The revenue threshold is unchanged at AED 3 million. The conditions set out in Ministerial Decision No. 73 of 2023 continue to apply. What has changed is the runway: three more years of certainty for businesses that were about to face their first full Corporate Tax computation.
That is genuinely good news. It is also a decision that arrives every year, and the default answer is not always yes.
What the relief actually does
If you elect Small Business Relief for a tax period, you are treated as having no taxable income for that period. You still register, you still file a return, and you still keep records. But you do not compute taxable income, you do not make adjustments, and you do not pay Corporate Tax.
The compliance saving is the point. A small trading company that elects the relief avoids the whole exercise of transfer pricing documentation, interest limitation, exempt income analysis and the adjustments that turn accounting profit into taxable income.
Who can elect it
Your revenue must not exceed AED 3 million in the tax period you are electing for, and it must not have exceeded AED 3 million in any previous tax period since Corporate Tax began applying to you. Revenue here means revenue, not profit. A company turning over AED 4 million and losing money does not qualify.
Once you cross AED 3 million in any period, the relief is gone permanently, not just for that year. That is the part most commentary omits, and it is the part that matters if you are growing.
Who cannot
Two exclusions:
- Qualifying Free Zone Persons. If you are claiming the 0% free zone regime on qualifying income, you cannot also take Small Business Relief. You choose one.
- Members of a Multinational Enterprise Group, meaning a group with consolidated revenue above AED 3.15 billion, as defined in Cabinet Decision No. 44 of 2020. A small UAE subsidiary of a very large parent does not qualify, however small the subsidiary is.
There is also an anti-abuse point worth stating plainly. Splitting one business across several entities so that each sits under AED 3 million is exactly the arrangement the general anti-abuse rule in Article 50 of the Corporate Tax Law exists to catch. If the only commercial reason for the structure is the threshold, do not do it.
Why the answer is not automatically yes
Electing the relief costs you something. In a period where you elect, you cannot carry forward tax losses arising in that period, and you cannot carry forward disallowed net interest expenditure from it. Losses from periods where you did not elect can still be carried forward and used in later periods where you again do not elect.
That trade-off matters for one specific kind of business: the one that is loss-making now and expects to be profitable soon.
A worked example
A company with revenue of AED 1.8 million makes a loss of AED 400,000 in its 2026 tax period, and expects taxable income of AED 900,000 in 2028 once it is established.
No tax to pay in 2026, which was already the case with a loss. The AED 400,000 loss is gone.
In 2028, tax is charged on AED 900,000 less the AED 375,000 band, at 9%.
Also no tax in 2026, because there is a loss. The AED 400,000 carries forward.
In 2028, taxable income is AED 500,000, less the band, at 9%.
Same relief, same company, a difference of AED 36,000. The cost of electing in the wrong year is not theoretical.
The reverse case is just as real. A consistently profitable business under AED 3 million with no losses to preserve should almost certainly elect, every year, and take the compliance saving.
What to do before your next return
- 1Check your revenue against the threshold for every period, not just this one. The test is cumulative and one breach is permanent.
- 2Decide the election period by period. It is not a one-time choice you make and forget. It is made in each return.
- 3Model it if you have losses. If you are loss-making now and expect profit within the next three years, work the arithmetic above with your own numbers before you tick the box.
- 4Do not stop keeping records. Electing the relief does not remove your obligation to register, to file, or to keep books that support the revenue figure you claimed the relief on. If the FTA asks how you knew you were under AED 3 million, the answer needs to be a ledger.
- 5If you are in a free zone, do the comparison properly. The 0% qualifying income regime and Small Business Relief are alternatives, and which one wins depends on your income mix rather than on which sounds better.
The short version
The extension buys most small UAE businesses three more years of a much simpler Corporate Tax position. Take it, in most cases. But make it a decision each year rather than a habit, and if you are carrying losses into a year you expect to be profitable, do the sum first.
If you want that checked against your own numbers, our free 30-minute compliance check covers it.
Book the compliance checkStated as at 8 September 2026 under Federal Decree-Law No. 47 of 2022, Ministerial Decision No. 73 of 2023 and Ministerial Decision No. 131 of 2026. This is general information, not advice on your circumstances, and requires review by a licensed tax agent before you rely on it.