Small Business Relief is not a tax-free threshold, and it ends with 2026

Many business owners in the UAE believe that if their revenue stays below AED 3 million, corporate tax does not apply to them. That belief is close enough to the truth to have caused no trouble so far. It is still wrong, and this year it starts to matter.

AED 3 million is real. It is the revenue limit for Small Business Relief, introduced under Article 21 of the Corporate Tax Law and set out in Ministerial Decision No. 73 of 2023. But it is a condition for eligibility, not a tax-free allowance. And the relief is not automatic. You have to claim it on your corporate tax return, for every tax period you want it.

If you do not claim it, the ordinary rules apply. The first AED 375,000 of taxable income is taxed at zero per cent. Anything above that is taxed at 9 per cent.

The difference is money. Take a business with AED 2.4 million in revenue and AED 500,000 of taxable income. If it is eligible and claims the relief, it is treated as having no taxable income and pays nothing. If it does not claim, it pays AED 11,250. Same business, same year.

Small Business Relief is available to eligible UAE Resident Persons. Two groups are excluded. Qualifying Free Zone Persons cannot claim it, because they already benefit from a zero per cent rate on qualifying income. Neither can a company that forms part of a multinational group with consolidated revenue of AED 3.15 billion or more.

There is also a condition on past revenue. Your revenue must not exceed AED 3 million in the relevant tax period, and it must not have exceeded AED 3 million in any previous tax period beginning on or after 1 June 2023, which is when the corporate tax regime started. One year above the threshold removes your eligibility from that point on.

Small Business Relief reduces your corporate tax to zero. It does not remove your obligation to file a return.

The return is due nine months after the end of your tax period. For a business with a 31 December year end, that is 30 September of the following year. Businesses with other year ends have different deadlines, so check yours rather than assuming.

The return and any payment are due on the same date. There is no separate, later window for paying.

A return is required even when the tax is zero, and late filing attracts an administrative penalty whether or not any tax was due. This is where businesses get caught. They calculate that they owe nothing, conclude there is nothing to do, and receive a penalty for a tax bill of zero.

Small Business Relief applies to tax periods ending on or before 31 December 2026.

For a business following the calendar year, that makes 2026 the last eligible period. For a business with a different year end, the last eligible period is the one ending on or before 31 December 2026, and for some businesses that period has already closed. Check your own year end rather than assuming.

To set any revenue threshold for later periods, the Ministry of Finance would have to issue a new Ministerial Decision. As at the date of publication, none has been issued.

For a calendar-year business that has claimed the relief in every eligible period, 2027 may be the first period in which it has to work out its corporate tax under the ordinary rules. Revenue is not taxable income. You start from your financial statements and work through deductible and non-deductible expenses, adjustments and exemptions, and you have to be able to support every figure with records.

One thing does not change. Ministerial Decision No. 114 of 2023 allows a business to prepare its financial statements on a cash basis if revenue does not exceed AED 3 million in the relevant tax period, and that allowance carries no 31 December 2026 restriction. So as the rules stand, an eligible business can still use cash accounting after 2026. What changes is that the calculation has to be done at all, rather than replaced by an election.

If you claim Small Business Relief for a tax period, no tax loss arises from that period to carry forward. The same applies to disallowed net interest expenditure.

This matters most for a business expecting a loss in its final eligible period. A business with a loss has no positive taxable income, so it has no corporate tax to pay in that period in any case. Claiming the relief gives it nothing it did not already have, and costs it the loss.

Without the election, that loss can generally be carried forward and set against taxable income in a later period, subject to the rules in the Corporate Tax Law. Once the relief is no longer available, that could be worth real money.

Losses from earlier periods work differently. A loss carried forward from before an election is not forfeited. It cannot be used in a period for which the relief is claimed, but it generally remains available for a later period in which the relief is not claimed.

It depends entirely on the numbers, and it is a decision to make before the return is filed rather than after.

We handle corporate tax registration, return preparation and filing for businesses across Dubai, and we help owners get their accounting records into a state where the numbers on the return can be supported. If your 30 September deadline is coming and you are not certain your books are ready for it, contact our team.

UAE Ministry of Finance. "Ministry of Finance Issues Decision on Small Business Relief for Corporate Tax Purposes." 6 April 2023. https://mof.gov.ae/en/news/ministry-of-finance-issues-decision-on-small-business-relief-for-corporate-tax-purposes/

Ministerial Decision No. 73 of 2023 on Small Business Relief for the Purposes of Federal Decree-Law No. 47 of 2022. UAE Ministry of Finance. https://mof.gov.ae/wp-content/uploads/2023/04/Ministerial-Decision-No.-73-of-2023-on-Small-Business-Relief-for-the-Purposes-of-Federal-Decree-Law-No.-47-of-2022.pdf

UAE Federal Tax Authority. Corporate Tax Topics: Small Business Relief. https://tax.gov.ae/en/taxes/corporate.tax/corporate.tax.topics/small.business.relief.23.aspx

UAE Federal Tax Authority. "Federal Tax Authority Urges Submission of Corporate Tax Returns and Settlement of Corporate Tax Liabilities Within Nine Months From the End of The Tax Period." 24 September 2025. https://tax.gov.ae/en/media.centre/news/federal.tax.authority.urges.submission.of.corporate.tax.returns.and.settlement.of.corporate.tax.liabilities.within.nine.months.from.the.end.of.the.tax.period.aspx

Ministerial Decision No. 114 of 2023 on the Accounting Standards and Methods for Corporate Tax Purposes. UAE Ministry of Finance. https://mof.gov.ae/wp-content/uploads/2023/05/Ministerial-Decision-No.-114-of-2023-on-the-Accounting-Standards-and-Methods-for-Corporate-Tax-Purposes.pdf

UAE Federal Tax Authority. Corporate Tax Guide: Accounting Standards and Interaction with Corporate Tax (CTGACS1). https://tax.gov.ae/Datafolder/Files/Guides/CT/Accounting%20Standards%20Guide%20-%2006%2011%202023.pdf

Deloitte Middle East. "A new Ministerial Decision offers relief to small businesses and start-ups." 10 April 2023. https://www.deloitte.com/middle-east/en/services/tax/perspectives/new-ministerial-decision-offers-relief-small-businesses-and-start-ups.html

Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, Article 20(5)(a), Article 21 and the corporate tax rates provisions.

This article is general information about UAE corporate tax rules as they stand at the date of publication. It is not tax advice and should not be relied on as a substitute for advice on your own circumstances.