Small Business Relief: the AED 3 million test

• Revenue threshold: AED 3,000,000 for the current tax period and each previous tax period. (source, as of 20 October 2026)
• The relief applies to tax periods starting on or after 1 June 2023 and ending on or before 31 December 2029. (source, as of 20 October 2026)
• Not available to Qualifying Free Zone Persons or to members of multinational groups with consolidated revenue above AED 3.15 billion. (source, as of 20 October 2026)
• Eligible businesses must still register, elect the relief in their Corporate Tax return and file within nine months of the period end. (source, as of 20 October 2026)
• Tax losses and net interest expenditure from a year in which the relief is elected can't be carried forward. (source, as of 20 October 2026)
• For a Tax Group, the AED 3 million threshold applies to the group as a whole. (source, as of 20 October 2026)

UAE Corporate Tax is charged at 9% on taxable income above AED 375,000. Small Business Relief lets a qualifying business elect to be treated as having no taxable income for a tax period. It owes no Corporate Tax for that period, whatever its profit.

It isn’t automatic. You choose it, period by period, in your Corporate Tax return.

To elect Small Business Relief for a tax period, all of these must be true:

1. You are a Resident Person for Corporate Tax. That can be a company (a juridical person) or an individual running a business (a natural person).
2. Your revenue is AED 3,000,000 or less in that tax period.
3. Your revenue was AED 3,000,000 or less in every previous tax period. One year over the line rules out every later year.
4. The tax period ends on or before 31 December 2029. The relief covers periods starting on or after 1 June 2023.
5. You are not excluded (see below).

Revenue is not profit. It is the gross income for the tax period, worked out under the accounting standards you use. It includes all your sales and other gross income, such as the proceeds from selling an asset, and it should reflect arm’s length prices. For a company, all its business activities count. For an individual, only the income from their business activities counts.

As first issued, Ministerial Decision No. 73 of 2023 applied the relief to tax periods ending on or before 31 December 2026. Ministerial Decision No. 131 of 2026, dated 29 July 2026, replaced that end date with 31 December 2029. The threshold stays at AED 3 million. The decision took effect the day after it was published.

So a business with a calendar financial year can, if it stays eligible, elect the relief for 2026, 2027, 2028 and 2029.

• Qualifying Free Zone Persons. A free zone company that is not a Qualifying Free Zone Person can elect if it meets the other conditions.
• Members of a multinational enterprise group with consolidated group revenue of more than AED 3.15 billion.

The FTA gives this example. Mr Y runs a business in Sharjah and is a UAE Resident Person. His tax period ends on 31 December each year.

• Year ending 31 December 2025: revenue of AED 4,300,000.
• Year ending 31 December 2026: revenue of AED 1,900,000.

Mr Y can’t elect Small Business Relief for 2026. His revenue is below the threshold that year, but it went over AED 3 million in an earlier tax period.

Tax Groups. The FTA’s guide says a Tax Group can elect the relief if the group’s revenue is AED 3 million or less. The threshold applies to the group as a whole, however many companies are in it.

Splitting a business. Suppose the FTA finds that a business was artificially separated into several persons, and the combined revenue is over AED 3 million in any tax period. If those persons elected the relief, the election is treated as an arrangement to get a tax advantage under Article 50 of the Corporate Tax Law, the anti-abuse rule. The FTA looks at:

• whether there was a valid commercial reason for the arrangement;
• whether the persons carry on substantially the same business, taking account of their financial, economic and organisational links.

When you elect, according to the FTA and the Ministerial Decision:

• You are treated as having no taxable income for the period.
• You don’t need transfer pricing documentation, but you must still follow the arm’s length principle.
• The FTA’s guide notes that businesses at this size can prepare financial statements on the cash basis.
• Other exemptions, reliefs and deductions aren’t available for that period.
• Tax losses from that period can’t be carried forward. Losses from earlier periods in which you didn’t elect can still be used later, in periods in which you don’t elect.
• Net interest expenditure from that period can’t be carried forward either, on the same terms.

If you have large start-up losses you expect to use against future profits, talk to your adviser before electing.

