When corporate tax arrived in June 2023, Small Business Relief was due to end with tax periods ending in 2026, and many small companies planned for a first real tax bill in 2027. In August 2026 the Ministry of Finance moved that horizon three years out. The AED 3 million threshold did not change, and neither did the conditions, so the questions are the same as before: does your business qualify, and is electing actually the better choice?
The conditions
| Condition | What it means in practice |
|---|---|
| Resident person | UAE companies, and individuals whose business turnover brings them into corporate tax |
| Revenue of AED 3 million or less this period | Revenue, not profit, measured under the accounting standards you report on |
| …and in every earlier tax period | Exceed AED 3 million once and the relief is gone for that period and every period after |
| Not a qualifying free zone person | A free zone company taking the 0% qualifying-income regime cannot also take this relief |
| Not in a large multinational group | Members of groups with consolidated revenue above AED 3.15 billion are excluded |
What you still have to do
- Register for corporate tax on EmaraTax by your deadline. Registering late costs AED 10,000, whether or not you owe any tax. The FTA has offered a waiver of that penalty to businesses that file their first return within seven months of the end of their first tax period; check whether it applies to you.
- File a corporate tax return within nine months of the end of each tax period, and elect the relief in it. No return, no relief.
- Keep financial statements. Businesses with revenue of AED 3 million or less may prepare them on a cash basis; audited statements are generally required only above AED 50 million revenue or for qualifying free zone persons.
- Keep the records behind your revenue figure, because that one number decides everything.
Is electing always right?
Usually, but not always. Under the ordinary rules, the first AED 375,000 of taxable income is taxed at 0% and the rest at 9%. A small business with modest profits may owe little or nothing anyway. The cost of electing is that tax losses and disallowed net interest from a relief year cannot be carried forward. A start-up that is losing money now and expects strong profits later may be better off not electing, so that today's losses can reduce tomorrow's tax.
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A profitable consultancy
Revenue AED 2.8 million, taxable profit AED 600,000. Without the relief: (600,000 − 375,000) × 9% = AED 20,250. With it: nil. Elect.
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A start-up in its build year
Revenue AED 900,000, loss of AED 400,000, profits of AED 1.5 million expected in two years when revenue will pass AED 3 million anyway. Electing now wipes out a loss that could have saved about AED 36,000 later. Do the sum before you tick the box.
Questions people actually ask
Has Small Business Relief been extended beyond 2026?
Yes. Ministerial Decision No. 131 of 2026, announced on 7 August 2026, extends it to tax periods ending on or before 31 December 2029. The AED 3 million threshold is unchanged.
Do I need to register for corporate tax if I claim the relief?
Yes. Registration and an annual return are required; the relief is elected in the return. Not registering carries a AED 10,000 penalty even if no tax would have been due.
Is the AED 3 million revenue or profit?
Revenue, the gross amount from your accounts, not profit.
Can a free zone company claim Small Business Relief?
Not if it is a qualifying free zone person benefiting from the 0% regime on qualifying income. A free zone company that is not a qualifying free zone person can elect the relief if it meets the other conditions.
Where these facts come from
Checked against the following on 8 October 2026. Rules and dates change — if you are reading this long after that date, verify before you act on it.
- DLA Piper — UAE extends corporate tax relief for small businesses (Aug 2026)
- PwC — Ministerial Decision No. 73 of 2023 on Small Business Relief
- Federal Tax Authority — Corporate Tax
- Ministry of Finance — AED 10,000 penalty for late corporate tax registration
WisoBooks is a bookkeeping and business-management tool, not an accounting, tax or legal advisor. Nothing on this page is tax advice, and tax rules change. Confirm your own obligations with the relevant authority or a qualified advisor.
