The regime brings corporate tax to zero for companies with revenue up to AED 3 million (about USD 817,000) per tax period, and on 7 August the Ministry of Finance extended it to 31 December 2029. A tax authority does not issue a public statement to repeat a rule that already exists; it issues one when it can see people doing the opposite.
What happened
On 3 August 2026 the Federal Tax Authority (FTA), the UAE's federal tax administration, published a statement restating something the legislation already said: companies claiming Small Business Relief (SBR) must still file a corporate tax return, in simplified form, by the statutory deadline. SBR is the regime that reduces corporate tax to zero for companies with revenue up to AED 3 million (approximately USD 817,000) per tax period. The filing obligation was already set out in Ministerial Decision No. 73 of 2023. When an authority feels the need to repeat it in a public announcement, it is because it is seeing companies that do not comply.
What changes in practice
Nothing changes in the legislation. What changes is that the FTA's position is now written and dated, and unawareness stops being a defence. Two operational consequences follow. First, the regime is not automatic: it must be claimed by making the election inside the return, so a company that does not file does not make the election and is taxed under the ordinary rules despite qualifying. Second, the simplified return remains a filing obligation with a fixed date, which for financial years ended 31 December 2025 is 30 September 2026.
Who it applies to
Every UAE company within the AED 3 million revenue threshold that wants to apply the regime, free zone and mainland alike. This includes companies that generated no revenue at all during the tax period: a dormant company is a company that does not pay, not a company that does not file. The population is not shrinking either. Through Ministerial Decision No. 131 of 7 August 2026, the Ministry of Finance moved the end date of the regime from 31 December 2026 to 31 December 2029, leaving the revenue threshold unchanged.
The exposure
The penalty for failing to file a corporate tax return is AED 500 per month (approximately USD 136) for the first twelve months, rising to AED 1,000 per month (approximately USD 272) from the thirteenth. It accrues on its own and nobody notifies the company while it builds. A dormant company left unattended for two years accumulates AED 6,000 in the first year and AED 12,000 in the second — AED 18,000 in total, approximately USD 4,900 — without ever having issued an invoice. The bill almost always surfaces at the worst moment: at licence renewal, or when a bank asks for the company's tax standing before opening an account.
What to do now
Open EmaraTax, the FTA's online tax portal, and check whether the corporate tax return for the last closed financial year shows as submitted. Do not ask the accountant whether it was filed: check the status inside the portal, because that is what counts before the authority. Anyone holding a dormant company that has never filed should count the months elapsed since the deadline and factor in the penalty already accrued before deciding whether to liquidate it or bring it back into compliance, because closing the company does not erase what has built up. For financial years ended 31 December 2025 the return is due by 30 September 2026, and the Small Business Relief election must be made inside that return: submitting it without selecting the regime means filing and paying.
Sources
- https://tax.gov.ae/en/media.centre/news.aspx
- https://tax.gov.ae/en/taxes/corporate.tax.aspx
- https://mof.gov.ae/en/financial-legislation/
Published 30 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.