A resident person with revenue of AED 3,000,000§ or less, in the current tax period and every earlier one, can elect Small Business Relief and be treated as having no taxable income§. It applies to periods starting on or after 1 June 2023§ and ending on or before 31 December 2029§, after Ministerial Decision No. 131 of 2026 replaced the old cut-off of 31 December 2026§.
What changed in 2026?
The original decision closed the relief at the end of 2026. For a business with a calendar financial year, the period ending 31 December 2026 would have been the last one covered, and planning for 2027 had to assume a real corporate tax bill. In July 2026 the Minister replaced that clause. The revenue limit is unchanged; only the end date moved, out to 31 December 2029§.
Chart data
| Point | Date |
|---|---|
| Relief starts | periods from 1 June 2023 |
| Old end date | was 31 December 2026 |
| New end date | 31 December 2029 |
Do I need the relief at all?
Check this before anything else, because the answer differs for companies and individuals. A company, including a free zone company, is a taxable person, so the relief is the question that decides whether it pays anything.
A sole trader or freelancer may never reach the question. A natural person's business activity is only subject to corporate tax once turnover from it exceeds AED 1,000,000§ in a calendar year, and a person below that is not required to register§. Relief becomes relevant to an individual only in a year when business turnover is above AED 1,000,000 but revenue is still within the AED 3,000,000 limit.
How does the revenue test work across years?
Read the condition slowly: revenue must be at or under the limit in this period and in all previous ones. The FTA's own Small Business Relief page gives an example. A Sharjah resident with AED 1,900,000 of revenue in 2026 cannot elect, because revenue in 2025 was AED 4,300,000§. A single year above the line closes the relief for the years after it, even if revenue falls back.
The test runs on revenue, not profit. This is one of the few places in the corporate tax rules where the top line matters more than the bottom line, which surprises owners who are used to thinking in margins. A low-margin trading company can be shut out of relief while a high-margin consultancy of the same profit is not.
Who cannot elect?
Two groups are excluded outright: a Qualifying Free Zone Person, and a member of a multinational group with consolidated revenue above AED 3.15 billion§. The first exclusion matters for small businesses far more than the second. If you hold free zone status and use the 0% rate on qualifying income, Small Business Relief is not also available to you. The free zone guide covers that trade-off.
Electing also has a cost of its own: while relief applies, other exemptions, reliefs and deductions are not available for that period. For most small businesses that is a fair exchange for a nil computation, but a business that would otherwise claim another relief should work out which route leaves it better off.
Do I still have to register and file?
Yes. The FTA said so again in August 2026: relief is elected in the tax return§. Eligible businesses register for corporate tax, submit a simplified return within the statutory deadline, and keep the records that let the FTA verify revenue and eligibility. Electing the relief reduces what you submit. It does not remove the submission.
For a financial year that ended on 31 December 2025, the FTA set the deadline at 30 September 2026§, and named businesses eligible for the relief specifically. The general rule is 9 months§ from the end of the tax period. A zero bill does not protect a late return: the late filing penalty is AED 500 a month, rising to AED 1,000 a month after a year§, counted from the day after the deadline.
What is the relief worth in money?
Less than people expect, and more than it looks. As a worked illustration, a business at the revenue limit with AED 500,000 of taxable income would otherwise pay 9% on AED 125,000, which is AED 11,250. Plenty of businesses under the limit have taxable income below AED 375,000 anyway and would owe nothing with or without relief.
The larger saving is often in the work. A simplified return is less to prepare than a full computation, against published corporate tax filing fees of AED 2,500–5,000 a year¤. For a business with very few transactions, one online provider lists an entry package at AED 411 a month¤, charged annually, which gives a sense of the floor. Against that, every month of lateness costs at least AED 500 in penalties.
That is also the trap. Because relief makes the tax zero, it is easy to treat the filing as optional, and then a business crosses AED 3,000,000 mid-period with no clean books behind it. If that is your trajectory, start paying for bookkeeping before the year you need it.
Questions owners ask
Is the AED 3 million limit revenue or profit? Revenue. Profit plays no part in the eligibility test.
My revenue went over the limit once, two years ago. Can I elect now? Not under the condition as the FTA states it, because every previous period must also be within the limit.
Does the extension change the limit? No. Ministerial Decision No. 131 of 2026 moved the end date and left the AED 3,000,000 figure where it was.
What to do next
- Check revenue in every period since your first, not just this one.
- If you are a sole trader, check whether business turnover passed AED 1,000,000 in the calendar year before worrying about relief.
- If you are in a free zone, confirm your status first: the two reliefs do not stack.
- Put the filing date in a calendar now. The election lives on the return, and the return has a deadline.
- Run your own numbers through the corporate tax calculator with the relief switch on and off.