This guide builds on our overview of UAE corporate tax, with the detail the Federal Tax Authority (FTA) applies.

What is small business relief under UAE corporate tax law?

Article 21 of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) lets a resident taxable person elect to be treated as not having derived any taxable income for a tax period, if its revenue stays under a limit the Minister of Finance sets and it meets the Minister's other conditions. [8] Ministerial Decision No. 73 of 2023 sets that limit at AED 3 million for each tax period. [3][12]

The FTA describes two benefits: [5][6]

  • Tax relief. No corporate tax is payable on the period's income.
  • Less paperwork. No taxable income calculation, a simplified tax return, and the option to prepare financial statements on the cash basis of accounting.

The relief is worth more the more profit you make. The FTA's own example compares 3 businesses, each with revenue of AED 2.8 million. Without the relief, the one with AED 800,000 profit would owe AED 38,250, and the one with AED 1.5 million profit would owe AED 101,250 (0% on the first AED 375,000 of taxable income, 9% above it). With the relief, each owes nothing. [5]

How long does small business relief last?

Point Rule Source
First periods covered Tax periods starting on or after 1 June 2023 [2][3]
Original end Tax periods ending on or before 31 December 2026 [3]
New end Tax periods ending on or before 31 December 2029 [1][2]
Decision that changed it Ministerial Decision No. 131 of 2026, signed 29 July 2026, announced 7 August 2026 [1][2]
What else changed Nothing. Only the end-date clause was replaced; the AED 3 million limit and the exclusions stand [2]

The FTA's detailed guide (August 2023) and its small business bulletin (July 2026) came out before the extension was announced, so both still show 31 December 2026. The bulletin itself tells businesses to watch for Ministry updates after 2026. The Ministry's decision is what applies. [2][5][6]

For a calendar-year business, the last period covered ends 31 December 2029. A period ending after that date falls outside the relief unless the Ministry extends it again. [2]

Who qualifies for small business relief?

You must meet all of these: [3][4][6]

  • Be a taxable person, which includes an individual running a business.
  • Be a resident person for corporate tax.
  • Have revenue of AED 3 million or less in the tax period you are claiming for, and in every earlier tax period.
  • Not be excluded (see the next section).

Companies. A company is resident if it is incorporated or established in the UAE, including in a free zone, or if it is incorporated abroad but effectively managed and controlled in the UAE. A free zone company that is not a Qualifying Free Zone Person can elect the relief like any other. [5]

Individuals. An individual is a taxable person only once turnover from business activities in the UAE exceeds AED 1 million in a calendar year. Wages, personal investment income and real estate investment income don't count towards that figure. Above AED 1 million, the individual registers and may then elect small business relief. [5][11] The AED 1 million registration test and the AED 3 million relief test are separate. [6]

Branches of foreign companies. A UAE branch (permanent establishment) of a non-resident company generally can't, because it isn't a resident person. The FTA makes one exception: where the parent's country has a tax treaty with the UAE containing a non-discrimination article for permanent establishments, the branch may qualify. [5]

Who cannot claim small business relief?

Excluded Detail Source
Qualifying Free Zone Persons Already pay 0% on qualifying income. One that elects to be taxed under the standard rules becomes an ordinary free zone person and may then elect the relief [3][4][5][12]
Members of multinational groups Group companies of a multinational group with consolidated revenue above AED 3.15 billion, as defined in the country-by-country reporting rules (Cabinet Resolution No. 44 of 2020), even if the UAE company itself is small [3][4][5][12]
Non-residents Including most UAE branches of foreign companies (see above) [5]
Anyone who has gone over AED 3 million A business can't elect if its revenue exceeded the limit in the period claimed or any earlier one. Going over once ends the relief for that period and every later one, even if revenue falls back [3][5][12]

How is the AED 3 million revenue limit worked out?

