UAE Tax Update 2026 | Small Business Relief (SBR) Extended Until 31 December 2029 | UAE Small Business Relief 2029
UAE Small Business Relief extended to 2029 under Ministerial Decision No. 131 of 2026. Learn about the AED 3 million threshold, eligibility, exclusions, filing and Corporate Tax requirements.
The UAE has provided an important update for small businesses under the UAE Corporate Tax regime.
Under Ministerial Decision No. 131 of 2026, the UAE Ministry of Finance has extended the period during which the Small Business Relief (SBR) revenue threshold applies.
The AED 3 million revenue threshold remains unchanged, but the period for which the threshold applies has been extended from 31 December 2026 to 31 December 2029.
The amendment was issued on 29 July 2026 and specifically replaces Clause (2) of Article (2) of Ministerial Decision No. 73 of 2023. The amended rule applies to Tax Periods commencing on or after 1 June 2023 and continues to subsequent Tax Periods ending on or before 31 December 2029.
For UAE-based entrepreneurs, SMEs, consultants, professionals and other eligible businesses, this provides additional certainty when planning their Corporate Tax compliance.
Small Business Relief (SBR) is a relief available under Article 21 of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, subject to the conditions prescribed under the relevant Ministerial Decisions.
Broadly, an eligible Resident Taxable Person can elect for Small Business Relief where its Revenue does not exceed AED 3 million for the relevant Tax Period and the applicable previous Tax Periods.
Where the election is validly made and all conditions are satisfied, the business is treated as having no Taxable Income for that Tax Period.
This can significantly simplify Corporate Tax compliance for qualifying small businesses. The FTA’s Small Business Relief Guide explains that the relief was designed to reduce the Corporate Tax compliance burden for eligible small businesses.
Small Business Relief should not be confused with the UAE’s general 0% Corporate Tax rate on taxable income up to AED 375,000.
These are different provisions.
Small Business Relief is a separate relief based primarily on the Revenue threshold and other eligibility conditions.
The most important change introduced by Ministerial Decision No. 131 of 2026 is the extension of the relevant period.
Under the original Ministerial Decision No. 73 of 2023, the AED 3 million threshold applied to Tax Periods commencing on or after 1 June 2023 and continuing to Tax Periods ending on or before 31 December 2026.
Ministerial Decision No. 131 of 2026 changes the end date to:
31 December 2029
Therefore, eligible businesses may continue to consider Small Business Relief for relevant Tax Periods ending on or before 31 December 2029, provided all other conditions are satisfied.
The following important point should be understood:
The AED 3 million Revenue threshold has not been increased.
It remains:
The amendment mainly extends the period during which the existing threshold applies.
The Ministry of Finance’s official legislation page lists Ministerial Decision No. 131 of 2026 as the amendment to Ministerial Decision No. 73 of 2023.
| Particular | Position After Ministerial Decision No. 131 of 2026 |
|---|---|
| Small Business Relief | Available subject to conditions |
| Revenue threshold | AED 3 million |
| Threshold based on | Revenue, not profit |
| First relevant Tax Periods | Tax Periods commencing on or after 1 June 2023 |
| Extended end date | 31 December 2029 |
| Resident Taxable Person | Potentially eligible, subject to conditions |
| Qualifying Free Zone Person | Generally not eligible for SBR |
| Certain MNE constituent companies | Not eligible |
| Election | Required |
| Corporate Tax registration | Still required |
| Tax Return | Simplified return where SBR is elected and applicable |
| Record keeping | Still required |
The FTA has specifically confirmed in 2026 that businesses eligible for Small Business Relief continue to have Corporate Tax compliance obligations, including registration, filing simplified Tax Returns and maintaining supporting records.
Small Business Relief is generally available to an eligible Resident Taxable Person that satisfies the prescribed conditions.
The FTA’s guidance explains that the Revenue must be AED 3 million or less for the relevant Tax Period and applicable previous Tax Periods.
The relief can apply to Resident Taxable Persons that are natural persons or juridical persons, provided they are within the UAE Corporate Tax regime and meet the relevant requirements.
However, simply having Revenue below AED 3 million does not automatically mean that a business qualifies.
The business must review all relevant conditions and exclusions before making the election.
This is one of the most important points for UAE businesses.
For example:
Business A
Revenue: AED 2.5 million
Expenses: AED 2.2 million
Profit: AED 300,000
The Revenue is AED 2.5 million.
