Key takeaways
- No, Small Business Relief is not available if revenue is just over the limit: the UAE relief has a single cut-off of AED 3,000,000 of revenue, and Ministerial Decision No. 73 of 2023 contains no tolerance band or partial relief for a company that misses it narrowly.
- The AED 3,000,000 test covers the current tax period and every previous tax period, so a company that went over the limit once cannot elect Small Business Relief later, even if its revenue falls back below AED 3,000,000.
- Small Business Relief now applies to tax periods ending on or before 31 December 2029, after Ministerial Decision No. 131 of 2026 extended the original end date of 31 December 2026 (checked October 2026).
- A UAE company over the limit still pays corporate tax at 0% on the first AED 375,000 of taxable income and 9% above that, so crossing the revenue line does not mean the whole profit is taxed.
- Electing Small Business Relief has a cost: tax losses and net interest expenditure from an elected tax period cannot be carried forward, so a loss-making company under the limit should compare both routes before electing.
- Qualifying Free Zone Persons and constituent companies of multinational enterprise groups cannot elect Small Business Relief at all.
Can you claim Small Business Relief if your revenue is just over AED 3 million?
No. Under Ministerial Decision No. 73 of 2023, a taxable person cannot elect Small Business Relief if its revenue in the relevant tax period, or in any previous tax period, went above AED 3,000,000. The Decision sets one cut-off and says nothing about phasing, rounding or partial relief, so AED 3,000,001 is treated the same as AED 30 million.
Revenue is measured under the accounting standards accepted in the UAE, so it is the top-line figure in your accounts, not your profit. A company with AED 3.08m of revenue and a thin margin is out; one with AED 2.9m and a large profit is in.
Say a SHAMS trading company recognises AED 3.08m of revenue and has taxable income of AED 800,000 (an illustration only, ignoring adjustments). Outside the relief, it pays 9% on the AED 425,000 above the AED 375,000 band, which is AED 38,250. Inside the relief, the same company would be treated as having no taxable income. The gap is a tax bill, not a cliff edge that taxes every dirham.
How does the AED 3 million test work across tax periods?
The test looks at the revenue of the current tax period and of all previous tax periods. If any of them exceeded AED 3,000,000, Article 2(3) of Ministerial Decision No. 73 of 2023 stops the company from electing the relief.
| Situation | Revenue by tax period | Can the company elect? |
|---|---|---|
| Under the limit every year | AED 2.4m, then AED 2.9m | Yes, if no exclusion applies |
| Over the limit in the current year | AED 2.8m, then AED 3.2m | No, for the current period |
| Over the limit once, back under later | AED 4.3m, then AED 1.9m | No, for the later period |
The third row follows the FTA's own example on its Small Business Relief page, where revenue of AED 4.3 million in 2025 rules out the relief for 2026 even though 2026 revenue is AED 1.9 million. The first two rows are illustrations built on the same rule.
One gap to flag: the relief applies to tax periods starting on or after 1 June 2023, and the sources we could read do not say whether revenue earned before that date counts as a "previous tax period". If your company traded before June 2023 and sits close to the line, confirm that point with the FTA or an adviser.
Which tax periods does Small Business Relief cover after the 2029 extension?
Small Business Relief covers tax periods that start on or after 1 June 2023 and end on or before 31 December 2029. Ministerial Decision No. 131 of 2026 moved the end date from 31 December 2026 and left the AED 3,000,000 threshold unchanged.
| Item | Position | Source |
|---|---|---|
| Revenue threshold | AED 3,000,000 per tax period, tested against current and previous periods | Ministerial Decision No. 73 of 2023 |
| Original end date | Tax periods ending on or before 31 December 2026 | Ministerial Decision No. 73 of 2023 |
| Extended end date | Tax periods ending on or before 31 December 2029 | Ministerial Decision No. 131 of 2026 |
| Date of decision | 29 July 2026 (announced by the Ministry of Finance on 7 August 2026) | Decision text; MOF announcement |
| Entry into force | The day after publication; the publication date is not stated in the text | Ministerial Decision No. 131 of 2026 |
For a company with a December year-end, the 2026 to 2029 tax periods all end on or before 31 December 2029. Nothing in the Decision continues the relief past 2029, so a company that depends on it should plan for the standard position from 2030 unless the Ministry of Finance extends it again.
AED 3,000,000: the revenue limit for Small Business Relief, tested against the current tax period and every previous tax period. Source: Ministerial Decision No. 73 of 2023, as amended by Ministerial Decision No. 131 of 2026, checked 28 October 2026.
What does electing Small Business Relief change, and what do you give up?
