The Ministry of Finance has extended Small Business Relief to tax periods ending on or before 31 December 2029. The revenue threshold is unchanged at AED 3 million, roughly USD 817,000. The relief is not automatic: it must be elected in the corporate tax return, and the election carries a cost.
What happened
On 29 July 2026 the UAE Ministry of Finance issued Ministerial Decision No. 131 of 2026, amending Ministerial Decision No. 73 of 2023 and extending Small Business Relief to tax periods ending on or before 31 December 2029. The decision takes effect the day following its publication; it was picked up by the press in the first week of August. Without this intervention the regime would have stopped at periods ending 31 December 2026. Small Business Relief allows a UAE entity with annual revenue up to AED 3 million (approximately USD 817,000) to be treated as having no taxable income for corporate tax purposes, with reduced compliance obligations. The threshold itself has not moved: it remains AED 3 million.
What changes in practice
The planning horizon gains three years. Any business that was considering closing, relocating or restructuring its UAE entity because the regime was due to expire at the end of 2026 now faces a different deadline and a different cost-benefit calculation. What the headline does not say is equally important: the relief does not apply by itself. It must be elected in the corporate tax return for each period, and the revenue threshold must be tested every financial year, not once at incorporation.
Who it applies to
UAE entities, both mainland and free zone, with annual revenue up to AED 3 million: licensed consultants and independent professionals, service companies, e-commerce and digital businesses below the threshold, special purpose vehicles, and entities in their first years of trading. The test is revenue, not profit, so a loss-making business above AED 3 million of turnover does not qualify.
The exposure
The threshold is a cliff edge, not a taper. Exceeding AED 3 million by any margin in a single financial year removes the benefit for that period. Two opposite errors follow from the announcement. A business unaware of the extension may incur restructuring costs it no longer needs. A business that relaxes may forget that the election is required each year and that electing the relief means forgoing the carry-forward of tax losses and of disallowed interest expenditure arising in that period. Free zone entities face a further choice: Small Business Relief and the Qualifying Free Zone Person (QFZP) 0% regime are, in practice, alternatives rather than a combination.
What to do now
Review any restructuring decision that was driven by the 2026 expiry and rerun it over the new horizon. Confirm that the election has actually been made in each filed return rather than assumed. Map projected revenue against the AED 3 million threshold for the current and next two financial years, and for free zone entities model the relief against the QFZP route before committing to either.
Sources
- https://mof.gov.ae/en/financial-legislation/
- https://gulfnews.com/business/corporate-tax/uae-extends-corporate-tax-relief-for-small-businesses-until-end-of-2029-1.500633548
- https://www.thenationalnews.com/business/economy/2026/08/07/uae-extends-corporate-tax-relief-for-small-businesses-until-2029/
Published 16 August 2026 on the basis of public sources and official United Arab Emirates instruments. This is not legal or tax advice. Verify your position with a qualified professional before acting.