UAE Small Business Relief Extended to 2029: What This Means for Your Business

If your business earns less than AED 3 million a year, there is some very welcome news from the UAE Ministry of Finance. The Small Business Relief (SBR) regime which significantly reduces the corporate tax compliance burden for smaller businesses and startups has just been extended by three years.

Here is everything you need to know.

What Has Changed?

The UAE Ministry of Finance issued Ministerial Decision No. 131 of 2026 on 8 August 2026, amending the provisions of the earlier Ministerial Decision No. 73 of 2023 on the taxation of corporations and businesses.

In simple terms: Businesses that qualified for small business relief before continue to qualify; they now have until the end of 2029 rather than the end of 2026 and the threshold stays at AED 3 millio, nothing else has been changed. You just have three more years.

 

What is Small Business Relief?

Small Business Relief was introduced under the UAE Corporate Tax Law to support startups, small businesses and micro enterprises by reducing the burden of corporate tax compliance. Under SBR, eligible businesses are treated as having derived no taxable income for the relevant tax period; meaning a corporate tax liability of nil - provided they elect for the relief in their corporate tax return.

This does not mean SBR businesses have no obligations. They must still:

• Register for Corporate Tax with the FTA
• Submit a simplified corporate tax return for each tax period
• Maintain all records and documentation to support the accuracy of their return
• Elect for SBR specifically in each tax return - it is not automatic

Important Note: The FTA confirmed this week that Small Business Relief (SBR) does not exempt businesses from filing. For the businesses whose FY ended 31 December 2025, the corporate tax and any other tax need to be submitted no later than 30 September 2026.

Who Qualifies for Small Business Relief?

To be eligible for SBR, a business must meet all of the following conditions:

• It must be a Resident Person for UAE Corporate Tax purposes
• Its revenue for the relevant tax period must not exceed AED 3 million
• Its revenue for all previous tax periods (from 1 June 2023 onwards) must not have exceeded AED 3 million in any period
• It must actively elect for SBR in its corporate tax return for each period it wishes to claim the relief

Who Cannot Claim Small Business Relief?

SBR is not available to every business. Two categories are specifically excluded:

• Qualifying Free Zone Persons (QFZPs) - businesses benefiting from the 0% free zone tax rate are not eligible for SBR
• Constituent Companies of Multinational Enterprise (MNE) Groups - businesses that form part of a group with consolidated global revenue exceeding AED 3.15 billion (approximately USD 858 million) are excluded

The Trade-Off: What You Give Up by Claiming SBR

Small Business Relief is genuinely helpful, but it comes with one important trade-off that businesses should understand before electing for it:

Tax Losses and Net Interest Expenditure incurred during an SBR period cannot be carried forward to future tax periods. This means that if your business makes a loss in a year when you claim SBR, that loss cannot be used to reduce your taxable income in a later year when you may be profitable and above the AED 3 million threshold. For businesses that expect to grow beyond AED 3 million revenue in the coming years, it may be worth discussing with your tax advisor whether claiming SBR in every period is the right approach.

Why This Extension Matters

The original SBR deadline of 31 December 2026 was beginning to create uncertainty for many small businesses. With the UAE Corporate Tax regime still relatively new, many SMEs and startups are only now fully understanding their obligations and the prospect of SBR expiring within months was a source of concern.

The three-year extension to 2029 provides:

• Certainty - businesses can plan their finances and tax positions with confidence for the next three years
• Breathing room - startups and early-stage businesses have more time to grow before the full corporate tax compliance framework applies to them
• Simplification - the lighter compliance requirements of SBR remain available, reducing the administrative burden on small businesses during a critical growth phase

As confirmed by multiple sources including The National and Gulf News, this decision forms part of the UAE Ministry of Finance's broader commitment to supporting entrepreneurs and strengthening the business environment.

What Should You Do Now?

If your business has annual revenue below AED 3 million, here is your action checklist:

• Confirm your Corporate Tax registration is in place. This is mandatory regardless of SBR eligibility
• Check whether you qualify for SBR based on your revenue for all periods since 1 June 2023
• Elect for SBR in your corporate tax return for each period you wish to claim it - it is not applied automatically
• If your financial year ended 31 December 2025, ensure your CT return is filed and any tax settled by 30 September 2026
• If you are approaching the AED 3 million revenue threshold, speak to your tax advisor about whether continuing to claim SBR is the right strategy given the loss carry-forward restriction