Small Business Relief Extended to 2029: Who Actually Qualifies for 0% Corporate Tax

In August 2026 the Ministry of Finance issued Ministerial Decision No. 131, extending Small Business Relief to tax periods ending on or before 31 December 2029. The relief had been legislated to end in December 2026, so this is three more years of runway for smaller UAE businesses.

The headline is simple: revenue of AED 3 million or less, no corporate tax. The conditions are where it gets interesting, and where some businesses assume eligibility they do not have.

What the Relief Actually Does

Small Business Relief is not a reduced rate. An electing business is treated as having no taxable income for that tax period, so no corporate tax is payable regardless of the profit it made.

The test is revenue, not profit. A business with AED 2.9 million of revenue and AED 2 million of profit is treated the same as one with AED 2.9 million of revenue and AED 50,000 of profit. Both qualify on the threshold. Profitability is irrelevant to eligibility.

The Full Conditions

• You must be a UAE resident person; a company incorporated here, or a natural person operating under a UAE trade licence
• Revenue must not exceed AED 3 million in the current tax period and in every previous tax period since 1 June 2023. Exceeding it once removes the relief permanently
• You must not be a Qualifying Free Zone Person
• You must not be a member of a multinational group with consolidated revenue above AED 3.15 billion
• The relief must be elected on your corporate tax return. It is never applied automatically

Who Is Excluded

The exclusion that surprises people most is the free zone one. A Qualifying Free Zone Person cannot elect Small Business Relief. A free zone company takes one route or the other; the QFZP 0% rate on qualifying income, with its substance, audit and activity conditions, or Small Business Relief as an ordinary taxable person. Not both.

Members of large multinational groups are also excluded regardless of local revenue, as are non-resident persons. And the anti-abuse rule means splitting a business into smaller entities to stay under the threshold does not work, artificially separated businesses are looked at together. Our corporate tax team assesses which route applies before an election is made.

When Electing It Is the Wrong Call

Electing the relief is not automatically the better outcome. In any period you elect, tax losses and net interest expenditure are suspended, they cannot be carried forward to offset future profits.

A business making a loss this year but expecting strong profits next year may be better off not electing, preserving the loss to reduce a future liability. A business approaching the AED 3 million threshold should model the year it crosses, because the shift from nil to a full corporate tax computation is abrupt. This is a modelling exercise, which is what our financial and tax advisory team does before the return is filed.

What You Still Have to Do

Relief from tax is not relief from compliance. You must still register for corporate tax with the Federal Tax Authority, file a return for every tax period, and maintain accounting records to UAE-accepted standards. A nil liability is still a filing obligation, supported by proper bookkeeping.

How nAlyze Helps

We confirm eligibility, model whether electing is genuinely the best outcome for your position, and handle the election and filing. If you are also reviewing structure, our guide to business setup in the UAE covers how the choice interacts with your licence. See if you’re a fit.

Frequently Asked Questions

How long is Small Business Relief available?

For tax periods ending on or before 31 December 2029, following the extension announced in August 2026 under Ministerial Decision No. 131.

Can a free zone company claim Small Business Relief?

Not if it is a Qualifying Free Zone Person. A free zone company outside the QFZP regime and meeting the other conditions can elect the relief, but it cannot combine both.

Is the AED 3 million threshold based on profit or revenue?

Revenue, calculated under applicable accounting standards. Profit does not affect eligibility, and the test applies cumulatively across every tax period since 1 June 2023.

Do I still need to register and file if I elect the relief?

Yes. Corporate tax registration and annual filing remain mandatory, and the election itself is made on the return. Failing to file carries penalties even at nil liability.

What happens if my revenue exceeds AED 3 million?

The relief is no longer available, in that period or any later one, and standard corporate tax applies 0% on taxable income up to AED 375,000 and 9% above it.