The Ministry of Finance has issued Ministerial Decision No. 131 of 2026 (issued 29 July 2026), making a single amendment with wide reach — one every corporate tax consultant advising small businesses should flag to clients now: the Small Business Relief (SBR) regime under Article 21 of the Corporate Tax Law, which was due to sunset for Tax Periods ending after 31 December 2026, now applies to Tax Periods ending on or before 31 December 2029.
For the hundreds of thousands of UAE small businesses that have elected the relief since the Corporate Tax regime began, the runway has just been extended by three years — but the conditions, the cumulative revenue test, and the trade-offs of electing remain exactly as they were.
Effectiveness: Article Two provides that the Decision comes into effect the day following the date of its publication. The amendment operates on the existing SBR framework in Ministerial Decision No. 73 of 2023; confirm the publication date when relying on the extended window.
A quick recap: what Small Business Relief is
Under Article 21 of the Corporate Tax Law and Ministerial Decision No. 73 of 2023, a Resident Taxable Person — company or natural person conducting business — may elect, in its Tax Return, to be treated as having no Taxable Income for a Tax Period where its Revenue does not exceed AED 3,000,000 in that period and in all previous Tax Periods ending on or before the sunset date. The election means no Corporate Tax is payable and the computation rules largely fall away, with simplified filing — a point worth confirming with whoever handles the business’s corporate tax filing in UAE each year.
The relief was never universal. It is unavailable to Qualifying Free Zone Persons and to constituent entities of multinational groups within the CbCR consolidated-revenue threshold (broadly AED 3.15 billion). And it was never free: for any period in which SBR is elected, Tax Losses cannot be accrued or carried forward, and Net Interest Expenditure cannot be carried forward — the elected periods are, in effect, wiped from the taxpayer’s attribute history. The general anti-abuse rule also stands guard against artificial business fragmentation designed to keep each fragment under AED 3 million.
What the amendment does — and what it doesn’t
Article One of MD 131/2026 replaces Clause 2 of Article 2 of MD 73/2023. The AED 3 million threshold, which applied to Tax Periods commencing on or after 1 June 2023 and ending on or before 31 December 2026, now continues for subsequent Tax Periods ending on or before 31 December 2029. What it does not do matters equally:
• The threshold is unchanged. AED 3 million it was, and AED 3 million it remains — with no indexation for the three additional years. A business growing with inflation alone may drift out of the relief before 2029.
• The cumulative test is unchanged. Eligibility requires revenue at or below AED 3 million in the current period and every prior period. A single breach — even one dirham over, even in one year — ends eligibility permanently, including for later years within the extended window in which revenue falls back below the line. The extension lengthens the runway only for those who never leave it.
• The exclusions and trade-offs are unchanged. QFZPs and CbCR-scope group members remain outside; elected periods still forfeit loss and interest carry-forwards; the election remains a per-period choice made in the Tax Return; and registration and filing obligations continue — SBR is a relief from tax, not from compliance.
The end-date mechanics: not every business gets the same three years
The sunset operates on the Tax Period’s end date, which makes financial year-ends decisive:
| Financial year-end | Last SBR-eligible Tax Period | Periods gained by the extension |
|---|---|---|
| 31 December | FY ending 31 Dec 2029 | FY2027, FY2028, FY2029 |
| 31 March | FY ending 31 Mar 2029 | FYs ending Mar 2027, 2028, 2029 |
| 30 June | FY ending 30 Jun 2029 | FYs ending Jun 2027, 2028, 2029 |
A March year-end business’s period ending 31 March 2030 ends after the sunset and is ineligible — so non-December year-ends effectively lose the balance of 2029. Businesses with a genuine choice of financial year (new incorporations in particular) may find a December year-end extracts the full value of the window.
Worked example
Facts. Noor Design Studio LLC (calendar-year) has revenue of AED 2.4m (2024), AED 2.8m (2025), and projects AED 2.95m (2026), AED 3.05m (2027), and AED 2.9m (2028).
2024–2026: Revenue is at or below AED 3m in each period and all prior periods — the studio may elect SBR in each return and pay no Corporate Tax. Under the pre-amendment law, 2026 (ending 31 December 2026) would have been its final relieved year.
2027: Projected revenue of AED 3.05m breaches the threshold. No SBR for 2027 — the studio computes Taxable Income normally, applies the 0% band on the first AED 375,000, and pays 9% above it.
2028: Revenue falls back to AED 2.9m — but eligibility is already gone: the cumulative test requires the threshold to have been met in all previous periods, and 2027 broke the chain. Despite the window now running to 2029, the studio cannot return to the relief.
The planning point is stark: for a business hovering at the line, the marginal AED 50,000 of revenue in 2027 costs not one year of relief but three. Revenue recognition timing, contract phasing across period-ends, and even the choice to decline marginal work in a boundary year are now multi-year decisions — best modelled with corporate tax consultants in Dubai — always within the bounds of genuine commercial arrangements, since artificial deferral or fragmentation invites the anti-abuse rule.
Observations
Why the extension. MD 73/2023’s original sunset aligned with an expected review of the regime after its first years of operation. The extension to 2029 signals policy comfort with the relief’s cost and its role in easing small businesses into the Corporate Tax system — and gives the SME sector rare medium-term certainty. Whether a further extension or a permanent regime follows in 2029 is a question for another Decision; businesses should plan on the current sunset being real.
The attribute forfeiture deserves an annual rethink. Electing SBR is not automatic just because it is available. A loss-making small business may be better served by not electing — banking the Tax Loss carry-forward for use against future profits — since an elected period’s losses are gone for good. With three more years of elections now on the table, the elect-or-not decision compounds: the right answer depends on the trajectory of the business, not the availability of the relief.
Records still matter. SBR-electing businesses retain registration, return-filing, and record-keeping obligations, and benefit from relaxed transfer pricing documentation — but revenue must be determinable and defensible, since the AED 3m test is the entire gateway and the FTA can examine it.
What small businesses should do now
Businesses using or nearing SBR should: re-forecast revenue through 2029 against the unchanged AED 3m line, identifying any boundary years early; treat the cumulative test as the planning constraint — one breach is permanent; revisit the elect-or-not decision annually where losses are being generated; check the financial year-end against the sunset’s end-date mechanics; and keep revenue recognition policies clean and consistent, since the threshold test will only attract more FTA attention as the relieved population persists for three more years.
How TSAC can help
TSAC, among the tax advisory firms working closely with the UAE SME sector, advises small and growing businesses on SBR eligibility, the elect-or-not analysis, revenue recognition, and the transition planning for the year a business outgrows the relief — which, for a healthy business, is the goal. The extension to 2029 buys time; the businesses that benefit most will be the ones that use it to plan the exit rather than merely enjoy the holiday.
This publication is for general information only and does not constitute tax advice. The Arabic text of the Decision prevails over the English translation. Please contact TSAC for advice specific to your circumstances.