On 7 August 2026 the Ministry of Finance announced Ministerial Decision No. 131 of 2026, which extends the period in which Small Business Relief can be claimed to tax periods ending on or before 31 December 2029. The AED 3 million revenue threshold set by Ministerial Decision No. 73 of 2023 continues to apply unchanged. For most UAE SMEs this removes a tax bill they had been told was arriving next year.
What the decision actually does
One thing, precisely: it moves the end date. The relief was previously available for tax periods ending on or before 31 December 2026. It is now available for tax periods ending on or before 31 December 2029.
Nothing else moved. The threshold is still AED 3 million of revenue. The conditions are still the conditions. It is still an election, still made in a return, and still lost permanently once you breach the threshold.
So a company on a calendar financial year that expected the period ending 31 December 2026 to be its last relief period now has the periods ending 31 December 2027, 2028 and 2029 as well, provided it stays eligible. A company with a 30 June year end gets the periods ending 30 June 2027, 2028 and 2029 — its period ending 30 June 2030 falls outside, because it ends after 31 December 2029.
Three things that did not change, and still cost people money
The extension is good news. It is not a reason to go back to not thinking about this, and the reasons are the same three that caught companies out before.
The threshold is a cliff, not a slope. The AED 3 million test is not a band. Exceed it and the relief is lost entirely for that period — and it does not come back in later periods even if revenue falls again. A company at AED 2.95 million pays nothing. The same company at AED 3.05 million pays tax on its full taxable income for that period, and on every period after it. The AED 100,000 of extra revenue can cost more than it brought in, permanently. Three extra years of relief means three more years in which you can trip over this line.
Revenue and taxable income are different numbers. The relief is tested on revenue. The tax, when it eventually applies, is charged on taxable income. A consultancy with AED 2.8 million of revenue and low costs may have far more taxable income than a trading company with the same revenue and thin margins. Companies that have never done the computation do not know which of those they are, and the first time they find out should not be the period after they breach the threshold.
You still have to file. Small Business Relief is an election made in the tax return, not an exemption from filing or from registration. The FTA has been explicit that persons eligible for the relief must still submit their return within the legal deadline. Companies that read "no taxable income" as "nothing to do" are the ones carrying a late registration or late filing penalty they have not noticed yet — see the registration penalty guide.
Who this helps most
In rough order.
High-margin service businesses under AED 3 million. Consultancies, agencies, professional practices — revenue under the threshold, costs mostly salaries and a small office, taxable income that is a large proportion of revenue. These were the companies facing the sharpest step up from zero. They now have three more years at zero.
Companies that had already budgeted the bill. If you provisioned for corporate tax from the period ending 31 December 2027, that provision can be released. Worth doing deliberately rather than discovering it at year end, particularly if it was priced into your client rates.
Start-ups and newly incorporated companies. A company incorporating now gets a meaningfully longer runway at zero tax than it would have had a month ago, which changes the arithmetic on early-stage hiring and reinvestment.
Least affected: companies already above AED 3 million, and free zone companies validly claiming 0% as a Qualifying Free Zone Person — though the latter should be testing that claim rather than assuming it, as we set out in the QFZP guide.
What to do with three extra years
The honest answer is that an extension is planning time, not a reason to stop. The work that was urgent for the 2027 period is now merely important, and it is the same work.
- Know where you sit against AED 3 million, monthly. This is the one thing that genuinely matters now. The cliff is unforgiving and you cannot manage your position if you find out about it in arrears. Current bookkeeping, not a year-end reconstruction.
- Do a real computation once, even while you owe nothing. Accounting profit, then every adjustment, arriving at taxable income. Doing this while the answer is academic is far cheaper than doing it for the first time in the period you breach the threshold.
- Identify non-deductible expenditure now. Entertainment beyond the permitted proportion, fines, certain donations, personal expenditure running through the company. This is where the surprise usually lives, and it does not get smaller by being deferred.
- Review related-party arrangements. Rent paid to a shareholder's property company, salaries to family members, a director's loan bearing interest. Transfer pricing applies regardless of whether you are claiming the relief, and three years of undocumented arrangements is harder to defend than one — see the errors we see most.
- Do not restructure to stay under the threshold. Splitting a business across entities to keep each under AED 3 million is a position that has to withstand scrutiny, and the General Anti-Abuse Rule exists for exactly this. Three more years of relief is not worth a permanent structure built to chase it.
One planning point worth raising
An extension that has happened once can happen again, and it can also not happen. The relief has now been extended from 2026 to 2029; it was originally legislated to run from June 2023. Reading that as a pattern and assuming 2029 will move too is the same error in the other direction — plan for the regime as it stands, and treat a further extension as a good surprise rather than a line in a forecast.
The practical version: if your growth plan takes you through AED 3 million before 2029 anyway, the extension changes your timing but not your destination, and the preparation work is unchanged. If it does not, you have three years in which the main job is simply to stay eligible and keep records good enough to prove it.
Not sure whether you are still eligible — or how close to the line you are?
We will check your revenue position against the threshold, confirm the election is correctly made in your return, and tell you what the first non-relief period would cost if you crossed it.
Frequently asked questions
Tax periods ending on or before 31 December 2029, following Ministerial Decision No. 131 of 2026. The previous cut-off was 31 December 2026. For a company with a calendar financial year, the period ending 31 December 2029 is now the last one in which the relief can be claimed; for a company with a 30 June year end it is the period ending 30 June 2029, because the period ending 30 June 2030 ends after the cut-off. From the following period the standard 0% and 9% rates apply regardless of revenue.
Revenue of AED 3 million or less in the tax period, and in all previous relevant tax periods. Where revenue exceeds the threshold in any period, eligibility is lost for that period and does not return in later ones even if revenue falls back below.
You move to the standard regime: 0% on taxable income up to AED 375,000 and 9% above that. A company with AED 600,000 of taxable income that paid nothing under the relief would pay 9% on the amount above AED 375,000 — AED 20,250 — so the change is real but it is not 9% of everything. This now applies from the period after the one ending 31 December 2029, or earlier if you breach the AED 3 million revenue threshold.
Yes. Small Business Relief is an election made in the tax return, not an exemption from filing. Companies that treated the relief as meaning they had nothing to do are the ones most likely to have a registration or filing failure behind them.
Yes. Two things in particular. You still have to file a return and make the election in it — the relief is not an exemption from filing. And you still have to track revenue against AED 3 million monthly, because breaching it loses the relief permanently, not just for that period. Establishing your real taxable income position while you owe nothing is also far cheaper than doing it for the first time in the period you cross the line.
