Small Business Relief in UAE Corporate Tax: AED 3 Million Test, Extension to 2029, How to Elect

In short: As of October 2026, Small Business Relief lets a UAE resident person whose revenue is AED 3 million or less in the current and all previous tax periods elect, in its corporate tax return, to be treated as having no taxable income. It applies to tax periods starting on or after 1 June 2023 and ending on or before 31 December 2029. Qualifying Free Zone Persons and members of large multinational groups cannot use it, and you must still register and file.

This guide answers one question: can your business use Small Business Relief, and should it? It gives you a five-point eligibility check, a table of which tax periods qualify now that the relief runs to 2029, a worked revenue test across several years, what electing costs you, the rule against splitting a business, the records and accounts you need, and what happens after 2029.

Registering for corporate tax is covered step by step in our corporate tax registration guide, and free zone companies weighing 0% against SBR should read our guide to corporate tax for free zone companies. This page is about the relief itself. Every rule below was checked on 25 October 2026 against Article 21 of Federal Decree-Law No. 47 of 2022 as published by the Ministry of Finance, Ministerial Decision No. 73 of 2023 on Small Business Relief, Ministerial Decision No. 131 of 2026 which amended it, Ministerial Decision No. 114 of 2023 on accounting standards, and the FTA’s Small Business Relief guide (CTGSBR1).

What is Small Business Relief in UAE corporate tax?

Article 21 of the Corporate Tax Law lets a taxable person that is a resident person elect to be treated as not having derived any taxable income for a tax period, if its revenue for that period and previous periods does not exceed a threshold set by the Minister and it meets the Minister’s other conditions. Ministerial Decision No. 73 of 2023 sets the threshold at AED 3,000,000 for each tax period.

Because corporate tax is charged on taxable income, a business treated as having none pays none. The FTA describes two benefits:

• Tax relief: no corporate tax on the income of that tax period.
• Administrative relief: no need to calculate taxable income, a simplified tax return, simpler records, and the option to prepare financial statements on a cash basis.

How much the relief is worth depends on profit. Without it, a resident business pays 0% on taxable income up to AED 375,000 and 9% above. The FTA’s guide shows three businesses with the same AED 2,800,000 revenue: with profits of AED 800,000, AED 1,000,000 and AED 1,500,000 they would owe AED 38,250, AED 56,250 and AED 101,250. Under SBR each owes nothing. A business whose profit is below AED 375,000 would pay nothing anyway, so for it the relief is mostly about the simpler return.

Am I eligible? The five-point check

Read together, Article 21 of the law and Articles 2 and 3 of Ministerial Decision No. 73 of 2023 give five tests. You must pass all five for the tax period you want to elect for.

Sources: Federal Decree-Law No. 47 of 2022, Articles 11 and 21; Ministerial Decision No. 73 of 2023, Articles 2 and 3, as amended by Ministerial Decision No. 131 of 2026; FTA Corporate Tax Guide CTGSBR1, sections 3 and 4.

Two more points sit around the check. The tax period itself must end on or before 31 December 2029 (see the timeline below). And the FTA can refuse the relief if the business has been artificially separated to keep each part under the threshold (see the anti-abuse section).

Free zone companies, individuals and groups

• Free zone companies. A free zone person is a resident, so it can elect SBR if it is not a Qualifying Free Zone Person. It is one route or the other. A QFZP pays 0% only on qualifying income and must keep audited accounts; SBR gives no tax on any income but needs revenue within AED 3 million every year. Our free zone corporate tax guide sets out the QFZP side, including the five-period election out under Article 19.
• Individuals, freelancers and sole establishments. An individual is within corporate tax only when business turnover in the UAE exceeds AED 1 million in a calendar year; wages, personal investment income and real estate investment income are left out. Above that line the individual registers and can elect SBR like a company. For licensed professionals, our professional licence guide works through two examples.
• Tax groups. A tax group is one taxable person, so the AED 3,000,000 applies to the group as a whole. The FTA’s example has three companies with AED 1,300,000, AED 900,000 and AED 1,000,000 of revenue: each is under the line, but the group’s AED 3,200,000 is not, so the group cannot elect.

