Tax Planning
UAE Small Business Relief Extended: What Startups Need to Know
The UAE’s Ministerial Decision No. 131 extends Small Business Relief for corporate tax until end-2029—here’s how qualifying companies can plan and benefit.
By NomadicTax Research Team • 5-8 min read • August 21, 2026
## Overview
In early August 2026, the UAE Ministry of Finance issued **Ministerial Decision No. 131 of 2026**, which amends provisions of the Small Business Relief under the Corporate Tax Law. The key change is an **extension**: entities with annual revenue not exceeding AED 3 million who qualify for Small Business Relief (SBR) can now benefit until **31 December 2029**, for tax periods ending on or before that date. ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-announces-extension-of-small-business-relief-for-corporate-tax-purposes-until-31-december-2029/?utm_source=openai))
## Who Qualifies
- Taxable Persons (resident entities) with **annual revenue ≤ AED 3 million** per period. ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-announces-extension-of-small-business-relief-for-corporate-tax-purposes-until-31-december-2029/?utm_source=openai))
- The threshold applies for tax periods beginning on/after **1 June 2023** up to those ending on or before **31 December 2029**. ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-announces-extension-of-small-business-relief-for-corporate-tax-purposes-until-31-december-2029/?utm_source=openai))
- Exclusions: **Free Zone Persons** (qualifying free zone entities) and members of **Multinational Enterprise (MNE) Groups** (as defined in existing legislation) are not eligible. ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-announces-extension-of-small-business-relief-for-corporate-tax-purposes-until-31-december-2029/?utm_source=openai))
## What Relief Covers
Small Business Relief simplifies compliance by treating the business as though it had **no taxable income** if revenue is below the threshold. It also affects how tax losses and disallowed interest are **carried forward** when entities elect SBR. ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-issues-decision-on-small-business-relief-for-corporate-tax-purposes/?utm_source=openai))
## Actionable Planning Tips for Small Businesses
- **Assess whether to elect into SBR**: For periods where revenue ≤ AED 3 million, consider electing the relief—trade-off includes inability to use some deductions or tax credits during relief periods.
- **Plan for 2029 end-game**: Because the relief ends for periods ending **after** 31 December 2029, businesses nearing that date should model what tax liability and compliance will look like once SBR is no longer available.
- **Maintain clean financial records**: Especially revenue, expenses, losses, and interest—this helps ensure eligibility and smooth transition back into full corporate tax.
- **Watch for artificial separation of activities**: If separate legal entities are used to avoid crossing the AED 3 million threshold collectively, MoF may apply general anti-abuse rules. ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-issues-decision-on-small-business-relief-for-corporate-tax-purposes/?utm_source=openai))
## Example Scenarios
| Scenario | Annual Revenue | Eligibility under SBR until 2029? |
|---|---|---|
| Sole trader business, AED 2.5 million/year revenue | AED 2.5 million | Yes: qualifies, relief extended to 2029 |
| Free zone trading company with AED 2 million/year | AED 2 million | No: free zone entities are excluded |
| Group of sister companies each with AED 2 million, combined AED 6 million | AED 6 million combined | Possibly excluded if considered as MNE or artificially separated—must analyze group affiliation |
## Implications
- **High impact** for startups, small enterprises and family businesses still under the threshold: lower compliance and potentially zero corporate tax liability for multiple years.
- **Medium impact** for enforcement: tax authority will need to monitor revenue streams and group structures to prevent misuse.
- Helps retain business confidence amid recent tax system changes in the UAE.
## Summary
The U.A.E.’s extension of Small Business Relief through 31 December 2029 provides certainty to smaller taxpayers who have been navigating a burgeoning corporate tax regime since 2023. Eligible entities should evaluate whether to elect relief, ensure they stay compliant with revenue and group rules, and plan ahead for when relief is no longer available.