Small Business Relief is not an exemption from the system. On 3 August 2026 the FTA stressed that businesses eligible for the relief must still:

• register for Corporate Tax;
• elect the relief in their Corporate Tax return. It isn’t claimed any other way;
• file the return, a simplified one, and pay any tax due within nine months of the end of the tax period;
• keep records that let the FTA verify their revenue, taxable income and eligibility.

For a financial year ending 31 December 2026, that means filing by 30 September 2027. Missing it can bring late-filing penalties even though no tax is due. Our Corporate Tax return guide and registration guide cover both steps.

The relief turns on one number for each tax period, so keep the evidence behind it:

• financial statements for the period, showing revenue;
• the sales invoices and credit notes that make up that revenue;
• bank statements showing the receipts;
• VAT returns for the same months, if you are VAT-registered, which should reconcile to your revenue;
• the same records for every earlier tax period, because the test looks back.

Yako builds your books from the bank statements you upload (PDF, CSV or Excel; there’s no direct bank feed) and the invoices you issue. From those books it produces your revenue for each financial year, with the transactions behind it.

You can elect Small Business Relief for a financial year in Yako’s Tax settings:

• Yako checks the revenue in your books against AED 3 million.
• While the election stands, it shows taxable income as nil.
• For anything the books can’t show, such as years before you used Yako, you confirm the figures when you elect.

Yako doesn’t file. You make the election in your Corporate Tax return on EmaraTax yourself, or your tax adviser does. To have your adviser check the figures first, give them time-limited access.

See how bank statements become financial statements and how Yako handles UAE VAT and Corporate Tax.

What is Small Business Relief in UAE Corporate Tax?

It is a relief that a resident business can elect when its revenue is AED 3 million or less in the current tax period and in every previous tax period. If it elects, it is treated as having no taxable income for that period, so no Corporate Tax is due.

Has Small Business Relief been extended?

Yes. Ministerial Decision No. 131 of 2026, dated 29 July 2026, extends the AED 3 million threshold to tax periods that end on or before 31 December 2029. Before that change, the relief covered periods ending on or before 31 December 2026.

Is the AED 3 million limit based on revenue or profit?

Revenue. It is the gross income for the tax period, worked out under the accounting standards you use, not your profit. A business with low profit but revenue above AED 3 million does not qualify.

Do I still need to file a Corporate Tax return if I claim Small Business Relief?

Yes. You must register for Corporate Tax, elect the relief in your Corporate Tax return, file that return within nine months of the end of the tax period and keep records that support your revenue. The FTA confirmed in August 2026 that eligible businesses file a simplified return.

Can a free zone company claim Small Business Relief?

A Qualifying Free Zone Person cannot elect Small Business Relief. A free zone company that is not a Qualifying Free Zone Person can, if it meets the other conditions.

What happens if my revenue went over AED 3 million in an earlier year?

You can no longer elect the relief. The test looks at the current tax period and all previous tax periods, so one year above AED 3 million rules it out for later years, even if revenue falls back below the threshold.

What do I give up by electing Small Business Relief?

Tax losses and net interest expenditure from a year in which you elect the relief can't be carried forward. Other exemptions, reliefs and deductions aren't available for that year. Losses from earlier years in which you did not elect can still be used in later years in which you don't elect.

Can I split my business into several companies to stay under AED 3 million?

Not safely. If the FTA finds a business was artificially separated and the combined revenue exceeds AED 3 million, electing the relief is treated as an arrangement to obtain a tax advantage under the Corporate Tax anti-abuse rule.

• FTA: Small Business Relief
• Ministerial Decision No. 73 of 2023 on Small Business Relief
• Ministerial Decision No. 131 of 2026 amending Ministerial Decision No. 73 of 2023
• FTA Corporate Tax Guide: Small Business Relief (CTGSBR1)
• FTA news, 3 August 2026: Small Business Relief claimants must file simplified returns on time
• FTA Corporate Tax Returns Guide

Last reviewed 20 October 2026 against the FTA and Ministry of Finance sources listed on this page.

This guide is general information, not tax advice. For your own position, speak to a registered tax agent or your accountant.