Small Business Relief (SBR) has been extended. Under the Ministry of Finance's Ministerial Decision No. 131 of 2026, eligible UAE businesses can now elect the relief for tax periods ending on or before 31 December 2029, instead of only 31 December 2026. The AED 3 million revenue threshold has not changed. If you have read that SBR "ends this year", that information is out of date.
What Small Business Relief does
A UAE-resident business with revenue of AED 3 million or less can elect to be treated as having no taxable income for a tax period, so no 9% corporate tax is payable for that period. Two points cause most of the mistakes. First, it is elective: you choose it in your corporate tax return, and it is not applied automatically. Second, the test is revenue, not profit. A business with AED 3.4 million of revenue and a loss does not qualify, and a business with AED 2.9 million of revenue and a large profit can.
Electing the relief does not remove your other obligations. Eligible businesses should still meet their registration, filing and record-keeping duties.
Who cannot use it
- Qualifying Free Zone Persons, who already take the 0% rate on qualifying income.
- Members of a multinational enterprise group with consolidated global revenue above AED 3.15 billion.
- A business whose revenue went above AED 3 million in the current period or in a relevant earlier period. Check your revenue history since corporate tax began on 1 June 2023, not only this year's figure.
What changed and what did not
| Item | Before the decision | Now |
|---|---|---|
| Last tax period that can use SBR | Ending on or before 31 December 2026 | Ending on or before 31 December 2029 |
| Revenue threshold | AED 3 million | AED 3 million (unchanged) |
| How it is claimed | Elected in the return | Elected in the return (unchanged) |
| Standard regime without SBR | 0% on the first AED 375,000 of taxable income, 9% above | Unchanged |
Worked examples: elect or not?
These use the standard rates, 0% on the first AED 375,000 of taxable income and 9% above it. They are illustrations, not tax advice.
| Business | If it elects SBR | If it does not elect |
|---|---|---|
| Revenue AED 2.4m, taxable income AED 700,000 | Tax: AED 0 | (700,000 - 375,000) x 9% = AED 29,250 |
| Revenue AED 2.9m, tax loss AED 200,000 | Tax: AED 0, but the loss for that period cannot be carried forward | Tax: AED 0, and the AED 200,000 loss can be used against future profit |
| Revenue AED 3.2m, taxable income AED 500,000 | Not eligible: revenue is above AED 3m | (500,000 - 375,000) x 9% = AED 11,250 |
The second row is the trade-off most guides skip. In a loss-making year, electing SBR gives you nothing to save (you owe no tax anyway) and costs you the loss. Compare both routes before you tick the box.
How to decide, step by step
- Add up revenue for the current period and for every earlier period since 1 June 2023. If any period went above AED 3 million, stop: SBR is not available.
- Check you are not a Qualifying Free Zone Person or part of a large multinational group.
- Work out the tax with and without the election, including what happens to any tax losses.
- Make the election in EmaraTax when you file the return for that period.
What the extension means for planning
When the relief was due to end in 2026, many small businesses were preparing for their first real corporate tax bill in 2027. The extension gives eligible businesses three more tax years at nil tax, provided revenue stays at or below AED 3 million. That is useful breathing room, but it is worth using well:
- Keep proper accounts anyway. When revenue grows past AED 3 million, or the relief ends after 2029, you will need accurate taxable income figures, and good records now make that switch painless.
- Watch your revenue each year. Growth is good, but crossing AED 3 million in a single period ends the relief for every later period, even if revenue falls again.
- Plan for 2030. Do not assume a further extension. Build the eventual tax cost into pricing and cash flow over the next few years.
Groups, related businesses and splitting
Each taxable person is tested on its own revenue, but the rules are designed to stop artificial arrangements. If one business is split across several companies mainly to keep each below AED 3 million, the FTA can treat the arrangement as abusive and deny the relief. Genuinely separate businesses with their own operations, staff and commercial reasons are a different matter. If you own several companies, document why each exists and how they deal with each other.
Transactions between related parties, such as a company paying its owner, a family member or a sister company, should still be on normal commercial terms. Electing the relief does not mean related-party pricing stops mattering, particularly if you later move to the standard rules.
Freelancers and sole traders
Individuals running a business or freelance activity become subject to corporate tax only once their business turnover exceeds AED 1 million in a calendar year. Once they are in scope, they can elect Small Business Relief under the same conditions as companies: revenue of AED 3 million or less in the current period and every previous one. They still need to register and file.
What to keep on file
Even with nil tax, keep the evidence that supports your election: financial statements or management accounts showing revenue, sales invoices, bank statements and the workings for each period's revenue figure. Corporate tax records must be kept for at least seven years. If the FTA ever asks whether your revenue really was below AED 3 million, these documents are your answer.
How to make the election in EmaraTax
- Log in to EmaraTax and open the corporate tax return for the tax period.
- Enter your revenue for the period, taken from your financial statements.
- Select the Small Business Relief election in the relevant section of the return and confirm the eligibility declarations.
- Complete the rest of the return as required; some sections are simplified when the relief is elected.
- Submit by the deadline, nine months after the end of the tax period, and keep a copy.
The election is made period by period. Electing in one year does not commit you for the next, and not electing in a loss year does not stop you electing later, as long as revenue has never exceeded AED 3 million.
A five-year view
Consider a consultancy with a 31 December year end. Its revenue was AED 1.8 million in 2024 and AED 2.3 million in 2025, and it expects AED 2.7 million in 2026. It can elect the relief for 2024, 2025 and 2026, and, under the extension, for 2027 to 2029 as long as revenue stays at or below AED 3 million in each year. If revenue reaches AED 3.1 million in 2028, the relief is lost for 2028 and every later year, and the standard 0% and 9% rates apply. Growing past the threshold is not a problem in itself; not planning for the tax that follows is.
Small Business Relief and other taxes
The relief only affects corporate tax. It does not change VAT: a business with taxable supplies above AED 375,000 still has to register for VAT, charge it and file VAT returns. It also does not affect customs duties, excise tax or other fees. Many small businesses confuse the two systems because both involve the number AED 375,000, but the VAT threshold is a turnover test and has nothing to do with corporate tax relief.
Questions to ask your accountant
- Has our revenue stayed at or below AED 3 million in every tax period so far?
- Do we have a tax loss this year that would be lost by electing?
- Are any related companies or arrangements likely to be questioned?
- What would our tax be under the standard rules, so we can plan for when the relief ends?
- Are our records good enough to support the revenue figure if the FTA asks?
A short conversation each year before the return is filed is usually enough to make the right election and avoid surprises later.
Common mistakes
- Believing SBR is automatic. It is a choice you must make on the return.
- Comparing AED 3 million with profit instead of revenue.
- Electing in a loss-making year and losing the loss carry-forward without checking.
- Relying on articles written before the extension, which say the relief ends in 2026.
- Assuming an electing business does not need to register or keep records.
Check before you act
Confirm the current text of Ministerial Decision No. 131 of 2026 and the conditions of Ministerial Decision No. 73 of 2023 with the Ministry of Finance and the Federal Tax Authority, or with a registered tax agent, before you file. Information checked October 2026.