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Small Business Relief under UAE Corporate Tax — what it is and who qualifies
An election that lets an eligible resident business be treated as having no taxable income for a tax period. Who can use it, the revenue test, the window it applies to, what you give up and how to decide — summarised from Ministerial Decisions No. 73 of 2023 and No. 131 of 2026, with the official texts one click away.
Small Business Relief is an election, not an exemption — eligibility is tested on revenue in closed books, and electing gives up losses you might carry forward.
- Revenue at or under AED 3,000,000 — this period and every earlier one
- you may elect, and the period is treated as having no taxable income.
- You elect
- no Corporate Tax for the period; losses of that period cannot be carried forward and other reliefs are not claimed; registration, records and the return still apply.
- You do not elect
- the normal rules apply — taxable income is computed, the first AED 375,000 at 0 % and the rest at 9 %, and a loss can be carried forward.
What Small Business Relief is
Small Business Relief is an election under Article 21 of the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022). A resident business whose revenue is AED 3,000,000 or less in the current and every earlier tax period can choose to be treated as having no taxable income for that period. Ministerial Decision No. 73 of 2023 sets the threshold and conditions; Ministerial Decision No. 131 of 2026 extended the relief to periods ending on or before 31 December 2029.
In practical terms, a business that elects the relief for a period does not compute taxable income or pay Corporate Tax for that period. The relief exists for the smaller end of the market: it lowers the compliance load while a business is small, and it falls away as the business grows or as the transitional window closes.
It is a choice, not a status, and it is made period by period: the election is made in the Corporate Tax return for each tax period. Nothing happens by default — a business that qualifies but does not elect is taxed under the normal rules for that period. Sometimes referred to informally as a small-business exemption; the official relief is Small Business Relief, and the business still registers, keeps records and files its return.
Who can elect it
The Decision sets conditions that must all be met for the period in question:
- A resident taxable person — the business is resident for Corporate Tax purposes, whether it is a company or a natural person carrying on a business.
- Revenue at or below AED 3,000,000 — in the relevant tax period and in every previous tax period.
- Not a Qualifying Free Zone Person — free-zone entities that meet the qualifying conditions are outside the relief.
- Not a member of a multinational enterprise group — as defined in Cabinet Decision No. 44 of 2020 (broadly, groups with consolidated revenue of AED 3.15 billion or more); we confirm whether your group falls within the definition.
The relief is time-limited. Ministerial Decision No. 73 of 2023 originally applied it to tax periods ending up to 31 December 2026; Ministerial Decision No. 131 of 2026 (announced by the Ministry of Finance on 7 August 2026) extended it to tax periods ending on or before 31 December 2029.
The revenue test
The threshold is tested on revenue, not profit — the gross amount recognised under the accounting standards accepted in the UAE (IFRS, or IFRS for SMEs where you qualify), before any costs. And it looks backwards: revenue must be at or below AED 3,000,000 in the current tax period and in all previous tax periods.
Two consequences follow. A business that has exceeded the threshold in any tax period cannot elect in a later one, even if revenue falls again. And a business close to the line needs reliable, timely books: the figure that decides eligibility is the one in your financial statements for the period, so it has to be right before the return is prepared.
What you give up
Being treated as having no taxable income sounds simple, and for many small businesses it is. But the election switches off parts of the Law for that period, and some of the effects reach into later years:
- Tax losses and net interest expenditure of the period you elect cannot be carried forward to future periods (Articles 4 and 5 of the Decision).
- Other reliefs and deductions provided by the Law are not available for the period you elect.
- Registration, records and a return remain. The relief changes how the period is treated, not whether you are a taxable person — the Corporate Tax return for the period is still filed.
Small Business Relief is an election, not an exemption. The question is never only “do we qualify?” — it is “is it worth it this year, and next?”AL TAMAYUZ specialists
How to decide
In practice the decision comes down to three questions, in order:
- Are we eligible — for this period and all previous ones? Confirm the revenue figures from closed books, and confirm you are neither a Qualifying Free Zone Person nor part of a multinational enterprise group.
- Would we have taxable income anyway? A business making a loss, or investing heavily, may prefer the normal rules so that its losses can be carried forward.
- Where will revenue be in the next two periods? A business that expects to cross the threshold may gain little from a one-period election and lose the losses it could have carried forward.
A registered tax agent walks through those questions with your actual numbers before the return is prepared. The election is made in the return — and the return is generally due within nine months of the end of the tax period — so the decision has to be ready well before the filing date. Our Small Business Relief review tests eligibility on your closed books and sets out the trade-offs in writing; if it is your first return, the Corporate Tax return readiness review covers the filing itself.