Which tax periods qualify now that SBR runs to 2029?

Ministerial Decision No. 73 of 2023 originally limited the relief to tax periods ending on or before 31 December 2026. Ministerial Decision No. 131 of 2026, issued by the Minister of State for Financial Affairs on 29 July 2026 and announced by the Ministry of Finance on 7 August 2026, replaced that clause. The threshold now applies to tax periods starting on or after 1 June 2023 and to subsequent tax periods ending on or before 31 December 2029. The AED 3 million threshold and the other conditions did not change.

The cut-off is tested on the date your tax period ends, not the calendar year, so a company with a June or March year end loses the relief earlier than a calendar-year company.

Sources: Ministerial Decision No. 73 of 2023, Article 2(2), as replaced by Ministerial Decision No. 131 of 2026, Article 1; Federal Decree-Law No. 47 of 2022 (tax periods starting on or after 1 June 2023).

A new company’s first tax period can run from 6 to 18 months. The FTA’s public clarification CTP003 says the thresholds are not pro-rated for a longer or shorter first period, and names the Small Business Relief revenue threshold as an example: AED 3 million applies to the whole first period, however long. A long first period therefore makes the test harder to pass, so check your dates with your tax agent before you choose your first year end.

The FTA’s Small Business Relief guide (CTGSBR1) is dated August 2023 and still shows 31 December 2026. The Ministerial Decision is the law and the guide is not legally binding, so the 2029 date applies; expect the guide to be updated.

A worked revenue test across several years

This is an illustration with round figures, not a real client. A Dubai mainland trading LLC has a 31 December year end and is registered for VAT. Revenue below excludes VAT.

What decided it: the AED 120,000 van sale, which took 2026 revenue AED 70,000 over the line. Asset sale proceeds count as revenue, and because Article 2(3) of Ministerial Decision No. 73 of 2023 shuts the door once revenue has exceeded the threshold in any period, the company loses SBR for 2026, 2027, 2028 and 2029, not just for one year. If its 2026 profit was AED 600,000, it now pays AED 20,250 (9% of AED 225,000) for 2026 instead of nothing.

Two variations.

• If revenue had been exactly AED 3,000,000 in 2026, it would still qualify: the test is “does not exceed”.
• If the company made a tax loss of AED 400,000 in 2024, electing SBR for 2024 would mean that loss is never declared and can never be used. Not electing for 2024 would keep the loss to set against later profits, at the cost of a full return. The FTA’s guide gives this same choice for a start-up with a first-year loss.

Signals worth watching: one large contract, the sale of a vehicle, property or part of the business, dividends received, and a long first tax period. Keep a running revenue total during the year so a planned sale does not cost several years of relief.

What does electing SBR mean, and what do you give up?

For the elected tax period, Article 21(2) of the law switches off five parts of the corporate tax rules. Ministerial Decision No. 73 of 2023, Articles 4 and 5, then sets out what happens to losses and interest.

What does not change: you remain a taxable person, so you register, file a return for every tax period and keep records. Owners of a company that elects SBR can still use the participation exemption on its dividends if they meet the conditions, because the company is still subject to corporate tax.

When not electing can be better. A business making a tax loss it wants to carry forward, a company inside a group that wants to transfer losses or assets at book value, or one with interest expenditure to carry forward may be better off filing a full return for that year. That is a judgement for your registered tax agent, year by year.

How do you elect Small Business Relief?

1. Register for corporate tax. The election is made in a tax return, so you need a Tax Registration Number first. A company incorporated on or after 1 March 2024, free zone companies included, applies within 3 months of incorporation; an individual whose business turnover passed AED 1 million in a calendar year applies by 31 March of the following year (FTA Decision No. 3 of 2024).
2. Keep revenue records from day one (see the record-keeping section).
3. At the year end, check the five tests for that tax period, including revenue in every earlier period.
4. File the tax return within 9 months of the end of the tax period (Law Art. 53) and elect SBR in it. If you elect, you complete the simplified return.
5. Repeat every year. The election applies to one tax period at a time.

