A KGRN Chartered Accountants Advisory Update on UAE Corporate Tax

The UAE has extended the availability of Small Business Relief under the Corporate Tax regime to eligible Tax Periods ending on or before 31 December 2029.

The AED 3 million Revenue threshold remains unchanged. To qualify, a Resident Person must have Revenue of AED 3 million or less in the relevant Tax Period and all previous Tax Periods, subject to the applicable conditions.

The extension gives eligible small businesses and start-ups a longer period to benefit from simplified Corporate Tax treatment, while continuing to meet their registration, filing and other applicable compliance obligations.

What Has Changed 

On 7 August 2026, the UAE Ministry of Finance announced Ministerial Decision No. 131, extending the period during which eligible businesses may claim Small Business Relief.

Previously, Small Business Relief was available for eligible Tax Periods ending on or before 31 December 2026. The relief has now been extended to eligible Tax Periods ending on or before 31 December 2029.

The underlying Revenue threshold remains unchanged at AED 3 million.

Importantly, the threshold is not assessed independently for each year. To remain eligible, Revenue must not exceed AED 3 million in the relevant Tax Period or any previous Tax Period.

Understanding Small Business Relief: A Quick Recap

Small Business Relief was introduced under Ministerial Decision No. 73 of 2023, pursuant to Article 21 of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.

The relief is designed to reduce the Corporate Tax compliance burden on eligible smaller businesses.

Where a valid election is made, the eligible Taxable Person is treated as having derived no Taxable Income for that Tax Period. As a result, the business is not required to calculate Taxable Income or pay Corporate Tax for that Tax Period, although other applicable Corporate Tax obligations continue to apply.

Criteria	Requirement
Revenue threshold	Revenue must be AED 3 million or less in the relevant Tax Period and all previous Tax Periods
Applicable period	Tax Periods beginning on or after 1 June 2023 and eligible Tax Periods ending on or before 31 December 2029
Revenue calculation	Revenue is determined in accordance with applicable accounting standards accepted in the UAE
Eligible Persons	Resident Persons for Corporate Tax purposes, subject to the applicable conditions
Excluded Persons	Qualifying Free Zone Persons and members of an MNE Group with consolidated group Revenue of more than AED 3.15 billion
Election requirement	Small Business Relief must be elected for each eligible Tax Period
Tax losses and interest expenditure	Tax Losses and disallowed Net Interest Expenditure from prior periods where Small Business Relief was not elected may continue to be carried forward, subject to the Corporate Tax rules

These conditions are reflected in the FTA’s Small Business Relief guidance.

What Happens If Revenue Exceeds AED 3 Million?

This is one of the most important aspects of the relief.

If a Taxable Person’s Revenue exceeds AED 3 million in any relevant Tax Period, the person will no longer qualify for Small Business Relief in subsequent periods, even if Revenue later falls below AED 3 million.

For example, if a business records Revenue of AED 4 million in one Tax Period and AED 2.5 million in the following period, it cannot claim Small Business Relief in the later period because the threshold was exceeded previously.

Why This Extension Matters for UAE SMEs

For eligible UAE small businesses and start-ups, the extension provides greater certainty over the availability of Small Business Relief beyond 2026.

Businesses that continue to satisfy the eligibility requirements can benefit from simplified Corporate Tax treatment for qualifying Tax Periods ending on or before 31 December 2029.

This can help reduce certain Corporate Tax computation and compliance requirements while businesses continue to build their financial and tax reporting processes.

However, the relief does not remove all Corporate Tax obligations.

Filing and Registration Requirements Still Apply

Small Business Relief is not automatic.

Eligible businesses must make an election for the relief through their Corporate Tax Return for each qualifying Tax Period.

Taxable Persons also remain subject to applicable Corporate Tax registration, filing and record-keeping requirements.

The FTA states that persons subject to Corporate Tax must register and obtain a Corporate Tax Registration Number. For natural persons, Corporate Tax registration generally becomes applicable where Revenue from taxable Business or Business Activities exceeds AED 1 million in a calendar year, subject to the applicable exclusions and rules.

Key Takeaways for Business Owners

• The AED 3 million Revenue threshold has not changed.
• The relief has been extended to eligible Tax Periods ending on or before 31 December 2029.
• Revenue must remain at or below AED 3 million in the relevant Tax Period and all previous Tax Periods.
• Small Business Relief must be actively elected for each eligible Tax Period.
• Eligible Taxable Persons must still comply with applicable Corporate Tax registration and filing requirements.
• Once Revenue exceeds AED 3 million in a relevant Tax Period, Small Business Relief is no longer available in subsequent periods.
• Qualifying Free Zone Persons cannot elect for Small Business Relief.
• Members of an MNE Group with consolidated group Revenue of more than AED 3.15 billion are also excluded.

How KGRN Chartered Accountants can Help

Determining whether your business qualifies for Small Business Relief requires more than checking the current year’s Revenue.

Businesses need to consider their Revenue history, entity structure, Corporate Tax status and filing obligations before making an election.

KGRN Chartered Accountants supports SMEs, start-ups and growing businesses across the UAE with:

• Small Business Relief eligibility assessments
• Corporate Tax registration
• Corporate Tax return preparation and filing
• Revenue threshold reviews
• Tax compliance and record-keeping
• Corporate Tax planning as businesses grow beyond the relief threshold

If you are unsure whether your business qualifies for Small Business Relief or how the extension to 2029 affects your Corporate Tax position, speak with KGRN’s Corporate Tax team for an eligibility and compliance review.