Business B
Revenue: AED 2.5 million
Expenses: AED 500,000
Profit: AED 2 million
The Revenue is still AED 2.5 million.
Therefore, for the SBR Revenue threshold, the relevant figure is Revenue, not the final accounting profit.
The FTA explains that Revenue is the gross amount of income derived during the Tax Period and is different from profit.
Businesses should monitor their Revenue carefully.
If a Taxable Person’s Revenue exceeds AED 3 million in a relevant Tax Period, the business may no longer be able to elect for Small Business Relief in subsequent Tax Periods, even if its Revenue later falls below AED 3 million.
The FTA’s Small Business Relief Guide specifically explains this consequence.
Suppose a UAE company has:
| Year | Revenue | SBR Position |
|---|---|---|
| 2026 | AED 2.2 million | Potentially eligible |
| 2027 | AED 2.8 million | Potentially eligible |
| 2028 | AED 3.4 million | Threshold exceeded |
| 2029 | AED 2.0 million | SBR generally no longer available |
This is why businesses should not look only at the current year’s Revenue. The relevant historical Revenue position also needs to be reviewed.
Consider a UAE company whose financial year is:
1 January to 31 December
Suppose the company satisfies all SBR conditions and its Revenue remains within the AED 3 million threshold.
The extension means eligible Tax Periods can potentially include:
2026
2027
2028
2029
subject to the applicable conditions.
The important date is the end of the Tax Period.
For a calendar-year business, a Tax Period ending 31 December 2029 falls within the extended period.
A Tax Period ending after 31 December 2029 would not fall within this particular extension.
Ministerial Decision No. 131 of 2026 expressly states that the threshold continues to apply to subsequent Tax Periods ending on or before 31 December 2029.
Eligible businesses need to elect for Small Business Relief.
The FTA’s guidance states that eligible Taxable Persons can elect for the relief through their Tax Return and, where the election is made, can use the simplified Tax Return process.
Therefore, businesses should not simply assume:
“My Revenue is below AED 3 million, so I don’t have to do anything.”
That approach can create compliance problems.
The business should first establish:
Whether it is a Resident Taxable Person.
Its Revenue for the relevant Tax Period.
Revenue for applicable previous Tax Periods.
Whether any exclusion applies.
Whether the SBR election is appropriate.
Whether the required Corporate Tax registration and return obligations have been completed.
Whether supporting records are properly maintained.
This is a very important clarification.
The FTA has specifically stated that Taxable Persons eligible for Small Business Relief must continue to fulfil their Corporate Tax compliance obligations.
These include:
Corporate Tax registration;
filing the applicable Tax Return;
maintaining supporting documents and records; and
complying with other applicable Corporate Tax requirements.
The FTA reiterated this position in September 2026, stating that Taxable Persons eligible for SBR must register for Corporate Tax, file simplified Tax Returns and maintain relevant documents supporting their eligibility.
Therefore:
Small Business Relief ≠ exemption from Corporate Tax registration.
Small Business Relief ≠ no Tax Return.
It is a relief that can result in the eligible business being treated as having no Taxable Income for the relevant Tax Period, while simplified compliance obligations continue to apply.
Where all requirements are met and the election is properly made, SBR can provide two broad benefits.
The eligible business is treated as having no Taxable Income for the relevant Tax Period.
Consequently, there is no Corporate Tax payable for that period under the SBR treatment.
The FTA guidance explains that eligible businesses can benefit from simplified Corporate Tax compliance, including a simplified Tax Return and certain record-keeping/accounting simplifications.
This can be particularly relevant for smaller UAE businesses that may otherwise face a more detailed Corporate Tax computation.
The AED 3 million threshold alone is not enough.
Certain businesses are excluded.
A Qualifying Free Zone Person (QFZP) cannot claim Small Business Relief.
This is important because QFZPs operate under a separate Corporate Tax framework for Qualifying Income.
The FTA’s SBR guidance specifically identifies Qualifying Free Zone Persons as excluded from the relief.
Small Business Relief is also not available to a business that is a constituent company of a relevant Multinational Enterprise Group (MNE) subject to the applicable Country-by-Country Reporting requirements.
The FTA guidance explains that this exclusion applies to relevant MNE constituent companies.
Therefore, a company should consider its group structure before making an SBR election.
