Small Business Relief extended to 2029
Small Business Releief is extended to 2029. How this will affect you? What had changed? What hadn't changed?
Ahmed AlShereef
9/7/20264 min read
Here's what didn't change
A plain-language briefing for UAE business owners · KAMMS Consulting Group · August 2026
What was announced
On 7 August 2026 the Ministry of Finance extended Small Business Relief for corporate tax purposes. The relief now applies to tax periods ending on or before 31 December 2029.
The revenue threshold is unchanged: businesses with revenue not exceeding AED 3 million can elect the relief and are treated as having no taxable income for that period.
For a great many UAE small businesses this is simply good news. It removes a corporate tax bill that was due to arrive with the 2027 financial year, and it gives three more years of breathing room.
We think it is worth a few minutes of your time to understand precisely what it covers — because the part that surprises people is not what the relief gives, but what it never touched.
What it means, by size of business
Under AED 3 million in revenue. You can elect the relief for tax periods ending on or before 31 December 2029 and pay no corporate tax on that period's profit. The conditions in the legislation still apply, and the election is made for each period, not once.
Approaching AED 3 million. Read the section on the threshold below. It is the part of this that matters most to you, and it has not been widely explained.
Above AED 3 million. The relief was never available to you, and the extension changes nothing. Standard rates apply — 0% on taxable income up to AED 375,000 and 9% above that.
What did not change
This is the substance of the briefing.
You still register, and you still file
The relief is not automatic and it is not an exemption from the corporate tax system. It is an election, and the election is made in the corporate tax return. A return still has to be prepared and submitted, on the same deadline as before — nine months after the end of your financial year. For a year ending 31 December 2025, that is 30 September 2026.
The record-keeping rules are untouched
Corporate tax relief and record-keeping obligations are separate things. Failing to keep the records the law requires carries an administrative penalty of AED 10,000, rising to AED 20,000 for a repeat violation within 24 months.
That penalty has nothing to do with how much tax you owe. A business that owes nothing because it elected the relief can still be penalised for not keeping records — and often has fewer records to show, precisely because it believed it had nothing to prove.
VAT was never part of this
Corporate tax and VAT are separate regimes. If your business is registered for VAT, the extension of Small Business Relief changed nothing about your VAT position at all. You still file quarterly. Those filings still need underlying records — invoices, reconciliations, input tax evidence.
If you are VAT-registered, you already have a year-round bookkeeping requirement that no corporate tax relief will ever remove.
The threshold is a claim you have to be able to prove
This is the one most often missed. The relief depends on revenue not exceeding AED 3 million in the current tax period and in every previous tax period since 1 June 2023.
That is a statement about your history, not just this year. And the burden of demonstrating it sits with you, not with the authority. If your revenue figures across three or four years cannot be produced from a proper set of books, you are claiming a relief you cannot readily evidence.
The threshold: the thing to actually watch
If your business is growing, the extension has bought you time but it has not removed the event you are heading toward.
The AED 3 million threshold is a hard line, not a taper. In the first tax period where revenue exceeds it, the relief is not available for that period. There is no partial relief and no averaging.
The practical problem is timing. A business without monthly books does not know its revenue position until someone adds it up — which, for most SMEs, happens well after the year has closed. By then the threshold has been crossed, the relief is gone for that period, and every decision that might have been taken differently has already been taken.
A business with monthly books knows in month seven that it is tracking toward AED 3.2 million, and can decide what to do about it while the year is still open.
That is the honest case for bookkeeping under the extended relief, and it has nothing to do with fear of a deadline.
What we suggest doing in the next 90 days
1. Confirm which tax periods your relief election covers. Not "we're covered until 2029" the specific periods, and whether the election has actually been made in each return filed so far.
2. Check that you can evidence the threshold. Can you produce revenue figures for every period since June 2023 from your records, without reconstructing them? If not, that is the first gap to close.
3. Separate your VAT position from your corporate tax position in your own mind. They are unrelated. If you are VAT-registered, your record-keeping requirement is quarterly and permanent.
4. If you are above roughly AED 2 million and growing, start monitoring monthly. The value is in knowing where you are before the year closes, not after.
5. File on time regardless. The relief removes tax. It does not remove the return, the deadline, or the late-filing penalty of AED 500 per month for the first twelve months and AED 1,000 per month after that.
Where we can help
KAMMS Consulting Group provides monthly bookkeeping for UAE SMEs from AED 500 a month, fixed fee, no setup cost. We work alongside your existing tax agent rather than replacing them: they file, we keep the books they file from.
If you would like to know where your records actually stand, send us three months of bank statements and we will tell you what we would flag. It costs nothing and there is no obligation.
info@kamms.ae · +971 52 832 2496 · Abu Dhabi, Dubai & Sharjah
Ahmed AlShereef
Patner
This briefing is general information, not tax advice for your specific circumstances. Figures verified against Ministry of Finance and Federal Tax Authority sources as at August 2026.
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