UAE Prolongs Corporate Tax Exemption for Small Businesses Until 2029

The Ministry of Finance in the UAE has recently confirmed an extension to its Small Business Relief initiative. Through Ministerial Decision No. 131 of 2026, this program, which operates under the Corporate Tax framework, will now apply to tax periods concluding by December 31, 2029. This new deadline pushes back the original expiration date of December 31, 2026, by an additional three years.

This relief allows eligible businesses generating up to AED3 million (approximately US$816,882) in annual revenue to opt for zero taxable income during relevant tax periods, effectively reducing their corporate tax obligations to zero. The revenue threshold itself, first established by Ministerial Decision No. 73 of 2023, remains unchanged; only the program’s duration has been extended.

It is crucial to understand that this relief is not automatically granted. Companies must actively elect to utilize it when filing their Corporate Tax return and must continuously satisfy all stipulated criteria, including maintaining proper registration, fulfilling filing duties, and keeping accurate records.

However, certain categories of entities remain excluded from this relief regardless of their revenue. These include Qualifying Free Zone Persons and businesses that are part of larger multinational enterprise groups.

The Ministry presented this extension as a strategic component of its broader efforts to foster entrepreneurship and support small businesses. This initiative is also aimed at enhancing the UAE’s competitive tax environment and strengthening its appeal as a leading global investment destination.

This measure complements the existing corporate tax framework, which came into effect for financial years commencing on or after June 1, 2023. Under this framework, a standard tax rate of 9% is applied to taxable income exceeding AED375,000.