Ministerial Decision No. 131 of 2026 extends the AED 3 million Small Business Relief window by three years, giving qualifying UAE businesses more time to benefit from simplified Corporate Tax treatment.
Quick Take
The UAE has extended its Small Business Relief regime until 31 December 2029.
Under Ministerial Decision No. 131 of 2026, the existing AED 3 million revenue threshold will continue to apply to eligible Tax Periods ending on or before 31 December 2029, replacing the previous cut-off of 31 December 2026.
For eligible small businesses, the extension is significant.
Small Business Relief allows qualifying Resident Persons to elect to be treated as having no Taxable Income for the relevant Tax Period, reducing both the potential Corporate Tax liability and certain compliance requirements. The Federal Tax Authority currently confirms that the relief is available where Revenue does not exceed AED 3 million in the current and all previous relevant Tax Periods, subject to the applicable conditions.
The Ministry of Finance described the 2026 extension as part of its continued support for small businesses and confirmed that the relief period now runs through Tax Periods ending on or before 31 December 2029.
But the extension should not be interpreted as a general Corporate Tax exemption for every small company.
Eligibility still needs to be assessed carefully.
What Has Changed?
When Small Business Relief was originally introduced through Ministerial Decision No. 73 of 2023, the AED 3 million revenue threshold applied to Tax Periods beginning on or after 1 June 2023 and ending on or before 31 December 2026.
Ministerial Decision No. 131 of 2026 changes that timeline.
The new Decision replaces Clause 2 of Article 2 of the original Ministerial Decision and provides that the threshold will continue to apply to subsequent Tax Periods ending on or before:
31 December 2029.
In practical terms, the UAE has extended the availability window for Small Business Relief by three years.
The threshold itself has not changed.
It remains AED 3 million in Revenue.
What has changed is how long eligible businesses may potentially benefit from the regime.
Who Can Benefit from Small Business Relief?
The relief is primarily aimed at smaller UAE businesses that fall within the Corporate Tax regime but remain below the prescribed revenue threshold.
According to the FTA, a Resident Person, whether a juridical person or an eligible natural person, may elect for Small Business Relief where the required conditions are satisfied.
The central test is Revenue.
To qualify, Revenue must be AED 3 million or less during:
- the relevant Tax Period; and
- every previous applicable Tax Period.
This historical element is important.
A business cannot simply look at its current year’s turnover in isolation.
If its Revenue exceeded AED 3 million in an earlier relevant Tax Period, Small Business Relief will generally no longer be available in a later period even if Revenue subsequently falls below the threshold. The FTA’s own guidance illustrates this with examples where a business becomes permanently ineligible after exceeding the threshold in a previous Tax Period.
This makes revenue monitoring across multiple years particularly important.
What Does the Relief Actually Do?
Small Business Relief is not simply a reduced Corporate Tax rate.
Where an eligible business makes a valid election, it is treated as having no Taxable Income for that Tax Period.
That can mean no Corporate Tax is payable for the period under the Small Business Relief rules.
There are also compliance benefits.
The FTA explains that an eligible taxpayer making the election does not need to calculate Taxable Income and generally has fewer fields to complete in its Corporate Tax Return.
Certain transfer pricing documentation requirements are also reduced, although businesses must still comply with the arm’s length principle when dealing with Related Parties and Connected Persons.
For a small operating business, these administrative savings can matter almost as much as the potential tax benefit.
Less complexity can mean fewer resources spent on tax computations while the business is still establishing itself or scaling.
But Small Business Relief Does Not Mean “No Corporate Tax Compliance”
This distinction is important.
A qualifying company does not simply ignore Corporate Tax because its Revenue is below AED 3 million.
Eligible Taxable Persons still operate within the UAE Corporate Tax framework.
For juridical persons subject to Corporate Tax, registration with the FTA remains required, and the Small Business Relief election is made as part of the relevant Corporate Tax process. The FTA states that taxable juridical persons are required to register and obtain a Corporate Tax Registration Number.
In other words:
being eligible for relief is different from being outside the Corporate Tax system.
Proper accounting records, Revenue calculations and tax filings remain important because they are what support the business’s eligibility for the relief.
The AED 3 Million Test Is About Revenue, Not Profit
This is another area where business owners can easily misunderstand the rule.
The eligibility threshold is based on Revenue, not taxable profit.
A company generating AED 3.2 million in Revenue with relatively small profits cannot rely on the fact that its net earnings are low.
Likewise, a company generating AED 2.8 million in Revenue with strong margins may still fall within the Revenue threshold, assuming all other conditions are satisfied.
The Ministry of Finance has stated that Revenue for Small Business Relief purposes is determined based on the applicable accounting standards accepted in the UAE.
This places bookkeeping and financial reporting at the center of the eligibility assessment.
What Happens If Revenue Goes Above AED 3 Million?
