UAE Corporate Tax Relief for Small Businesses Extended to 2029

The UAE Ministry of Finance has issued Ministerial Decision No. 131 of 2026, amending the Small Business Relief rules under the UAE Corporate Tax regime. The key change is the extension of the AED 3 million revenue threshold period from 31 December 2026 to 31 December 2029.

What is Small Business Relief?

Small Business Relief was introduced under Article 21 of the UAE Corporate Tax Law to reduce the corporate tax burden and compliance requirements for smaller businesses operating in the UAE.

Where the conditions are satisfied, an eligible taxable person may elect to be treated as having derived no taxable income for the relevant tax period.

What has changed?

Ministerial Decision No. 131 of 2026 amends Article 2(2) of Ministerial Decision No. 73 of 2023. The amendment extends the period during which the AED 3 million revenue threshold remains available.

Previously, the threshold applied to tax periods commencing on or after 1 June 2023 and ending on or before 31 December 2026. Following the amendment, the threshold continues to apply to subsequent tax periods that end on or before 31 December 2029.

Who can benefit?

Small Business Relief may be available to a resident taxable person whose revenue does not exceed AED 3 million in the relevant tax period and all previous tax periods.

A taxable person cannot elect for Small Business Relief if its revenue has exceeded the AED 3 million threshold in any relevant or previous tax period.

Revenue for this purpose is determined in accordance with the applicable accounting standards accepted in the UAE.

Who is excluded?

• The relief is not available to a Qualifying Free Zone Person.
• The relief is also not available to a constituent company of a multinational enterprise group as defined under the relevant UAE legislation. 

Key considerations before making the election

Businesses should not look at the election only as an immediate tax saving. The wider tax profile of the business should also be considered.

Where an election is made for a tax period, tax losses incurred in that period cannot be carried forward to subsequent tax periods.

Net interest expenditure incurred during a tax period in which the election is made also cannot be carried forward to subsequent tax periods.

The anti-abuse rule remains relevant. If the Federal Tax Authority establishes that a business or business activity has been artificially separated to stay below the AED 3 million threshold, the arrangement may be treated as one designed to obtain a corporate tax advantage.

What this means for UAE businesses

The extension gives eligible small businesses additional certainty during the early years of the UAE Corporate Tax regime. It also allows businesses more time to manage corporate tax compliance in a simplified manner.

However, businesses should review the position annually. A business with expected growth, carried forward losses, financing costs, or changing free zone status may need to assess whether electing for Small Business Relief remains beneficial.

Baker Tilly UAE comment

The extension of the Small Business Relief period to 31 December 2029 is a positive development for the UAE small business sector. It gives eligible businesses more time to benefit from simplified corporate tax treatment while they continue to grow and formalise their tax compliance processes.

Businesses should reassess revenue levels, eligibility conditions, and the commercial impact of making the election for each relevant tax period.

Sources reviewed

The relevant terms used in this article, where applicable, are derived from the following legislation issued under the UAE Corporate Tax regime.

• Taxation of Corporations and Businesses Federal Decree-Law No. 47 of 2022
• Ministerial Decision No. 131 of 2026 amending Ministerial Decision No. 73 of 2023 on Small Business Relief.
• Ministerial Decision No. 73 of 2023 on Small Business Relief for the purposes of Federal Decree-Law No. 47 of 2022.

How can we help?

As one of the leading tax advisory firms in the UAE and part of the world’s 8th (eighth) largest audit and consulting network, Baker Tilly UAE supports Boards, CEOs, CFOs, Finance Directors, and businesses in navigating the UAE Corporate Tax regime and evolving tax landscape. Our specialised tax advisory and compliance services cover Corporate Tax, UAE Corporate Tax Registration, Corporate Tax Return Filing, Tax Compliance, Tax Planning, Transfer Pricing, Tax Health Checks, Tax Risk Advisory, and international tax matters, helping organisations meet their UAE tax obligations, optimise tax positions, manage tax risks, and maintain regulatory compliance. We support businesses across the UAE with practical, commercially focused tax solutions designed to address complex Corporate Tax requirements, strengthen tax governance, enhance financial decision-making, and drive sustainable long-term growth