Businesses should also be careful about artificially splitting business activities between different entities merely to keep each entity below the AED 3 million threshold.
The SBR framework contains an anti-abuse rule concerning artificial separation.
The FTA can examine financial, economic, organisational and structural relationships when considering whether businesses have been artificially separated.
Suppose one business generates:
AED 5 million Revenue
The owner creates two separate entities:
Company A — AED 2.5 million
Company B — AED 2.5 million
If the entities have been structured artificially only to obtain Small Business Relief, the SBR position requires careful review.
Businesses should therefore obtain professional advice before restructuring solely to remain below the threshold.
VAT and Corporate Tax are separate tax regimes.
A business may be VAT registered and may still potentially qualify for Small Business Relief if it satisfies the Corporate Tax SBR conditions.
The FTA’s Small Business Relief Guide specifically discusses the interaction between SBR and VAT registration.
Therefore, businesses should not assume:
VAT Registered = Not eligible for SBR
or
Not VAT Registered = Automatically eligible for SBR
The Corporate Tax SBR conditions must be examined separately.
Businesses should pay particular attention to the filing requirement.
The FTA has confirmed that SBR-eligible Taxable Persons must continue to submit the applicable simplified Corporate Tax Return within the prescribed legal timeframe.
For example, the FTA stated in September 2026 that Taxable Persons subject to Corporate Tax generally have a period not exceeding nine months from the end of their Tax Period for filing their Tax Return and paying Corporate Tax due.
Therefore, eligible businesses should not interpret SBR as a complete exemption from tax compliance.
Even where SBR is claimed, businesses should maintain proper accounting and supporting documentation.
The FTA has stated that records allow the Authority to verify matters such as:
Revenue;
Taxable Income;
eligibility for Small Business Relief; and
information submitted in the Tax Return.
The FTA has highlighted records such as transaction records, asset registers, liability records and records of ownership interests, depending on the nature of the business.
A practical document file may include:
Sales invoices
Purchase invoices
Bank statements
Expense documents
Customer records
Supplier records
Asset records
Loan and liability records
Accounting ledgers
Financial statements
Ownership records
Corporate Tax registration information
Corporate Tax Return
Documents supporting Revenue calculations
Proper bookkeeping is therefore important even when the business expects to claim Small Business Relief.
One of the most common misunderstandings is:
“My business is below AED 3 million, so I do not need to worry about UAE Corporate Tax.”
This is not correct.
A business may have Revenue below AED 3 million but still need to:
Register → Maintain Records → Review Eligibility → Elect SBR → File the Required Return
The FTA’s 2026 communications make this particularly clear.
Not necessarily.
Although SBR can provide significant benefits, businesses should review the consequences before making the election.
The FTA’s guidance explains that an SBR election can affect the availability of certain Corporate Tax rules and reliefs during the relevant Tax Period.
For example, businesses that elect for SBR cannot accrue and utilise certain Tax Losses or excess interest expenditure for the relevant Tax Period in the same way as businesses that do not elect for SBR. Certain other Corporate Tax reliefs are also affected.
Therefore, businesses should consider their:
current Revenue;
expected future growth;
existing Tax Losses;
financing arrangements;
related-party transactions;
group structure;
Free Zone status;
transfer pricing considerations; and
future Corporate Tax position
before making an SBR election.
This update is also relevant to Indian entrepreneurs and Indian companies doing business in the UAE.
Many Indian entrepreneurs establish:
UAE mainland companies;
Dubai companies;
Abu Dhabi companies;
Sharjah companies;
Free Zone companies;
consulting businesses;
trading companies;
service businesses;
e-commerce businesses; and
professional service businesses.
If such a UAE business falls within the UAE Corporate Tax regime, its SBR eligibility should be reviewed based on the UAE Corporate Tax rules.
However, an Indian owner should not assume that the AED 3 million SBR threshold automatically determines the Indian tax position.
The UAE Corporate Tax analysis and Indian tax analysis are separate matters.
Depending on the circumstances, Indian tax considerations such as:
residential status;
foreign income;
permanent establishment;
transfer pricing;
foreign tax credit;
controlled transactions; and
applicable India-UAE tax treaty provisions
may also need to be considered.
Indian businesses expanding into the UAE should therefore obtain advice covering both jurisdictions where required.
If your UAE business has Revenue of AED 3 million or less, consider the following checklist:
Confirm that the business has completed its Corporate Tax registration requirements.
