UAE Small Business Relief: the AED 3,000,000 test is one-way, the election can cost more than it saves, and it now runs to 2029

Small Business Relief is the one part of UAE Corporate Tax that looks like a pure giveaway: an eligible Resident Person with Revenue at or below AED 3,000,000 elects to be treated as having no Taxable Income for the Tax Period, pays no Corporate Tax, and files a simplified return. It is set by Article 21 of Federal Decree-Law No. 47 of 2022, and its conditions by Ministerial Decision No. 73 of 2023.

It is not a pure giveaway, and three features decide whether a particular company should take it. Two of them are not in the headline, and the third is newer than most of what is written about the relief online. This page is not tax advice; the Decree-Law, the Ministerial Decisions and the FTA control.

1. The AED 3,000,000 test is cumulative, and losing it is permanent

The threshold is not a yearly line you can cross and come back under. Revenue has to be at or below AED 3,000,000 for the relevant Tax Period and all previous Tax Periods (Article 2(1) of Ministerial Decision No. 73 of 2023, measured from the first Tax Period commencing on or after 1 June 2023). Once Revenue exceeds AED 3,000,000 in any Tax Period, the person can no longer elect for the relief, and Article 2(3) says so explicitly: not even if Revenue is equal to or falls below the threshold in subsequent Tax Periods.

So a company that touched AED 3.2m in one good year and settled back to AED 2.4m afterwards is outside the relief for the rest of its life. That is a planning fact with a date on it, because the test runs from the first period beginning on or after 1 June 2023 and only grows.

Two more things the threshold is not:

It is Revenue, not profit. Revenue is defined in the Decree-Law as the gross amount of income derived during a Tax Period, determined under the accounting standards accepted in the UAE (Article 2(4) of the Decision) and on the arm's length principle. It includes all sales and other gross income, such as the proceeds of selling an asset. The FTA's own guide states the position plainly: the amount of profit a business makes has no impact on its eligibility. A business with AED 4m of Revenue and a loss is ineligible; a business with AED 2m of Revenue and a large profit is eligible. It is measured per person, across every activity. For a juridical person, the income from all Business Activities it undertakes is counted together. Splitting a business to get under the line is specifically addressed: where a Person artificially separates a business and the FTA determines that artificial separation has taken place, the relief is not available and the unpaid tax has to be repaid (section 3.1.3 of the FTA's Small Business Relief guide, CTGSBR1).

2. Who cannot elect at all, whatever the Revenue

Two categories are excluded by the Decision regardless of how small they are:

• A constituent company of a Multinational Enterprise Group (Article 3(1)). An MNE here means a group operating in more than one country with total consolidated group revenue above AED 3.15 billion that is required to file a Country-by-Country Report under Cabinet Resolution No. 44 of 2020. A UAE subsidiary with AED 500,000 of Revenue inside such a group still cannot elect.
• A Qualifying Free Zone Person (Article 3(2)), because a QFZP already has a 0% rate on its Qualifying Income. The free zone test that decides QFZP status is its own question, and the de minimis rule sits in Ministerial Decision No. 265 of 2023, which replaced No. 139 of 2023 with effect from 1 June 2023, and is worked through in the QFZP de minimis test.

3. Electing in a loss year throws the loss away

This is the part that turns the relief into a decision rather than a default. Electing means being treated as having no Taxable Income, and a Tax Loss is negative Taxable Income. The FTA's guide works the case directly (Example 11): a Resident Person with AED 2,500,000 of Revenue and AED 3,500,000 of costs has a Tax Loss of AED 1,000,000. If it elects for Small Business Relief, the Tax Loss is not declared to the FTA and cannot be carried forward to future Tax Periods. If it does not elect, it declares the loss and carries it forward, at the price of an ordinary return and an ordinary computation.

What the loss is worth is arithmetic the business can do before it chooses. A Tax Loss carried forward offsets the Taxable Income of subsequent Tax Periods under Article 37(1) of the Decree-Law, capped at 75% of that period's Taxable Income before loss relief under Article 37(2). Against the 9% rate, AED 1,000,000 of carried-forward loss is up to AED 90,000 of Corporate Tax that is never paid. The relief it would be given up for saves nothing in a loss year, because a loss year has no tax to save. The same logic applies to disallowed Net Interest Expenditure, which an electing person likewise does not carry forward.

The decision therefore reads: elect in profitable years inside the threshold; think hard before electing in a loss year or a year with a large interest disallowance. The relief is an election made period by period, not a status, so a company can take it in one year and not the next.

4. Nil tax is not nil filing, and the return is still what carries the penalty

The election is made in the Tax Return itself. The return is still due within nine months of the end of the Tax Period under Article 53(1) of the Decree-Law, so a 31 December 2025 Tax Period had to be filed by 30 September 2026 whether the relief was elected or not. Registration is a separate obligation with its own AED 10,000 penalty for lateness (Cabinet Decision No. 10 of 2024, amending No. 75 of 2023). A company with no tax to pay and no return filed owes nothing for late payment and the full AED 500 a month for the late return.

5. The relief now reaches 31 December 2029

Ministerial Decision No. 73 of 2023 limited the relief to Tax Periods beginning on or after 1 June 2023 and ending on or before 31 December 2026, and that is still the date in most of what is published about it, including the FTA guide extract this page cites for everything else. The Ministry of Finance announced on 7 August 2026 that Ministerial Decision No. 131 of 2026 extends the relief to Tax Periods ending on or before 31 December 2029. For a calendar-year business that is three more elections, not none, and it changes the answer to "is it worth restructuring to stay under AED 3m" from a one-year question to a four-year one.

Where the test is done for you

The free UAE Corporate Tax calculator runs the Article 20(2) computation for one Tax Period in the browser, including the Small Business Relief switch, so the liability the election is weighed against is the first figure you see. The UAE Corporate Tax Computation Workbook ($29, /uae-corporate-tax/) applies the full eligibility test as a formula, Resident, Revenue at or below AED 3,000,000 in this and every earlier period, not an MNE constituent, not a QFZP, alongside the QFZP de minimis test, the carry-forwards and the filing date, with the article or decision cited on every line. Team and consultancy licences are $119 and $249. The computation order is set out in how UAE Corporate Tax is computed, the dates in the return deadline guide, and the cost of missing one in late return vs late payment.

Sources

• Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, Articles 21 (Small Business Relief), 37(1) and 37(2) (Tax Loss Relief and the 75% cap) and 53(1) (filing date): mof.gov.ae.
• Ministerial Decision No. 73 of 2023 on Small Business Relief: Article 2(1) and the 1 June 2023 commencement, Article 2(3) on losing the threshold permanently, Article 2(4) on measuring Revenue, Article 3(1) on MNE constituents, Article 3(2) on Qualifying Free Zone Persons.
• FTA Corporate Tax Guide, Small Business Relief, CTGSBR1: the Revenue and profit distinction, section 3.1.3 on artificial separation, and Example 11 on the Tax Loss that is not carried forward. Read from the FTA PDF held in this repository's product sources.
• Ministry of Finance announcement of 7 August 2026 on Ministerial Decision No. 131 of 2026, extending the relief to Tax Periods ending on or before 31 December 2029.
• Ministerial Decision No. 265 of 2023 (which replaced No. 139 of 2023 with effect from 1 June 2023): the free zone de minimis test. Cabinet Resolution No. 44 of 2020: Country-by-Country Reporting. Cabinet Decision No. 10 of 2024 amending No. 75 of 2023: the AED 10,000 late registration penalty.

Last checked against the sources on 5 October 2026.