UAE Small Business Relief Extended to 2029: MD 131 Explained

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Table of Contents

• What did Ministerial Decision No. 131 of 2026 change?
• Which tax periods are now covered?
• Who qualifies for Small Business Relief in the UAE?
• How much tax does the extension save?
• Should every eligible business elect the relief?
• How do you claim Small Business Relief?
• Can freelancers and sole establishments use the relief?
• What about free zone companies?
• What should business owners and finance teams do before 31 December 2026?
• Get your Small Business Relief election checked before you file
• Frequently asked questions

Last updated: 9 November 2026 | Reviewed by: M. A. Farahat, ACPA, CFE, CICA

Short answer: Small Business Relief no longer ends in 2026. Ministerial Decision No. 131 of 2026, announced by the UAE Ministry of Finance on 7 August 2026, extends the relief to tax periods ending on or before 31 December 2029. The AED 3,000,000 revenue threshold and the other conditions in Ministerial Decision No. 73 of 2023 have not changed, and you still have to register, file a corporate tax return and elect the relief in that return each year.

The businesses with the biggest gain from this change are not the ones with a December year end. If your financial year ends on 31 March, 30 June or 30 September, your current tax period ends in 2027, which put it outside the old 31 December 2026 cut-off. Under MD 131 that period qualifies again. If an adviser told you in early 2026 that you had already lost the relief, that advice is now out of date.

What did Ministerial Decision No. 131 of 2026 change?

MD 131 changes one date. Ministerial Decision No. 73 of 2023 set the AED 3 million revenue threshold for tax periods starting on or after 1 June 2023 and limited it to tax periods ending on or before 31 December 2026. MD 131 replaces that end date with 31 December 2029. The Ministry of Finance published the announcement on 7 August 2026.

Which tax periods are now covered?

Eligibility depends on when your tax period ends, not when it starts. The table shows the three extra tax periods MD 131 adds for each year end.

A company with a 31 March year end cannot claim the relief for the year ending 31 March 2030, because that period ends after 31 December 2029. The same applies to June and September year ends in 2030.

Who qualifies for Small Business Relief in the UAE?

According to the Federal Tax Authority, the relief is open to Resident Persons, which covers both companies and natural persons. To elect it for a tax period, your revenue must be AED 3,000,000 or less in that period and in every previous tax period. Revenue is measured under the accounting standards accepted in the UAE, so the test uses turnover, not profit. A company with AED 3.2 million of revenue and a loss is over the limit.

Two groups cannot elect the relief at all, regardless of revenue:

• Qualifying Free Zone Persons
• Members of a multinational enterprise group with consolidated group revenue above AED 3.15 billion

The previous-period test is strict. The FTA gives the case of a Sharjah business owner with revenue of AED 4,300,000 in the year ending 31 December 2025 and AED 1,900,000 in the year ending 31 December 2026. He cannot claim the relief for 2026, because his revenue crossed AED 3,000,000 in an earlier tax period. Once you exceed the threshold, the relief is closed to you for that period and every period after it, and MD 131 does not reopen it.

Splitting one business across two or more licences or entities to stay under AED 3,000,000 does not work either. Where the FTA finds that a business was artificially separated and the combined revenue exceeds the threshold, MD 73 treats it as an arrangement to obtain a tax advantage under the general anti-abuse rule in Article 50 of the Corporate Tax Law.

How much tax does the extension save?

A company that elects the relief is treated as having no taxable income for that tax period. Without the relief, the standard rates apply: 0% on taxable income up to AED 375,000 and 9% on the part above it.

Take a Dubai mainland trading company with a 31 December year end, revenue of AED 2,400,000 and taxable income of AED 600,000 in each of 2027, 2028 and 2029.

Each year, the tax without the relief is (AED 600,000 minus AED 375,000) x 9% = AED 20,250. Under the old rule the company would have paid that from 2027. Under MD 131 it pays nothing for three more years, as long as its revenue stays at or below AED 3,000,000 in every one of those years.

Where taxable income is AED 375,000 or less, the tax is zero with or without the relief. The benefit in that case is the simplified return and the waiver of transfer pricing documentation, not a tax saving.

Should every eligible business elect the relief?

