Lets a resident taxable person with revenue of AED 3 million or less in the current and all previous tax periods elect to be treated as having no taxable income, for tax periods from 1 June 2023 ending by 31 December 2026 (extended to 2029 by Ministerial Decision No. 131 of 2026); free zone QFZPs and MNE members cannot elect.
Ministerial Decision No. 73 of 2023 gives effect to the Small Business Relief in Article 21 of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022). A Resident Person whose Revenue is AED 3,000,000 or less in the relevant Tax Period and in every previous Tax Period may elect to be treated as having no Taxable Income for that period. The decision was issued on 3 April 2023 and came into effect fifteen days after publication. It remains in force, as amended by Ministerial Decision No. 131 of 2026.
Article 2 sets the threshold. The Revenue limit is AED 3,000,000 for each Tax Period, applying to Tax Periods commencing on or after 1 June 2023. As originally issued, Clause 2 limited the threshold to Tax Periods ending on or before 31 December 2026; Ministerial Decision No. 131 of 2026 replaced that clause so the threshold continues to apply to Tax Periods ending on or before 31 December 2029. A Taxable Person cannot elect for the relief if its Revenue in any relevant or previous Tax Period has exceeded the threshold, so one year above AED 3,000,000 ends access permanently. Revenue is measured under the accounting standards accepted in the UAE.
Article 3 excludes two categories from electing: a Constituent Company of a Multinational Enterprises Group as defined in Cabinet Decision No. 44 of 2020 (the country-by-country reporting decision), and a Qualifying Free Zone Person. A free zone company must therefore choose between the 0% qualifying regime and Small Business Relief.
Articles 4 and 5 deal with the cost of electing. Tax Losses incurred in a period for which the relief is elected cannot be carried forward; unused losses from earlier non-election periods may be carried forward only to later periods in which no election is made, subject to Article 37 of the law. The same rule applies to Net Interest Expenditure under the general interest deduction limitation in Article 30.
Article 6 is the anti-avoidance rule. Where the FTA establishes that persons have artificially separated a Business so that each stays under AED 3,000,000 while the combined Revenue exceeds it, and the relief is elected, this is treated as an arrangement to obtain a Corporate Tax advantage under Article 50(1) of the law. The FTA considers whether the arrangement had a valid commercial purpose and whether the persons carry on substantially the same Business, looking at their financial, economic and organisational links.
Resident Persons for Corporate Tax, juridical and natural, with Revenue of AED 3,000,000 or less in the current and all prior Tax Periods. Qualifying Free Zone Persons and members of Multinational Enterprises Groups within Cabinet Decision No. 44 of 2020 cannot elect.
| Article 2(1) | Sets the Small Business Relief Revenue threshold at AED 3,000,000 for the relevant Tax Period and each previous Tax Period. |
| Article 2(2) | As amended by Ministerial Decision No. 131 of 2026, the threshold applies to Tax Periods commencing on or after 1 June 2023 and continues to apply to Tax Periods ending on or before 31 December 2029 (originally 31 December 2026). |
| Article 2(3) | A Taxable Person cannot elect for the relief if its Revenue in any relevant or previous Tax Period has exceeded the AED 3,000,000 threshold. |
| Article 2(4) | Revenue is determined in accordance with the applicable accounting standards accepted in the UAE. |
| Article 3 | A Resident Person electing the relief must not be a Constituent Company of a Multinational Enterprises Group under Cabinet Decision No. 44 of 2020, nor a Qualifying Free Zone Person. |
| Article 4 | Tax Losses incurred in a Tax Period for which the relief is elected cannot be carried forward; earlier unutilised losses can be carried forward only to periods in which no election is made, subject to Article 37 of the Corporate Tax Law. |
| Article 5 | Net Interest Expenditure incurred in an election period cannot be carried forward; earlier amounts carry forward only to non-election periods, subject to Article 30 of the Corporate Tax Law. |
| Article 6 | Artificial separation of a Business across several persons to stay under the threshold, with the relief elected, is treated as an arrangement to obtain a Corporate Tax advantage under Article 50(1); the FTA looks at commercial purpose and financial, economic and organisational links. |
| Article 7 | The decision was published and came into effect fifteen days after publication; it was issued on 3 April 2023. |
The decision sets no penalty of its own. Artificial separation of a business to claim the relief is treated as a Corporate Tax advantage arrangement under Article 50 of the Corporate Tax Law, allowing the FTA to counteract it; ordinary administrative penalties under Cabinet Decision No. 75 of 2023 apply to filing and registration failures.
Small Business Relief is the default we test for every start-up, consultancy and small trading company we administer, because the AED 3,000,000 threshold covers most owner-managed businesses in their first years. Before each return we confirm Revenue against the management accounts, check that no earlier Tax Period breached the threshold, and confirm the company is not a Qualifying Free Zone Person claiming 0% in the same period, since the two regimes cannot be combined. We warn clients that electing forfeits the year's Tax Losses, which matters for loss-making ventures expecting profits later. Where a founder runs several small companies with the same staff and customers, we advise against splitting revenue between them to stay under the threshold, as Article 6 treats that as avoidance. With the 2026 extension to periods ending by 31 December 2029, our tax calendars now assume the relief is available for three more years.
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