By Nadeem Afzal, ACCA, CPA, UAECA | Founder and Managing Partner, AL SAQR (VAT Account), Dubai | Published 12 November 2026
Short answer: Small Business Relief lets an eligible resident business treat itself as having no taxable income for a tax period if its revenue does not exceed AED 3 million in that period and the previous one. The Ministry of Finance has extended the relief to tax periods ending on or before 31 December 2029 (Ministerial Decision No. 131 of 2026). It is an election, not automatic. Qualifying Free Zone Persons and members of large multinational groups cannot use it. Whether to elect depends on losses, growth and the commercial context.
Many small Dubai businesses see “AED 3 million” and assume relief applies automatically. It does not, and electing has consequences. This guide sets out who qualifies, what you give up and a decision framework. For corporate tax support, see our corporate tax consultant in Dubai page.
What Changed in 2026
The relief was originally due to end for tax periods ending after 31 December 2026. In August 2026 the Ministry of Finance issued Ministerial Decision No. 131 of 2026, extending it to tax periods ending on or before 31 December 2029. The AED 3 million revenue threshold stays. Businesses planning around a 2026 cut-off should revisit those plans.
Who Is Eligible
| Condition | Requirement |
|---|---|
| Residence | The person is a resident person for corporate tax purposes |
| Revenue | Revenue of AED 3 million or less in the relevant tax period and in all previous tax periods (from the date of the relief’s start) |
| Not a QFZP | Qualifying Free Zone Persons are excluded |
| Not in a large MNE group | Members of a multinational enterprise group with consolidated revenue of AED 3.15 billion (EUR 750 million) or more are excluded |
| Election | The person elects to apply the relief in the tax return |
The revenue test uses revenue, not profit. A loss-making business with AED 3.2 million of revenue is not eligible. A highly profitable consultancy with AED 2.8 million is.
What the Relief Does
If you elect, you are treated as having no taxable income for the tax period. No corporate tax is payable. You still:
- register for corporate tax and obtain a Tax Registration Number;
- file a corporate tax return, including the election;
- maintain accounting records and the supporting documents;
- remain subject to the arm’s length principle for related party transactions.
What You Give Up by Electing
- Tax losses. Losses incurred in a relief period cannot be carried forward. A start-up with large early losses may do better by not electing.
- Certain reliefs and elections that depend on taxable income may not be available for relief periods.
- Flexibility. The relief ends for good once revenue exceeds the threshold, and you should plan for a step into the 9% regime.
Should You Elect? A Decision Framework
| Situation | Typical outcome |
|---|---|
| Profitable, stable, revenue well under AED 3 million | Elect: tax saved, simple compliance |
| Early-stage, large start-up losses expected to reverse within a few years | Compare: losses carried forward could be worth more than relief |
| Revenue growing toward AED 3 million within one or two periods | Model the cliff: crossing the threshold ends relief for the period and later ones |
| Free zone company that meets QFZP conditions | Not available; QFZP rules apply |
| Group member with related businesses | Check each entity; revenue is tested per taxable person, and group structures need review |
| Lender or investor requires full tax computations | Consider whether the relief position suits stakeholder reporting |
Worked Example
A Dubai consultancy has revenue of AED 2.7 million and taxable profit of AED 900,000 in the year. Without relief, the tax is 9% on taxable income above AED 375,000: (900,000 − 375,000) × 9% = AED 47,250. With the election, tax is nil. If the same business had a prior-year loss of AED 600,000 that it could carry forward, the comparison changes, so the decision must be modelled.
Do Not Confuse It With Other Thresholds
- The AED 375,000 zero-rate band applies to all taxable persons under the 9% regime. It is not Small Business Relief.
- The AED 1 million turnover threshold applies to individuals carrying out business activities and decides whether the individual is a taxable person at all.
- The VAT threshold of AED 375,000 is a separate regime with a separate purpose.
Practical Steps
- Confirm residence status and whether you are a member of a group.
- Compile revenue for the current and all prior tax periods and test against AED 3 million.
- Model the tax with and without the election, including losses.
- Decide before filing, and document the reasoning.
- Record the election in the corporate tax return in EmaraTax.
- Monitor revenue each quarter; plan for the year you cross the threshold.
How AL SAQR (VAT Account) Supports Small Businesses
We register businesses for corporate tax, prepare the revenue test and the election analysis, compute taxable income and file the return. We also model the transition to the standard regime and keep the accounting records the FTA expects. See our accounting services and, for free zone entities, our free zone setup page.
Frequently Asked Questions
What is the Small Business Relief threshold in the UAE?
Revenue of AED 3 million or less in the relevant tax period and in previous tax periods.
Until when is Small Business Relief available?
For tax periods ending on or before 31 December 2029, following Ministerial Decision No. 131 of 2026.
Is Small Business Relief automatic?
No. The business must elect to apply it in its corporate tax return.
Can a free zone company use Small Business Relief?
A Qualifying Free Zone Person cannot. A free zone company that is not a QFZP may be eligible if it meets the other conditions.
Do I still need to register for corporate tax if I elect the relief?
Yes. You must register, file a return and keep records.
Conclusion
The extension to 2029 gives small businesses time, but it does not remove the need to decide. Test revenue across all periods, model the election against loss carry-forward and growth, and document the decision. For stable profitable businesses the relief is usually worth taking. For early-stage and fast-growing businesses it is a calculation.
Speak to AL SAQR (VAT Account) about corporate tax
www.vataccount.com | info@vataccount.com | +971 55 316 7569
About the author
Nadeem Afzal, ACCA, CPA, UAECA
Founder & Managing Partner, AL SAQR (VAT Account) | UAE Tax & Accounting Advisor
Nadeem advises UAE SMEs, startups and corporations, on the mainland and in free zones, on VAT, Corporate Tax, e-invoicing readiness, accounting and bookkeeping, drawing on more than 15 years of UAE and UK practice.
Sources
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
- Ministerial Decision No. 73 of 2023 (Small Business Relief), as extended by Ministerial Decision No. 131 of 2026
- The National, “UAE extends corporate tax relief for small businesses until 2029”, 7 August 2026
- Cabinet Decision No. 49 of 2023 (turnover threshold for natural persons)
Important Notice
This article has been prepared by AL SAQR Accounting & Bookkeeping for informational purposes only. The content is based on applicable UAE laws and regulations in effect at the time of publication and does not constitute legal advice. While every effort has been made to ensure accuracy, AL SAQR Accounting & Bookkeeping accepts no liability for any loss or damage arising from reliance on this article without prior written engagement.
Tax laws, Ministry of Finance decisions and FTA regulations are subject to change. The positions presented are based on legislation and published guidance current as of the date of this article and do not constitute a formal tax ruling. Businesses should obtain independent professional advice or formal clarification from the relevant authority before acting on any compliance position with significant financial impact.
