UAE Extends Small Business Relief for Corporate Tax Until End of 2029

Small businesses in the UAE have received more time to benefit from Small Business Relief under the country's Corporate Tax framework. The UAE Ministry of Finance has extended the relief for qualifying tax periods ending on or before December 31, 2029.

The extension was announced through Ministerial Decision No. 131 and keeps the existing AED 3 million revenue threshold unchanged. The relief was previously available for tax periods ending on or before December 31, 2026.

What Has Changed With the Extension?

The first and most important thing that has changed with this revision is the period up to which small business relief can be taken advantage of.

While under the old criteria, eligible businesses would have been able to take advantage of this relief till December 31, 2026, the new criteria extend this period by another three years, until December 31, 2029.

The revenue criterion of AED 3 million continues to remain the same. Businesses will continue to have to calculate their revenues in order to determine whether or not they qualify for taking the benefit of this relief.

What Is Small Business Relief?

Small Business Relief was introduced under Article 21 of the UAE Corporate Tax Law to support resident businesses with relatively small revenues.

Where an eligible business elects to use the relief, it is treated as having no taxable income for the relevant tax period. As a result, the business does not pay Corporate Tax on its taxable income for that qualifying period.

The measure is intended to make the transition to the UAE Corporate Tax regime easier for small and micro businesses. It can also reduce the administrative and financial pressure that tax compliance may create for businesses in their early stages.

Who Can Qualify for Small Business Relief?

The AED 3 million revenue threshold is one of the main requirements. An eligible resident taxable person must have revenue that does not exceed AED 3 million in the relevant tax period and the applicable previous tax periods, as prescribed under the rules.

The relief is not available to every type of taxpayer. Certain categories are excluded, including Qualifying Free Zone Persons and members of multinational enterprise groups that fall within the relevant scope of the Corporate Tax rules. Non-resident individuals are also outside the resident-person eligibility requirement.

Businesses should therefore avoid assuming that revenue below AED 3 million automatically makes them eligible. Their legal status, activities and other circumstances also need to be considered.

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Important Compliance Points for Businesses

The extension does not remove the need for businesses to manage their Corporate Tax responsibilities properly.

Small Business Relief is elective, which means an eligible business must make the required election when filing its Corporate Tax return. Businesses should also maintain proper accounting records and supporting documents to establish their revenue and tax position.

Businesses should keep the following points in mind:

• Check eligibility before claiming Small Business Relief.
• Monitor revenue regularly during the tax period.
• Maintain accurate accounting and financial records.
• Complete required Corporate Tax registration and filing obligations.
• Make the Small Business Relief election when eligible.
• Review the tax position when revenue approaches AED 3 million.
• Seek professional advice if the business expects to exceed the threshold.

Good record keeping is particularly important because the relief depends on meeting specific conditions. Accurate financial information can also make future tax planning easier as the business grows.

How a Professional Tax Consultant in the UAE Can Help

While the extension will allow some businesses to continue benefiting from Small Business Relief for a while longer, it is still essential to know the criteria for claiming such relief.

A professional tax consultant in the UAE will be able to evaluate the eligibility of the business, check its revenue status, and file and elect Corporate Tax for the business. Professional assistance will also enable the business to have an idea about its future tax position when it starts making more revenue.

For an expanding SME, tax planning cannot be limited only to the current tax year. Businesses close to making AED 3 million in revenue will find it useful to review their accounting systems, forecast the revenue for the future, and prepare for the moment when the Small Business Relief will no longer be applicable.

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What Businesses Should Do Next

The extension of Small Business Relief till December 31, 2029, will be an encouraging step for eligible companies in the UAE. It means that the AED 3 million income limit will remain the same, but now the companies will have more time to enjoy the relief.

Businesses should use this chance to check whether they qualify for this relief and to maintain their accounting records properly while growing. If your business is close to this threshold, you should think about your future tax position regarding Corporate Tax instead of postponing this issue until the threshold is exceeded.

At CDA, we can help you check whether you qualify for this relief, manage your Corporate Tax responsibilities, and plan accordingly when your annual income approaches the AED 3 million threshold. To know more about the services, connect with the team now!

Mitesh Maithia

Tax Manager

Mitesh is a Tax Professional with expertise in direct, indirect, and international taxation, including transfer pricing, since 2018. Passionate about making complex tax matters simple, he shares insights to help businesses stay compliant and forward-looking.