tax return if I claim Small Business Relief? Yes. You must register, get a TRN and file a return for every tax period. The election is made inside that return.
Is the AED 3 million limit based on revenue or profit? It is based on revenue, meaning gross income under accepted accounting standards. Profit is irrelevant to eligibility.
Can a free zone company claim Small Business Relief? Only if it is not a Qualifying Free Zone Person. A free zone company keeping the 0% rate cannot also claim this relief.
What happens if my revenue goes over AED 3 million? You lose the relief for that period and every later period. Revenue falling back below the limit does not restore it.
Can I claim Small Business Relief after I have filed my return? No. If you submit a return without the election, you cannot claim the relief later for that period. Check the election box before you submit.