Do not calculate the AED 3 million threshold based only on net profit.
Review the gross Revenue under the applicable UAE Corporate Tax rules.
Check Revenue for the relevant previous Tax Periods as required under the SBR rules.
Confirm the business’s Corporate Tax status.
Review whether the business is:
a Qualifying Free Zone Person;
a relevant MNE constituent company; or
involved in an arrangement that may constitute artificial separation.
Consider Tax Losses, interest expenditure and other Corporate Tax reliefs before making the election.
Where eligible and appropriate, make the Small Business Relief election through the relevant Corporate Tax filing process.
Do not assume that SBR eliminates the Corporate Tax return requirement.
Keep sufficient accounting records and documents to demonstrate Revenue and eligibility.
SBR eligibility should be reviewed based on the applicable Tax Period and relevant historical Revenue.
The Small Business Relief Revenue threshold is AED 3 million per Tax Period, subject to the applicable conditions. Ministerial Decision No. 131 of 2026 did not increase the threshold.
Yes. The relevant threshold now continues to apply to subsequent Tax Periods ending on or before 31 December 2029, subject to the applicable conditions.
The principal amendment is the extension of the applicable period from the previous 31 December 2026 end date to 31 December 2029.
No. The AED 3 million Revenue threshold remains unchanged.
No. An eligible business must make the applicable election.
No. The FTA has confirmed that SBR-eligible Taxable Persons must continue to meet Corporate Tax compliance obligations, including registration.
Yes. Eligible businesses must file the applicable simplified Corporate Tax Return within the prescribed timeframe.
No. It is based on Revenue, not profit.
Generally, no. Qualifying Free Zone Persons are excluded from SBR under the applicable rules.
The business may lose eligibility for SBR in subsequent Tax Periods even if Revenue later falls below AED 3 million.
Potentially, if the UAE entity is an eligible Resident Taxable Person and satisfies all applicable conditions. Indian tax and UAE tax implications should be reviewed separately.
No. Businesses should maintain appropriate records supporting their Revenue and Corporate Tax position. The FTA has specifically emphasised record-keeping obligations for SBR-eligible businesses.
The extension to 2029 gives eligible small businesses additional time to consider Small Business Relief, but businesses should not treat the extension as an automatic tax exemption.
The correct approach is to:
Review → Calculate → Verify Eligibility → Consider the Consequences → Elect Where Appropriate → File → Maintain Records
Businesses should particularly review their Corporate Tax position if they previously expected Small Business Relief to end after Tax Periods ending in 2026.
The extension may be relevant to their Corporate Tax planning for 2027, 2028 and 2029, subject to the applicable conditions.
The UAE’s extension of Small Business Relief to 31 December 2029 is an important Corporate Tax development for eligible small businesses.
The key points are simple:
The most important practical point is that Ministerial Decision No. 131 of 2026 extends the existing SBR framework; it does not create an unconditional tax exemption for every UAE business with Revenue below AED 3 million.
Businesses should review their individual facts, Revenue history, group structure, Free Zone status and other applicable conditions before making the SBR election.
IGSK Corporate Tax Advisors provides professional assistance for businesses with UAE:
Corporate Tax Registration
Corporate Tax Return Filing
Small Business Relief Review
UAE VAT Registration & Return Filing
UAE Bookkeeping & Accounting
Financial Statements
Tax Compliance
Tax Advisory
UAE Company Setup
Accounting Outsourcing
India–UAE Tax Advisory
For professional assistance with your UAE Corporate Tax, VAT and accounting requirements, contact IGSK Corporate Tax Advisors.
Website: www.igskct.ae
The above article is based on UAE Corporate Tax legislation and guidance issued by the competent UAE authorities, including:
Ministerial Decision No. 131 of 2026 amending Ministerial Decision No. 73 of 2023 on Small Business Relief.
Federal Tax Authority – Small Business Relief Guide.
Federal Tax Authority – Corporate Tax Registration guidance.
Federal Tax Authority – 2026 clarification on SBR filing and compliance obligations.
UAE Ministry of Finance – Financial Legislation Portal.
Disclaimer: This article is intended for general information and educational purposes only. UAE Corporate Tax rules may depend on the specific facts and circumstances of each taxpayer. Businesses should review the applicable legislation and obtain professional tax advice before making an SBR election or taking a tax position.
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