Electing Small Business Relief means the company is treated as having no taxable income for that tax period, but the election is made period by period and it removes other reliefs and loss carry-forwards for the period. It is not automatic.
| Item | Effect of electing | Source |
|---|---|---|
| Taxable income | Treated as nil for the tax period | FTA Small Business Relief page |
| Election | Made separately for each tax period | FTA Small Business Relief page |
| Other exemptions, reliefs and deductions | Not available for that period | FTA Small Business Relief page |
| Tax losses | Losses of an elected period cannot be carried forward | Ministerial Decision No. 73 of 2023, Article 4(1) |
| Net interest expenditure | Cannot be carried forward from an elected period | Ministerial Decision No. 73 of 2023, Article 5(1) |
| Transfer pricing documentation | Not required, but the arm's length principle still applies | FTA Small Business Relief page |
Losses and interest from periods where the company did not elect can still be carried forward under the usual corporate tax rules (Articles 4(2) and 5(2) of the Decision).
What are your options if revenue is over the limit?
A company over the AED 3,000,000 limit falls under the standard corporate tax rules: 0% on the first AED 375,000 of taxable income in a tax period and 9% on taxable income above that, under Cabinet Decision No. 116 of 2022. The practical steps look like this:
- Confirm revenue against your accounting standard with your accountant, checking cut-off and what counts as revenue, before the tax period closes.
- Check the exclusions: a Qualifying Free Zone Person and a constituent company of a multinational enterprise group cannot elect the relief at any revenue level.
- Work out taxable income, not revenue, because the 0% band of AED 375,000 applies to taxable income.
- Diarise the filing and payment deadline for your tax period; if you'd rather not track these dates by hand, the free UAE compliance calendar lists them for your company.
What most guides don't tell you
Revenue timing decides which side of the line you land on. The test uses revenue under your accounting standard, so a December invoice booked in the wrong period can flip the answer. That argues for clean cut-off before year-end, not for deferring genuine revenue, which would misstate the accounts.
One year over the limit closes the door for the rest of the relief's life. Because every previous tax period is tested, a strong year at AED 3.4m ends eligibility through to 2029 even if the next year is quiet. Forecast revenue early so the loss of the relief is planned.
Electing can cost you money. A start-up with AED 1.5m of revenue and a tax loss that elects the relief gives up the right to carry that loss forward. If you expect profits next year, keeping the loss may leave a lower tax bill; work it through with your adviser first.
Splitting the business does not work. Article 6 of Ministerial Decision No. 73 of 2023 says that dividing a business to stay under the threshold may be treated as an arrangement to obtain a tax advantage under Article 50(1) of the Corporate Tax Law. The FTA looks at commercial purpose and whether the entities carry on substantially the same business.
Which deadlines apply to your company?
Under or over AED 3 million, your corporate tax and VAT dates run on your company's own calendar, and a missed date costs more than a close call on revenue. The free UAE compliance calendar is a calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Frequently asked questions
What is Small Business Relief and do I qualify?
Small Business Relief lets an eligible resident person elect to be treated as having no taxable income for a tax period if its revenue is AED 3,000,000 or less in that period and in every previous one. You do not qualify if you are a Qualifying Free Zone Person or a constituent company of a multinational enterprise group, or if your revenue has ever gone over the limit.
Is Small Business Relief still available after 2026?
Yes, Ministerial Decision No. 131 of 2026 extends it to tax periods ending on or before 31 December 2029, with the AED 3,000,000 threshold unchanged. Nothing in the Decision continues it beyond that date.
Do sole establishments need to register for corporate tax?
A sole establishment is owned by an individual, and individuals are subject to corporate tax only on business turnover above AED 1,000,000 in a Gregorian calendar year (Cabinet Decision No. 49 of 2023); wages, personal investment income and real estate investment income do not count. An owner below that level is not required to register for corporate tax.
Do freelancers have to pay corporate tax in the UAE?
A freelancer earning business income under a licence is subject to corporate tax only if that business turnover goes above AED 1,000,000 in a Gregorian calendar year, the same test that applies to sole establishment owners. Salary and personal investment income do not count toward the threshold.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Ministerial Decision No. 73 of 2023 on Small Business Relief, Ministry of Finance
- Ministerial Decision No. 131 of 2026 amending Ministerial Decision No. 73 of 2023, Ministry of Finance
- Ministry of Finance announcement: extension of Small Business Relief until 31 December 2029
- Small Business Relief (Corporate Tax), Federal Tax Authority
- Cabinet Decision No. 116 of 2022 on the Article 3 threshold, Ministry of Finance
- Cabinet Decision No. 49 of 2023 on natural persons, Ministry of Finance
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, Ministry of Finance
Last checked: 28 October 2026
This is general information, not tax or legal advice for your specific situation.