The UAE's federal corporate tax applies to financial years starting on or after 1 June 2023. For small businesses, the most important update this year is that Small Business Relief has been extended to 2029. Here are the essentials.
The rates
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
Small Business Relief, now to 2029
A UAE resident business with revenue of AED 3 million or less can elect to be treated as having no taxable income for the period. In August 2026 the Ministry of Finance extended the relief through Ministerial Decision No. 131 of 2026, so it now covers tax periods ending on or before 31 December 2029.
- It is not automatic. You elect for it in your corporate tax return, period by period.
- The test is revenue, not profit.
- Once revenue goes above AED 3 million in any period, you can't claim the relief for that period or later ones.
- Qualifying Free Zone Persons and members of large multinational groups can't use it.
- Splitting one business into several to stay under the threshold can be challenged under anti-abuse rules.
You still need to register and file
- Companies and other legal entities must register for corporate tax, even if they expect to pay nothing.
- Individuals doing business are generally in scope only when their UAE business turnover is above AED 1 million in a calendar year.
- Returns are due within nine months of the end of the tax period. For a year ending 31 December 2025, that was 30 September 2026.
Penalties to avoid
| What | Penalty |
|---|---|
| Late registration | AED 10,000, waived if the first return is filed within seven months of the end of the first tax period |
| Late return, first 12 months | AED 500 for each month or part month |
| Late return, from month 13 | AED 1,000 for each month or part month |
A simple checklist
- Register on the FTA's EmaraTax portal if you haven't already.
- Keep proper accounting records. Your corporate tax return is built from them.
- Check your revenue against AED 3 million every year before deciding on the relief.
- Diarise the nine-month filing deadline for each tax period.
How we help
We keep UAE books VAT- and corporate-tax-ready, check whether Small Business Relief applies, and prepare your return well before the deadline. Rules change, so always confirm the latest position with the Federal Tax Authority or with us. Book a free Leak Check to start.
This article is general information, not tax or legal advice. Rules change, so check the current position or speak to us before acting.