UAE Extends Small Business Relief to 2029: What Businesses Need to Know
The UAE Ministry of Finance has announced an extension of Corporate Tax Small Business Relief to tax periods ending on or before 31 December 2029. The extension gives eligible businesses a longer period to benefit from the relief, subject to the applicable conditions.
For business owners, the key question is whether their company qualifies—and what responsibilities remain after claiming it.
Who Can Benefit?
Small Business Relief is available to eligible UAE resident persons whose revenue does not exceed AED 3 million in the relevant tax period and all previous applicable tax periods.
The threshold relates to revenue, rather than profit. A business cannot establish eligibility simply by showing that its expenses have reduced its net earnings.
Qualifying Free Zone Persons and members of multinational groups with consolidated revenue exceeding AED 3.15 billion are excluded from this relief. Eligible businesses must elect to apply it for each relevant tax period.
A Practical Example
Consider a UAE resident company with revenue of AED 2.4 million in its current tax period and AED 2.1 million in its previous tax period. Assuming all other requirements are satisfied, it may elect for Small Business Relief.
Now consider another company with current-period revenue of AED 2.4 million but revenue of AED 3.5 million in an earlier applicable tax period. Its current revenue has fallen below the threshold, but the earlier breach prevents it from qualifying.
Reviewing revenue history is therefore just as important as reviewing the current year’s figures.
What Does the Relief Actually Change?
A business making a valid election is treated as having no taxable income for the relevant period. It does not need to calculate taxable income or pay corporate tax on that period’s income and can complete a simplified tax return.
However, eligibility should be assessed before making the election. Revenue below AED 3 million does not, by itself, establish that every requirement has been met.
Registration and Filing Still Matter
Small Business Relief does not remove the requirement to register for corporate tax, submit the applicable tax return, or maintain supporting records.
The Federal Tax Authority has specifically reminded eligible businesses that these compliance obligations continue to apply. Financial records must support the revenue reported and the basis for claiming relief.
What Should Businesses Do Now?
Before claiming relief, management should:
-
Review revenue for the current and all previous applicable tax periods.
-
Confirm the business’s residency status and check the exclusions.
-
Reconcile revenue figures with the underlying accounting records.
-
Confirm registration status and the relevant filing deadline.
-
Assess eligibility and make the appropriate election in the tax return.
The extension offers eligible businesses valuable support. Making effective use of it starts with accurate records and a documented eligibility assessment.
How SFA Can Help
At Strategy Financial Advisory, we support businesses with UAE Corporate Tax compliance and bookkeeping, helping them assess their position and prepare reliable financial information.
Contact SFA to review your eligibility for Small Business Relief and prepare for your next corporate tax filing.
