SMEs in the UAE remain tax-free
Small Business Relief extended to 2029: Why now is the best time to set up your company in Dubai
If you run a start-up in Dubai, work as a freelancer, or are building a small to medium-sized business, this news should make your day: The popular Small Business Relief is being extended. On August 7, 2026, the UAE Ministry of Finance officially confirmed that the tax relief will continue until December 31, 2029 – and businesses in Dubai will benefit from this in full.
For you, this specifically means: If your annual revenue remains at a maximum of AED 3 million, you will effectively remain exempt from Corporate Tax in the coming years as well. Instead of a temporary exception, you now have a clear, multi-year framework upon which to build your Dubai plans.
What exactly has changed?
Until now, this relief only applied to tax periods ending on or before December 31, 2026. With the new Ministerial Decision No. 131, the government has pushed this deadline back by another three years – while the proven conditions from the original regulation (Ministerial Decision No. 73 of 2023) remain in place.
The background is a strong signal to the start-up scene, which is particularly vibrant in Dubai: Small businesses make up over 94% of the economic landscape. With the extension, the country is deliberately backing this engine – and Dubai, as the economic hub of the Emirates, benefits from exactly the stability that young companies need to grow.
Do you benefit from the Small Business Relief? The requirements at a glance
The rules of the game remain pleasantly straightforward – just over a significantly longer period. If you meet the following points, you will be treated for tax purposes as if you had no taxable income:
1. Revenue threshold of AED 3 million: Your annual revenue must not exceed the AED 3 million mark (around USD 816,000) in the current and in all previous tax periods (starting from June 1, 2023). Important to know: This limit applies permanently. If it is exceeded in even a single period, the eligibility is lost for that and all future periods. Clean revenue monitoring is therefore essential from the very beginning.
2. Residency in the UAE: Your company must be a resident person in the UAE – your company in Dubai, whether in the mainland or a free zone, fulfills this condition.
3. Who does not benefit: Two groups are excluded: Qualifying Free Zone Persons, who already benefit from the 0% rate in the free zone, as well as companies belonging to a multinational enterprise (MNE) group with a consolidated global annual revenue of over AED 3.15 billion.
The often-underestimated advantage: less bureaucracy
The tax savings are one side of the coin. The other – and in everyday life at least as valuable – is the noticeable relief in administration. Anyone who uses the Small Business Relief primarily gains time back:
Simplified tax return instead of complex calculation. You do not have to painstakingly determine your taxable income; instead, you submit a simplified tax return.
Cash-basis instead of accrual accounting. You are allowed to prepare your financial reports using the straightforward cash basis of accounting, rather than dealing with the much more complex accrual basis.
No transfer pricing documentation. The extensive documentation requirements for transfer pricing are waived – the arm’s length principle still applies, but the paperwork does not.
Especially for small teams in Dubai without an in-house tax department, this is a real gain in focus and freedom.
Do not forget: Register and actively elect
A point that is often overlooked and that we strongly urge you to remember: Even if the effective tax rate ends up being 0%, it does not happen automatically.
Every company in Dubai and the other Emirates must register for Corporate Tax with the Federal Tax Authority (FTA) – without exception. And you must actively elect the Small Business Relief for each tax period in your tax return. Simply treat these two steps as a fixed part of your annual routine, and you will be on the safe side.
One more note on the fairness of the rule: The tax authority closely monitors the artificial splitting of businesses (Anti-Abuse Rules). Anyone who splits a business solely to stay under the 3 million threshold risks losing the relief and facing significant penalties. However, with a cleanly structured setup from the outset, this question does not even arise.
Frequently Asked Questions about the Small Business Relief in Dubai (FAQ)
Until when is the Small Business Relief valid now? Newly until December 31, 2029 – meaning for all tax periods ending on or before this date.
What is the revenue threshold? AED 3 million annual revenue (approx. USD 816,000). This limit applies to the current and all previous periods starting from June 1, 2023.
Do I still have to register for Corporate Tax in Dubai? Yes. Registration with the FTA is mandatory for all companies, even if you end up paying zero tax.
Does the relief apply automatically? No. You actively elect it for each tax period in your tax return.
Can free zone companies in Dubai use the relief? Qualifying Free Zone Persons are excluded because they already benefit from the 0% free zone rate. For mainland companies in Dubai, however, the relief is applicable.
Your next step with EmiratesSetup
The extension until the end of 2029 gives founders in Dubai something rare: long-term planning security. This makes this moment an excellent time to strategically, legally, and tax-efficiently structure your business setup in Dubai.
Are you wondering if your planned structure qualifies for the Small Business Relief, or do you need support with your Corporate Tax registration? That is exactly what we are here for. EmiratesSetup accompanies you during company formation in Dubai, advises you on the appropriate legal structure – mainland or free zone – and ensures that you confidently comply with all regulatory requirements.
Contact us today for a personal and no-obligation consultation – we look forward to shaping your path in Dubai with you.