- Confirm revenue from closed books — for this period and every previous one
- Estimate taxable income anyway — a loss year may prefer the normal rules
- Decide in writing before the return — the election is made in the return
Sources
This summary is written from the official publications below. They are authoritative; this page explains them and does not replace them.
- Ministerial Decision No. 73 of 2023 on Small Business Relief — UAE Ministry of Finance — mof.gov.ae
- Ministerial Decision No. 131 of 2026 amending Ministerial Decision No. 73 of 2023 — UAE Ministry of Finance — mof.gov.ae ‖ Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, Article 21 — UAE Ministry of Finance — mof.gov.ae ‖ Small Business Relief — Federal Tax Authority — tax.gov.ae
Last verified against official sources: 5 October 2026.
The Decision in one table
Five points decide whether the relief is available and whether it is worth electing. The middle column is the factual summary; the last column is what we check with clients before advising.
| Point | What the Decision provides | What to check in your business |
|---|---|---|
| WhoEligibility | Resident taxable persons — companies and natural persons carrying on a business — that are not Qualifying Free Zone Persons and not members of a multinational enterprise group. | Your residence status for Corporate Tax, your free-zone position and any group membership. |
| Revenue testThe threshold | Revenue of AED 3,000,000 or less in the relevant tax period and in all previous tax periods. | Closed, reliable revenue figures for every tax period to date — not estimates. |
| PeriodsWhen it applies | Tax periods ending on or before 31 December 2029 (extended by Ministerial Decision No. 131 of 2026). | Your financial year end, and which of your periods fall inside the window. |
| EffectIf you elect | Treated as having no taxable income for that period; no Corporate Tax is computed or payable for it. | Whether you would have had taxable income at all in that period. |
| Trade-offsWhat you give up | Tax losses and net interest expenditure of the period cannot be carried forward; other reliefs and deductions of the Law do not apply for that period. | Losses you expect, investment plans, and where revenue will be in the next two periods. |
| Facts as published by the UAE Ministry of Finance in Ministerial Decision No. 73 of 2023, as amended by Ministerial Decision No. 131 of 2026. | ||
Factual summary in the middle column; professional insight in the last column. Nothing in this table replaces the official text or a review of your own facts.
Turn the rules into a decision for your business
Eligibility, the election and the trade-offs are decided on your own figures. A Small Business Relief review applies the revenue test to your closed books, sets out in writing what electing — or not electing — would mean, and has a registered tax agent check the comparison before anything is filed.
Corporate Tax
From registration to filing — your position accurate, defensible and on time.
- Registration with the FTA, including free-zone and group considerations
- Impact assessment, reliefs and elections
- Taxable-income computation, return preparation and filing
Does this affect my business?
Tell us your financial year end, your revenue to date and your structure. A registered tax agent confirms whether the relief is available to you, whether it is worth electing, and what to do next — with a written scope before any work.
Read the law first; the summary tells you what it means in practice.
Questions readers ask about the relief
No. It is an election you make in the Corporate Tax return for the period; if you do not elect, the normal rules apply. Eligibility must hold for that period and every previous one, so we confirm the revenue figures from closed books before the return is prepared.
Yes. The relief changes how the period is treated, not whether you are a taxable person. Registration with the FTA, proper records and a Corporate Tax return for the period remain obligations. We prepare the return, make the election in it and keep the evidence behind the revenue figure.
The Decision excludes Qualifying Free Zone Persons and members of multinational enterprise groups. Whether a free-zone entity meets the qualifying conditions depends on its own facts — substance, income and activities — which we assess with you before advising on either route.
Once revenue exceeds AED 3,000,000 in a tax period, the relief is not available for that period or any later one, because the test covers all previous periods. You then compute taxable income under the normal rules — and losses from relief periods cannot be carried forward, which is why growth plans matter before electing.
No. It is an election that treats the period as having no taxable income, but you remain a taxable person: you stay registered with the FTA, keep proper records and file the Corporate Tax return for the period. That is why the trade-offs matter before you elect.
Tax periods that start on or after 1 June 2023 and end on or before 31 December 2029; Ministerial Decision No. 131 of 2026 extended the original end date of 31 December 2026. You elect period by period: losses of a period in which you elect cannot be carried forward; losses of other periods remain usable, under the normal loss rules, in later periods in which you do not elect.
Read this page for what it is
Not sure whether to elect?
A Small Business Relief review tests your figures and sets out, in writing, what electing would mean for your business.
