Updated August 2026: This article was originally published in April 2023 following the introduction of Small Business Relief under Ministerial Decision No. 73 of 2023. It has been updated to reflect Ministerial Decision No. 131 of 2026.
By Alia Noor, FCMA, CGMA, MBA
UAE Registered Tax Agent | Associate Partner – Taxation & Compliance Advisory
Ahmad Alagbari Chartered Accountants
Small Business Relief forms part of the UAE Corporate Tax framework and is intended to reduce the Corporate Tax and compliance burden for eligible small businesses.
The relief was introduced under Ministerial Decision No. 73 of 2023, with an AED 3 million Revenue threshold. In July 2026, Ministerial Decision No. 131 of 2026 extended the relief period from 31 December 2026 to 31 December 2029, giving eligible businesses three additional years to benefit from Small Business Relief.
Who Is Eligible for Small Business Relief?
An eligible Resident Person may elect for Small Business Relief where Revenue does not exceed AED 3 million for the relevant Tax Period and previous relevant Tax Periods, subject to the prescribed conditions.
Revenue is determined based on the applicable accounting standards accepted in the UAE.
Importantly, the threshold is based on Revenue, not profit. Where Revenue exceeds AED 3 million in a relevant or previous Tax Period, Small Business Relief will not be available.
Who Is Not Eligible?
Small Business Relief is not available to:
- Qualifying Free Zone Persons; and
- Constituent Companies of certain Multinational Enterprise Groups.
Free Zone businesses should therefore understand their Corporate Tax status before assuming that Small Business Relief is available.
Tax Loss Relief
Where Small Business Relief is elected for a Tax Period, Tax Losses incurred during that Tax Period cannot be carried forward to subsequent Tax Periods.
However, unutilised Tax Losses from previous Tax Periods in which Small Business Relief was not elected may be carried forward, subject to the applicable conditions under the Corporate Tax Law.
Interest Deduction Limitation
Where Small Business Relief is elected, Net Interest Expenditure incurred during that Tax Period cannot be carried forward to subsequent Tax Periods.
Net Interest Expenditure from earlier Tax Periods in which Small Business Relief was not elected may remain available for carry forward, subject to the applicable Corporate Tax provisions.
Artificial Separation of Business
Businesses should not artificially separate a Business or Business Activity simply to remain below the AED 3 million Revenue threshold.
Where artificial separation is undertaken to obtain a Corporate Tax advantage, the General Anti-Abuse provisions of the Corporate Tax Law may apply.
What Should Small Businesses Consider?
The extension to 31 December 2029 provides eligible small businesses with a longer period in which Small Business Relief may be available.
However, eligibility should not be assumed simply because a business qualified in an earlier Tax Period. As businesses grow, Revenue and circumstances can change.
Businesses should therefore continue to monitor their Revenue, eligibility and Corporate Tax status for each relevant Tax Period.
Small Business Relief can provide valuable support to eligible businesses, but Corporate Tax compliance should grow alongside the business.
Disclaimer
This article is for general informational and educational purposes only and does not constitute tax, legal, accounting or professional advice. Readers should consider their specific circumstances, refer to applicable UAE Corporate Tax legislation and official guidance, and obtain professional advice where appropriate.
UAE Corporate Tax, Small Business Relief, UAE Tax, Corporate Tax, AED 3 Million Revenue Threshold, Ministerial Decision 131 of 2026, Ministerial Decision 73 of 2023, Federal Tax Authority, FTA, Tax Relief, UAE Small Businesses, Corporate Tax Compliance
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