UAE Small Business Relief and the 31 December 2026 sunset
Small Business Relief is the reason a large number of UAE companies have paid no corporate tax since the regime began. It is also, on current law, about to end.
The relief is available for tax periods ending on or before 31 December 2026. Unless it is extended, a calendar-year business that has been electing it every year moves onto the ordinary computation from 1 January 2027. This guide covers who qualifies, how to elect, what the sunset actually means in cash terms, and what to do in the months before it lands.
Who qualifies
| Test | Requirement |
|---|---|
| Residence | Must be a UAE resident person — a UAE-incorporated entity, or a natural person conducting business in the UAE |
| Revenue, this period | AED 3,000,000 or less |
| Revenue, every previous period | AED 3,000,000 or less in each one |
| Free zone status | A Qualifying Free Zone Person cannot elect the relief |
| Group membership | A member of a multinational group above the global revenue threshold cannot elect |
| Measured on | Revenue — gross, not profit |
What it is worth
The relief sits in Article 21 of Federal Decree-Law No. 47 of 2022, which lets the Minister set a revenue ceiling below which a resident person is treated as having derived no taxable income. Ministerial Decision No. 73 of 2023 fixed that ceiling at AED 3,000,000 and confined it to tax periods beginning on or after 1 June 2023 and ending on or before 31 December 2026. Both halves matter: Article 21 is the power, Ministerial Decision No. 73 is the number and the expiry date, and it is the Ministerial Decision that will have to be reissued if the relief is ever extended.
The relief treats taxable income as nil, so the saving is whatever tax would otherwise have been due.
| Revenue | Taxable income | Tax without relief | Tax with relief |
|---|---|---|---|
| AED 900,000 | AED 260,000 | AED 0 — below the band anyway | AED 0 |
| AED 1,500,000 | AED 480,000 | AED 9,450 | AED 0 |
| AED 2,200,000 | AED 700,000 | AED 29,250 | AED 0 |
| AED 2,900,000 | AED 1,050,000 | AED 60,750 | AED 0 |
| AED 3,100,000 | AED 1,150,000 | AED 69,750 | Not available — revenue over AED 3m |
Note the first row. A business with modest margins may already be under the AED 375,000 band, in which case the relief changes nothing about the tax and only simplifies the computation. The relief is most valuable to businesses with high margins on revenue under AED 3 million.
The sunset, in cash terms
For a calendar-year business, the last period covered is the year ending 31 December 2026. The first uncovered period is the year ending 31 December 2027, with its return and payment due 30 September 2028.
The behavioural risk is larger than the arithmetic. Businesses that have elected relief every year have had no reason to build a rigorous corporate tax process — no add-back discipline, no arm's-length documentation, sometimes no audited financials. The first real computation is not the moment to discover that.
How to elect
The relief is not automatic and it is not applied for separately. It is elected on the corporate tax return for the period concerned.
- Register first. There is no route to the relief that avoids registration and a TRN.
- Confirm eligibility — resident person, revenue at or below AED 3 million in this and every prior period, not a QFZP, not in a large multinational group.
- Log in to EmaraTax and open the return for the period that has just ended.
- Make the election in the return for that period.
- File within nine months of the period end.
- Keep the revenue evidence. The burden of demonstrating eligibility sits with you, and records are kept for seven years.
Chartered Advisory models the first post-relief computation on your actual numbers, gets the bookkeeping onto an IFRS footing, and prepares the election and the return.
Avail our UAE corporate tax servicesThe mistakes that cost the most
- Treating the relief as automatic. It is an election on a filed return; no return, no relief.
- Skipping registration because the relief means no tax — and collecting the AED 10,000 late-registration penalty.
- Testing profit instead of revenue. The AED 3 million cap is measured on gross revenue.
- Forgetting the every-previous-period condition and assuming a return under the cap restores eligibility.
- Assuming a free zone entity can elect. A Qualifying Free Zone Person cannot.
- Letting the bookkeeping stay informal because the relief made it feel unnecessary, then meeting the first real computation unprepared.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
Questions people also ask
When exactly does Small Business Relief end?
On current law it is available for tax periods ending on or before 31 December 2026. For a calendar-year business that makes the year to 31 December 2026 the last covered period, with the year to 31 December 2027 computed in the ordinary way and its return due 30 September 2028. Any extension would have to be announced, so plan on the sunset rather than against it.
Is the AED 3 million cap measured on revenue or profit?
Revenue — gross, before any costs. A business turning over AED 3.4 million on thin margins is outside the relief even if its profit is small, while a consultancy billing AED 2.8 million with very low costs is inside it and saves the most. The test tracks the top line, not the bottom.
I exceeded AED 3 million one year but I am back below it. Can I elect again?
No. The condition requires revenue at or below AED 3 million in the current period and in every previous period, so exceeding it once closes the relief permanently. This is why revenue sitting close to the threshold is worth watching deliberately rather than discovering after the year has closed.
Can a free zone company elect the relief?
A Qualifying Free Zone Person cannot. Nor can a member of a multinational group above the global revenue threshold. A free zone entity that is not claiming QFZP status and is taxed as an ordinary resident person is in a different position and should take advice on its specific facts.
If I elect the relief, do I still have to file a return?
Yes. The relief removes the tax, not the compliance. You register, you file within nine months of the period end, you keep records for seven years, and the late-filing and late-payment penalties apply to you in full. The election itself is made on that return.
Send the tax year and the transaction or filing involved, and we will tell you what is actually required.
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