Revenue is "the gross amount of income derived during a tax period", per the Corporate Tax Law, and it is measured under the accounting standards accepted in the UAE. [3][5] Profit plays no part. The FTA's guide sets out what this means: [5]

  • All income counts, from any source. Dividends received and the proceeds of selling an asset, such as a vehicle, a shop or part of the business, are added in.
  • Foreign income counts. A company includes all its UAE and foreign income. An individual includes foreign income only where it relates to the UAE business.
  • VAT is left out. VAT charged to customers belongs to the FTA, so it is not revenue.
  • Barter counts at market value.
  • The accounting basis. Revenue is measured under IFRS or IFRS for SMEs, or on the cash basis where revenue is AED 3 million or less. The FTA can challenge a choice that gives an unreasonable result.

Two FTA examples show how strict the test is: [4][5]

  • A business with revenue of AED 1.9 million in 2026 can't claim, because its revenue in 2025 was AED 4.3 million.
  • A shopkeeper whose revenue had never exceeded AED 3 million (AED 1.85 million the year before) sells his shop for AED 1.2 million, taking that year's revenue to AED 4.15 million. He loses the relief for that year and every year after it. The FTA says it makes no difference that the sale was a one-off.

For a family holding company, dividends count. In the FTA's example, a company with AED 1.5 million of sales and AED 1 million of dividends from UAE companies has revenue of AED 2.5 million. A large asset sale counts in full towards the revenue of the year it happens. [5]

What does electing small business relief change?

Article 21 switches off several parts of the law for any period in which you elect: exempt income, the other reliefs, deductions, tax loss relief, and the transfer pricing documentation rules. [8] In practice: [3][5][10]

Rule In a period when you elect Source
Tax losses No tax loss can arise, and none can be used or transferred [3][5][10]
Losses from earlier periods Carried forward, to be used in a later period when you don't elect [3][5][10]
Net interest expenditure Can't be built up or carried forward from that period; amounts from earlier non-relief periods carry forward [3][5]
Group transfers and business restructuring relief Not available [5]
Transfer pricing documentation Not required, but deals with related parties must still be at arm's length [4][5]
VAT Unchanged: every VAT obligation continues [5]

The trade-off. No tax loss arises in a year the relief is elected, so a loss made that year can never be carried forward. Losses from years without the relief are kept: they can be used in a later year without the relief, or transferred to another taxable person if the conditions are met. [3][10][12] Whether electing makes sense depends on the figures over several years, which is a question for your tax adviser.

Shareholders. A company that elects the relief is still subject to corporate tax. The FTA says its shareholders should still be able to use the participation exemption on dividends and gains from it, if they meet the other conditions. [5]

Tax groups. A tax group is one taxable person, so the AED 3 million limit applies to the group as a whole. In the FTA's example, 3 group companies with revenue of AED 1.3 million, AED 0.9 million and AED 1 million total AED 3.2 million, and the group can't claim. [5]

What is the artificial separation rule?

If the FTA finds that a business has been split, and the revenue of the whole business exceeds AED 3 million in a tax period while one or more of the parts elects the relief, the arrangement is treated as one made to obtain a corporate tax advantage under the law's general anti-abuse rule (Article 50). [3][5][12] The relief is then denied: the business must pay the tax it would have owed, and a penalty may be imposed. [5]

The FTA asks 2 questions: was the split made for a genuine commercial purpose, and is substantially the same business being carried on? [3][5] It looks at 3 kinds of link between the parts: [3][5]

  • Financial: does one part fund another, or depend on it to survive?
  • Economic: do they serve the same customers, or benefit each other?
  • Organisational: shared premises, managers, staff or marketing, and whether a customer would know they were dealing with separate businesses.

The FTA's guide describes 3 patterns it treats as artificial: [5]

  • Functional: a hotel owner moves the guests-only restaurant into a company he wholly owns, with the same manager and staff.
  • Geographical: one owner runs the same laundrette business through 3 companies in different parts of Dubai, buying supplies together.
  • Temporal: a consultant deregisters each company as its sales near AED 3 million and opens a new one serving the same clients.

