The Ministry of Finance announced the extension of the small business relief under the corporate tax regime, according to a report published by the Emirates News Agency. The decision updates the prior applicability that had been scheduled to end on 31 December 2026, the ministry said in its statement. Resident persons, including both natural and juridical entities, may elect the relief for each tax period provided their revenue does not exceed AED 3 million in that period and all previous ones since the regime began. The measure forms part of ongoing adjustments to the federal tax framework introduced in 2022.
According to guidelines on the Federal Tax Authority website, businesses that elect the relief are treated as not having derived any taxable income for the period in question. Such taxpayers cannot claim other exemptions, reliefs or deductions available under the corporate tax law. The authority also notes that while transfer pricing documentation is not required, compliance with the arm’s length principle remains mandatory for all related party transactions.
Ministerial Decision No. 73 of 2023 had originally established the small business relief for tax periods starting on or after 1 June 2023 and ending on or before 31 December 2026, a PwC analysis of the decision stated. The corporate tax system itself applies a zero per cent rate on taxable income up to AED 375,000 and 9 per cent on amounts above that threshold, according to the same summary. This latest extension by the Ministry of Finance adds three further years during which qualifying businesses can maintain the simplified treatment.
The Federal Tax Authority has reminded taxable persons that eligibility for the relief does not exempt them from core obligations, its recent directives show. Registration for corporate tax, submission of simplified returns and retention of records sufficient to verify revenue and eligibility are all still required. These requirements ensure proper oversight even as the relief reduces the overall compliance load for smaller entities.
Data from the tax authority places the revenue threshold at exactly AED 3,000,000 for both the current and all preceding tax periods as the key qualifying condition. Election of the relief must be indicated explicitly on each corporate tax return filed through the EmaraTax platform. Businesses that surpass the threshold in any period become subject to the standard corporate tax rules without the option to revert for that year.
The extension arrives as the UAE’s corporate tax regime completes its third year of operation, Deloitte’s regional tax insights noted in related briefings. Many resident businesses initially benefited from the relief during the initial rollout phase that began in mid-2023. The Ministry of Finance statement distributed via WAM did not detail changes to other aspects of the relief criteria.