For growing businesses, this may be the most important question.
Suppose a UAE company records:
2026 Revenue: AED 2.2 million
2027 Revenue: AED 2.7 million
2028 Revenue: AED 3.4 million
2029 Revenue: AED 2.6 million
Once Revenue exceeds AED 3 million in 2028, the historical Revenue condition becomes relevant.
The business would not simply regain access to Small Business Relief because Revenue fell back below AED 3 million in 2029.
FTA guidance makes clear that once Revenue has exceeded the threshold in a relevant previous Tax Period, the relief is no longer available in a later period.
This means businesses approaching the threshold should prepare for the transition before it happens.
Accounting systems, deductible expenditure, tax positions and Corporate Tax calculations become considerably more important once Small Business Relief is no longer available.
Who Cannot Claim the Relief?
There are also important exclusions.
The FTA confirms that Small Business Relief is unavailable to:
Qualifying Free Zone Persons, and
members of certain Multinational Enterprise Groups whose consolidated group Revenue exceeds AED 3.15 billion.
This is particularly relevant in the UAE because being a “small company” operationally does not automatically mean that Small Business Relief applies.
For example, a UAE entity may have relatively modest local Revenue but still belong to a much larger international group.
Likewise, a Free Zone company needs to determine whether it is operating under the Qualifying Free Zone Person regime rather than assuming the Small Business Relief rules will apply.
Qualifying Free Zone Persons operate under a separate Corporate Tax framework and may benefit from a 0% Corporate Tax rate on Qualifying Income when the relevant conditions are met.
What About Freelancers and Individual Business Owners?
Natural persons require a slightly different analysis.
The FTA currently states that a natural person becomes subject to Corporate Tax where they conduct a Business or Business Activity in the UAE and their total turnover from those activities exceeds AED 1 million during a calendar year. Salary, Personal Investment Income and Real Estate Investment Income are excluded from that calculation.
Once the individual falls within the Corporate Tax regime, Small Business Relief may potentially become relevant if the separate AED 3 million Revenue conditions and other requirements are satisfied.
The AED 1 million natural-person threshold and the AED 3 million Small Business Relief threshold therefore perform different functions.
One determines whether an individual conducting business falls within Corporate Tax.
The other determines whether an eligible Resident Person may elect for Small Business Relief.
Why the 2029 Extension Matters
For many UAE SMEs, the extension creates something increasingly valuable:
planning visibility.
Businesses that expected the relief to disappear after 2026 now potentially have another three years in which to operate within the simplified regime, provided they remain eligible.
For an early-stage company, that additional period may coincide with some of its most important growth years.
It can give management more room to invest in employees, market development, technology and expansion while operating under simplified Corporate Tax treatment.
The decision also fits within the broader design of the UAE Corporate Tax framework, which has included specific measures aimed at reducing the administrative burden on smaller businesses. The Ministry of Finance has previously highlighted Small Business Relief as one of the mechanisms designed to support start-ups and smaller enterprises.
The Extension Is Helpful. It Is Not a Reason to Stop Planning.
A business sitting at AED 1 million of annual Revenue and one sitting at AED 2.9 million may technically fall under the same threshold.
Strategically, however, they are in very different positions.
The second business may be one successful contract away from leaving the Small Business Relief regime.
That is why growing businesses should use the extension as a planning window rather than simply a tax holiday.
Management should know:
where current Revenue stands,
whether any previous Tax Period exceeded the threshold,
whether the business is genuinely eligible for the election,
when Revenue is likely to cross AED 3 million, and
what the Corporate Tax position will look like once the relief is no longer available.
The earlier that transition is understood, the easier it becomes to prepare proper accounts, forecast tax liabilities and avoid compliance surprises.
What Should Businesses Do Now?
The first step is not automatically to claim the relief.
It is to confirm eligibility.
Businesses should review their Revenue history from the beginning of the UAE Corporate Tax regime, determine their status as a Resident Person, check whether any exclusion applies, and ensure their accounting records support the Revenue figures being reported.
Businesses approaching AED 3 million should also begin modelling what happens after they cross the threshold.
The new Decision gives eligible businesses until Tax Periods ending on or before 31 December 2029 to potentially benefit from the regime.
That additional time is valuable.
Used properly, it can become part of a broader transition from small-business tax relief to a more mature Corporate Tax and financial reporting framework.
How Dawia Can Help
Corporate Tax relief is most useful when it forms part of a properly managed financial structure.
At Dawia Family Office, we support businesses in understanding their Corporate Tax position, maintaining appropriate financial records and preparing for regulatory obligations as they grow.
If your business currently operates below the AED 3 million Revenue threshold or is approaching it, the extension provides an opportunity to review your position before your next Corporate Tax filing.
The relief window has become longer. The need to understand where your business stands has not.