Its example of a genuine split is a franchise: a separately owned café in another emirate that uses the same brand under a franchise agreement. [5] Running a business through more than one company, for example to limit liability, is not artificial separation by itself. [5]

How do I apply for small business relief?

There is no separate application. The steps are: [5][6][7]

  1. Register for corporate tax with the FTA on EmaraTax, even if you expect to owe nothing. A company formed in the UAE on or after 1 March 2024 must apply within 3 months of incorporation. [6]
  2. Keep records that prove your revenue in the period and every earlier one.
  3. Elect the relief in your corporate tax return, and file the simplified return, within 9 months of the end of the tax period.
  4. Elect again every period. The election covers only the return it is made in.

Don't miss the election. Once a return for a period has been filed without electing, the FTA says the relief can't be claimed for that period later. [5]

Deadlines. For tax periods ending 31 December 2025, returns and any tax were due by 30 September 2026 (now passed). [7] For periods ending 31 December 2026, the 9-month rule gives 30 September 2027. [6]

Late registration. The penalty is AED 10,000. Under the FTA's waiver initiative it is waived if the first tax return is filed within 7 months of the end of the first tax period. [9]

What records do I need to keep?

Every business keeps its records for 7 years after the end of the tax period they relate to. [6][8] Typical records, in the FTA's list, are financial statements, bank statements, sales and purchase ledgers, invoices or till rolls, purchase orders, delivery notes, loan documents and business correspondence. [5][6]

Records need not be kept in their original form (paper receipts can be scanned), but they must be readable and available to the FTA on request. The FTA can ask for any records it needs to check that you qualify. [5][8]

How Marlborough Gulf helps

What we do:

  • We advise on whether your companies and any holding structure meet the conditions, and what electing changes for each one, year by year.
  • We keep the books and prepare accounts that show revenue clearly, on the basis the FTA accepts.
  • We flag the events that can end the relief for good, such as a large asset sale or a new group structure, before they happen.

What others do: Where you need representation before the Federal Tax Authority, a registered tax agent acts for you.

Corporate tax and VAT advice → Accounting and bookkeeping →

Request a consultation

Questions people ask

What is small business relief in the UAE?

An election under the Corporate Tax Law that treats a resident business with revenue of AED 3 million or less, in the current and all earlier tax periods, as having no taxable income, so no corporate tax is due. [3][8][12]

How do I apply for small business relief in the UAE?

Register for corporate tax, then elect the relief in your tax return for each period and file the simplified return within 9 months of the period end. There is no separate form. [5][6][7]

Is small business relief extended beyond 2026?

Yes. Ministerial Decision No. 131 of 2026 extended it to tax periods ending on or before 31 December 2029. [1][2]

This guide is general information, not tax advice for your circumstances.