No. Electing the relief has a cost that the headlines about the extension leave out. Under MD 73, tax losses and net interest expenditure incurred in a tax period where you elect the relief cannot be carried forward to later periods. Losses from periods where you did not elect the relief can be carried forward, but only into later periods where you also do not elect it.

That makes a loss year the worst year to elect. Your tax is already zero in a loss year, so the relief saves you nothing, and electing it wipes out a loss you could have used against profits once your revenue passes AED 3,000,000 or the relief ends after 2029. A start-up that expects losses in 2027 and fast growth in 2028 should model both routes before filing.

The FTA also confirms that a business electing the relief cannot use other exemptions, reliefs and deductions in that period. It does not need transfer pricing documentation, but its transactions with related parties must still follow the arm’s length principle.

How do you claim Small Business Relief?

The extension applies by itself. You do not need to submit any application to benefit from the later end date. Claiming the relief for each tax period works the same way it always has:

1. Register for corporate tax on EmaraTax if you have not already. Being eligible for the relief does not remove the registration requirement.
2. Keep your accounting records and revenue figures for every tax period, including the periods before you claimed the relief. The FTA uses them to check the AED 3,000,000 test.
3. File your corporate tax return within nine months of the end of the tax period and select the Small Business Relief election in that return. Electing businesses file a simplified return with less information.
4. Repeat the election in every tax period you want the relief. It does not roll over from one year to the next.

On 3 August 2026 the FTA reminded businesses that the relief does not remove the obligation to file a corporate tax return, and that a company with a year ending 31 December 2025 had to file and pay any tax by 30 September 2026. A company that qualifies for the relief but files late is still exposed to late filing penalties. Our page on corporate tax penalties in the UAE lists the amounts, and our corporate tax return filing deadline guide shows the due date for each year end.

Can freelancers and sole establishments use the relief?

Yes, if they are in scope. A natural person running a business or business activity in the UAE becomes subject to corporate tax when turnover from that business exceeds AED 1,000,000 in a calendar year, under Cabinet Decision No. 49 of 2023. Salary, personal investment income and income from personal real estate investment do not count towards that figure. A freelancer with business turnover between AED 1,000,000 and AED 3,000,000 must register and file, and can elect the relief through to the tax period ending 31 December 2029.

What about free zone companies?

A Qualifying Free Zone Person cannot elect the relief. It is taxed at 0% on qualifying income and 9% on taxable income that is not qualifying income. A free zone company that does not meet the qualifying conditions, or chooses to be taxed under the standard rules, is treated like any other resident company and can elect the relief if its revenue has stayed at or below AED 3,000,000 in every tax period.

If you were planning to restructure a small free zone company for 2027 to avoid paying 9%, that plan was built on the old end date. With three more years of relief available, compare the two positions on your own numbers before you change your structure.

What should business owners and finance teams do before 31 December 2026?

Start with your revenue history. Pull the revenue figure for every tax period since your first corporate tax period and confirm that none of them exceeded AED 3,000,000. One period above the line ends your eligibility for good.

Next, forecast the result for the current year. If you expect a loss, decide now whether you will elect the relief, since electing it will cancel that loss. If you expect revenue to pass AED 3,000,000 within the next three years, plan for the move to the standard 9% regime rather than counting on relief to 2029.

Finally, check your other filings. The relief only affects corporate tax. VAT registration, VAT return filing and excise obligations continue as before, so a business under AED 3,000,000 still needs to watch the VAT registration threshold. Our explainer on the difference between direct and indirect taxes covers how corporate tax and VAT sit side by side.

Get your Small Business Relief election checked before you file

Our FTA-registered tax agents review your revenue history from your first tax period, test whether electing the relief costs you a tax loss, and file your simplified corporate tax return on EmaraTax before the deadline. If your revenue is close to AED 3,000,000 or you run more than one licence, we also check the artificial separation rule before you claim. Find out more about our corporate tax return filing service, or book a consultation with our corporate tax team.

Frequently asked questions

Sources: Ministry of Finance, extension of Small Business Relief to 31 December 2029; Federal Tax Authority, Small Business Relief; Federal Tax Authority, simplified returns for Small Business Relief; Ministry of Finance, Ministerial Decision No. 73 of 2023; Federal Tax Authority, Corporate Tax.