Small Business Relief UAE

On 7 August 2026 the Ministry of Finance issued Ministerial Decision No. 131 of 2026, extending the period in which eligible businesses can claim Small Business Relief. The relief had been due to close for tax periods ending after 31 December 2026. It will now stay available for tax periods ending on or before 31 December 2029. This matters to a large share of UAE companies. Any business with annual revenue at or below AED 3 million, including many start-ups, owner-managed firms and smaller trading entities, had been told to treat this year as its last under the relief. It has just been given three more. The extra time is welcome, but the relief is easy to misread, and it changes none of the underlying filing obligations.

What the decision changes

Small Business Relief is grounded in Article 21 of Federal Decree-Law No. 47 of 2022. A resident taxable person that elects for the relief, and whose revenue does not exceed AED 3 million, is treated as having no taxable income for that period. No corporate tax falls due, and reporting is simplified. Ministerial Decision No. 73 of 2023 originally limited the relief to tax periods ending on or before 31 December 2026. Decision No. 131 moves that closing date to 31 December 2029. Nothing else moves with it. The AED 3 million threshold stands, and so do the existing conditions. What has changed is the length of the runway, and any business that had written 2026 off as its final eligible year should look again.

The relief is claimed, not granted automatically

A frequent and costly assumption is that a qualifying business can simply do nothing. It cannot. The relief is an election made inside the corporate tax return, so the company must be registered and the return must be filed. For a business whose first tax period ended on 31 December 2025, that return is due on 30 September 2026, which is fifty-four days away, and the election is made in it. The penalties for inaction are not trivial. Late registration carries a fixed AED 10,000. A return filed late attracts AED 500 for each month of delay in the first year and AED 1,000 a month after that, and unpaid tax accrues interest at 14% a year. A company that owes no tax can still run up penalties in the thousands purely by failing to file. Our advice to eligible clients is consistent: register, file, then elect, and do each on time.

Who still cannot use it

The extension lengthens the timeline without widening the gate. The relief remains closed to Qualifying Free Zone Persons and to members of multinational groups, meaning groups whose consolidated revenue exceeds AED 3.15 billion under Cabinet Decision No. 44 of 2020. A free zone company relying on the 0% qualifying-income regime sits under a separate set of rules, with its own conditions and audit requirements, and cannot fall back on Small Business Relief as well. Groups close to the AED 3.15 billion line should establish their position on the evidence rather than assume it.

Three traps that remain

Several features of the regime outlast this decision and continue to catch people out. The AED 3 million test is cumulative and, once failed, final: cross the threshold in any single period and the relief is gone for that year and for every year that follows. Electing also has a price. In a period where you claim the relief, you cannot carry forward the tax losses or the disallowed net interest expenditure that arose in it, so a start-up running at a loss but expecting profits soon may be better off declining the relief and holding those amounts for later. That calls for a calculation, not a reflex. And any attempt to split a business into smaller entities to stay under AED 3 million falls within the general anti-abuse rule in Article 50 of the Corporate Tax Law, which allows the FTA to set the arrangement aside and assess on the real position.

Making the extra time count

The value of Decision No. 131 is that electing becomes a decision you revisit each year over a longer period, rather than a single call before a looming cut-off. A growing company might claim the relief this year and drop it next; a loss-making one might decline it now to protect its losses. Read well across 2026 to 2029, that pattern can be worth considerably more than the tax saved in any one year. At Altus Citadel Services FZCO we help owners and finance teams test eligibility, weigh the loss and interest trade-offs year by year, and file returns and elections that will stand up to scrutiny. If your revenue sits near or below AED 3 million, or you are deciding whether to elect for the current period, speak to us before the 30 September deadline so the choice is made with the full picture in front of you.

Contact us at: www.altuscitadelservices.com |  +971 50 961 6354 or +971 50 161 9605 or info@altuscitadelservices.com