Sources

  1. UAE Ministry of Finance, "Ministry of Finance Announces Extension of Small Business Relief for Corporate Tax Purposes until 31 December 2029", 7 Aug 2026, read 29 Oct 2026. https://mof.gov.ae/en/news/ministry-of-finance-announces-extension-of-small-business-relief-for-corporate-tax-purposes-until-31-december-2029/
  2. Ministerial Decision No. 131 of 2026 Amending Certain Provisions of Ministerial Decision No. 73 of 2023 on Small Business Relief, Ministry of Finance, signed 29 Jul 2026, Article One. Read 29 Oct 2026. https://mof.gov.ae/wp-content/uploads/2026/08/Ministerial-Decision-No.-131-of-2026-Amending-Certain-Provisions-of-Ministerial-Decision-No.-73-of-2023-on-Small-Business-Relief-for-the-Purposes-of-Federal-Decree-Law-No.-47-of-2022-EN.pdf
  3. Ministerial Decision No. 73 of 2023 on Small Business Relief, Ministry of Finance, 3 Apr 2023, Articles 2 to 6 (official Arabic text; no official English text was found on the Ministry or FTA websites, so see source 12 for the Ministry's English summary). Read 29 Oct 2026. https://mof.gov.ae/wp-content/uploads/2023/04/%D9%82%D8%B1%D8%A7%D8%B1-%D9%88%D8%B2%D8%A7%D8%B1%D9%8A-%D8%B1%D9%82%D9%85-73-%D9%84%D8%B3%D9%86%D8%A9-2023-%D9%81%D9%8A-%D8%B4%D8%A3%D9%86-%D8%AA%D8%B3%D9%87%D9%8A%D9%84%D8%A7%D8%AA-%D8%A7%D9%84%D8%A3%D8%B9%D9%85%D8%A7%D9%84-%D8%A7%D9%84%D8%B5%D8%BA%D9%8A%D8%B1%D8%A9-%D9%84%D8%A3%D8%BA%D8%B1%D8%A7%D8%B6-%D9%82%D8%A7%D9%86%D9%88%D9%86-%D8%B6%D8%B1%D9%8A%D8%A8%D8%A9-%D8%A7%D9%84%D8%B4%D8%B1%D9%83%D8%A7%D8%AA.pdf
  4. Federal Tax Authority, Small Business Relief (corporate tax topic), page updated 6 May 2024, read 29 Oct 2026. https://tax.gov.ae/en/taxes/corporate.tax/corporate.tax.topics/small.business.relief.23.aspx
  5. Federal Tax Authority, Small Business Relief, Corporate Tax Guide CTGSBR1, August 2023 (corrected copy of 29 Aug 2023), sections 3 to 7. Read 29 Oct 2026. https://tax.gov.ae/Datafolder/Files/Guides/CT/Small%20Business%20Relief%20Guide%20-%20EN%20-%2029%2008%202023.pdf
  6. Federal Tax Authority, Basic Tax Information Bulletin: Small Business, July 2026, sections 2 to 9. Read 29 Oct 2026. https://tax.gov.ae/Datafolder/Files/Pdf/2026/CT_TaxB_ulletin_EN_V5.pdf
  7. Federal Tax Authority, "FTA Confirms Taxable Persons Eligible for the Small Business Relief Must Submit Simplified Corporate Tax Returns Within Prescribed Legal Deadline", 3 Aug 2026, read 29 Oct 2026. https://tax.gov.ae/en/media.centre/news/fta.confirms.taxable.persons.eligible.for.the.small.business.relief.must.submit.simplified.corporate.tax.returns.within.prescribed.legal.deadline.aspx
  8. Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law), Articles 21 and 56. https://mof.gov.ae/wp-content/uploads/2022/12/Federal-Decree-Law-No.-47-of-2022-EN.pdf
  9. Federal Tax Authority, Corporate Tax Registration (questions on the late registration penalty and waiver), updated 26 Oct 2026, read 29 Oct 2026. https://tax.gov.ae/en/services/corporate.tax.registration.aspx
  10. Federal Tax Authority, Basic Tax Information Bulletin: Corporate Tax Losses, June 2026, question 9. Read 29 Oct 2026. https://tax.gov.ae/Datafolder/Files/Pdf/2026/CT-Tax-Bulletin-Corporate-Tax-Losses-EN.pdf
  11. Federal Tax Authority, Corporate tax: basis of taxation for natural persons, read 29 Oct 2026. https://tax.gov.ae/en/taxes/corporate.tax/corporate.tax.topics/basis.of.taxation.natural.person.aspx
  12. UAE Ministry of Finance, "Ministry of Finance Issues Decision on Small Business Relief for Corporate Tax Purposes", 6 Apr 2023 (the Ministry's English summary of Ministerial Decision No. 73 of 2023), read 29 Oct 2026. https://mof.gov.ae/en/news/ministry-of-finance-issues-decision-on-small-business-relief-for-corporate-tax-purposes/