Small Business Relief Extended to 2029 — and Why You Still File a Return

• 08 August, 2026
• By Safwan, Managing Partner
• Corporate Tax

Last reviewed 8 August 2026 by the Exiloz tax team against the UAE legislation in force on that date. Tax law moves — confirm any figure against tax.gov.ae before you act on it.

Three more years of relief, and not one fewer filing

On 7 August 2026 the UAE Ministry of Finance announced Ministerial Decision No. 131 of 2026, which amends Ministerial Decision No. 73 of 2023 and extends Small Business Relief to tax periods ending on or before 31 December 2029. The revenue ceiling stays at AED 3,000,000. Nothing else in the relief moved. In particular: you still register for corporate tax, you still make the election, and you still file a return every year.

The relief was always written with an expiry date on it. Under the original decision it ran out after tax periods ending 31 December 2026, which meant most Dubai SMEs were about to spend the 2027 financial year budgeting for 9% corporate tax for the first time. That planning problem has now been pushed out by three years.

Good news travels fast, and it usually loses a clause on the way. The clause it lost this week is the one that matters most: relief from tax is not relief from filing.

What changed on 7 August 2026?

Which tax periods does the extension cover?

The extension is written against tax periods ending on or before 31 December 2029, not financial years starting before it. For a calendar-year company that reads cleanly. For anyone else it quietly costs a period.

A 31 March year-end is the clearest example. Its financial year running 1 April 2029 to 31 March 2030 ends after the cut-off, so that year is outside the relief even though it starts inside the window. The last covered period is the one ending 31 March 2029.

So a June year-end business gets its last free period six months earlier than the December business next door. Worth knowing now, not in 2029.

Is the AED 3 million test on revenue or profit?

The AED 3 million test is measured on revenue: gross income for the tax period under the accounting standards applied in the UAE. Not net profit. A trading company turning over AED 4.2 million on a thin AED 180,000 margin is outside the relief; a consultancy billing AED 900,000 at a 70% margin is comfortably inside it.

The second half of the test is the one that catches people. Revenue has to be at or below AED 3 million in the relevant tax period and in every previous tax period. Cross the line once and the relief is gone for the periods that follow, even if turnover drops back afterwards. A single strong year closes the door permanently.

Who cannot claim Small Business Relief?

Two groups are shut out by Ministerial Decision No. 73 of 2023, and the extension does not reopen either door.

The free-zone point deserves a moment. A free-zone company that is not a QFZP can claim Small Business Relief like any other resident person. If you hold QFZP status, the comparison is a real modelling exercise rather than an obvious answer, and our guide to Small Business Relief versus the free-zone 0% rate runs both routes side by side.

What does electing cost you?

Electing switches off several parts of the corporate tax law for that period. You cannot accrue, use or transfer tax losses. You cannot accrue or carry forward net interest expenditure. Transfers at net book value inside a qualifying group and Business Restructuring Relief are off the table too. In exchange, you owe no tax, you file a simplified return, and you are not required to keep transfer pricing documentation.

Losses you brought into the period are not destroyed. They sit still and become usable again in the next period where you have taxable income and have not elected. What you lose is the loss generated during an elected period.

That single sentence drives the one decision worth thinking about, and most SMEs get it backwards:

Put numbers on the second row. A start-up with AED 1.4 million of revenue posts a AED 300,000 loss in 2026. Elect, and the tax bill is nil. Do not elect, and the tax bill is still nil, because there is no taxable income to tax. The difference only shows up later: the second route carries AED 300,000 of loss forward, and when the business turns profitable that shelters up to AED 27,000 of corporate tax. The relief cost this company money, and its only cost was a slightly longer return.

One caution on the arithmetic: carried-forward losses can offset a maximum of 75% of taxable income in any later period, so the AED 27,000 arrives across two or more years rather than all at once.

Do you still file a corporate tax return under the relief?

This is the part of the announcement that gets dropped in the retelling. Small Business Relief reduces the tax to nil. It does not remove you from the corporate tax system, and the penalties for behaving as if it did are administrative, automatic and unrelated to how much tax you owed.

1. Register for corporate tax and hold a TRN. The election is made inside a return, and there is no return without registration.
2. File a return for every tax period, within 9 months of the period end. A 31 December 2026 year-end files by 30 September 2027.
3. Make the election in each return. It is not a one-off switch and it does not roll over. Miss it in one year's return and you are taxed normally for that year.
4. Keep records for 7 years after the end of the tax period, including whatever evidences your revenue figure.
5. Keep your other filings running: VAT returns, UBO, WPS payroll, AML registration where it applies, and your licence renewals. Corporate tax relief touches none of them.

Miss the return and the FTA charges AED 500 per month for the first twelve months and AED 1,000 per month from the thirteenth, under Cabinet Decision No. 75 of 2023 as amended. Late payment of tax now runs at 14% per annum. A business with an AED 0 liability can still walk into five figures of penalties by treating a nil return as an optional one. We have seen it. Our penalties and voluntary disclosure guide covers what to do if that has already happened to you.

Can you split the company to stay under AED 3 million?

It is the first idea everyone has, and the FTA wrote a rule for it before anyone had it. Where a person artificially separates one business into several entities so that each sits below the threshold, relief is denied. The unpaid corporate tax becomes payable, with penalties on top.

Genuine commercial structures are fine. Two real businesses with different customers, staff, contracts and bank accounts are two businesses. A single operation invoiced through three licences that share the same team, the same premises and the same customers is one business wearing three hats, and it will be read that way.

The mistakes we correct most often

What to do this month

1. Pull your revenue history for every tax period since your corporate tax start date, and confirm none of them breached AED 3 million.
2. Write down your last eligible period from the year-end table above, and put the first taxable year in your forecast now.
3. Check last year's return actually carried the election. If it did not, a voluntary disclosure may still fix it.
4. Decide loss years deliberately, not by default, before the return is filed.
5. Plan the exit. Three years is long enough to grow past AED 3 million. The businesses that handle that transition well start their bookkeeping and provisioning discipline while the tax is still nil.

That last point is the real opportunity in this announcement. The relief buys three more years of nil tax; it does not buy three years of nil bookkeeping. Businesses that use the window to get their accounting in order arrive at their first taxable year with clean numbers. The ones that use it as an excuse to defer arrive at the same year with a mess and a deadline.

The legal basis

Small Business Relief sits in Article 21 of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The conditions, the AED 3 million threshold and the exclusions come from Ministerial Decision No. 73 of 2023. The FTA's Small Business Relief Corporate Tax Guide (CTGSBR1) explains the election, the loss and interest consequences and the artificial-separation test in detail. The extension announced on 7 August 2026 is Ministerial Decision No. 131 of 2026, which amends the 2023 decision and moves the last eligible tax period to one ending on or before 31 December 2029. Penalties for late registration, filing and payment are in Cabinet Decision No. 75 of 2023 and its amendments.

Primary sources: the Ministry of Finance announcement of 7 August 2026 and the Federal Tax Authority at tax.gov.ae. Confirm any figure against those before you act on it.

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