Do not miss the return. The FTA’s guide states that once a return has been submitted without the election, the relief cannot be claimed for that period later. For a calendar-year business, the 2026 return is due by 30 September 2027. Who prepares and submits the return is up to you; we recommend a registered tax agent for the return and the election.

Penalties that still apply to SBR businesses

The FTA’s clarification CTP006 waives the AED 10,000 late registration penalty if the first tax return is filed within 7 months of the end of the first tax period instead of 9. To see these alongside other company fines, use our company penalty exposure calculator.

The anti-abuse rule: splitting a business to stay under AED 3 million

Article 6 of Ministerial Decision No. 73 of 2023 says that where the FTA establishes that one or more persons have artificially separated their business, total revenue across the whole business exceeds AED 3,000,000 in a period, and the parts have elected SBR, this is an arrangement to obtain a corporate tax advantage under the general anti-abuse rule in Article 50 of the law. The FTA’s guide says the business then repays the tax it would have owed, and a penalty may be imposed.

The FTA asks two questions: was the separation done for a valid commercial purpose, and do the persons carry on substantially the same business? It looks at financial, economic and organisational links. The guide describes three patterns:

Running more than one company is not abuse in itself. The FTA’s guide gives a franchise arrangement as an example of a genuine commercial separation. If you are thinking about a second licence for a new line of business, set out the commercial reason on paper and take advice before both companies elect SBR.

Records, accounts and the cash basis

To prove you can elect, you must be able to show the FTA that revenue did not exceed AED 3 million in the period and every earlier period. The FTA’s guide gives no fixed list, but expects documents such as:

• bank statements;
• sales ledgers;
• invoices or other records of daily takings, such as till rolls;
• order records and delivery notes;
• other business correspondence.

Records can be kept electronically if they are readable and available on request, and must be kept for 7 years after the end of the tax period they relate to (Law Art. 56). For a period ending 31 December 2026, that is until 31 December 2033.

VAT is separate. SBR does not change your VAT registration, returns or records, and VAT you charge is left out of revenue for the SBR test. Our VAT registration guide covers the VAT side, including when you must register.

Where SBR fits in your first 90 days

For a new company, the steps that make SBR possible later sit inside the first three months: corporate tax registration within 3 months of incorporation, a bank account that keeps business income separate, and bookkeeping from the first invoice. Our new company compliance checklist puts these on one timeline with VAT, UBO, visas and WPS. If you set up from abroad, our company setup guide for non-residents explains which steps can be done remotely; note that a foreign company’s UAE branch is not a resident person for SBR.

Common mistakes with Small Business Relief

• Not registering because “small businesses are exempt”. The relief is claimed in a return, so registration comes first. Late registration costs AED 10,000.
• Testing profit, not revenue. The AED 3 million is gross income of the period.
• Forgetting one-off income. Asset sales, dividends and other income count, and one bad year ends the relief for good.
• Assuming it ends in 2026. Ministerial Decision No. 131 of 2026 extended it to periods ending on or before 31 December 2029; older articles and the 2023 FTA guide still show 2026.
• Using a calendar year when your year end is not December. The cut-off follows the end date of your tax period.
• Electing in a loss year without thinking. A loss in an elected year is gone.
• Claiming SBR and QFZP 0% together. A free zone company chooses one route.
• Opening a second company to stay under the line without a real commercial reason.
• Filing late or filing without the election. The election cannot be added later to a return filed without it.

How MIRDXB PRO helps small businesses

We set up mainland and free zone companies and sole establishments, register them for corporate tax and VAT on EmaraTax where you authorise us to, and keep the PRO side running: licence renewals, visas, establishment cards and amendments. Our fee is fixed and quoted on WhatsApp before you pay. For recurring government work, see our monthly PRO plans for companies; for the whole setup, our start-a-business route map.

What we are not. MIRDXB PRO is not a registered tax agent with the FTA and is not an auditor or accountant. We do not decide whether you are eligible for Small Business Relief, give tax advice, keep your books, prepare corporate tax returns or make the election for you. For the return and the SBR election, use a registered tax agent; the FTA publishes the list of registered tax agents.

Frequently asked questions