The small business relief extension to 2029: what changes for you

The original rule, in Ministerial Decision No. 73 of 2023, applied the AED 3 million revenue threshold to tax periods starting on or after 1 June 2023 and ending on or before 31 December 2026. The 2026 decision extends the relief to tax periods ending on or before 31 December 2029.

Nothing else of substance moved. The threshold remains AED 3 million per tax period, it is still tested on revenue rather than profit, and the excluded groups remain excluded. So the question for most owners is not 'is it extended?' but 'should I keep electing?'

Resident persons, both companies and individuals, can elect if revenue in the current tax period and every earlier one was AED 3 million or less. The test looks backwards. The FTA's own example shows a person with AED 4.3 million in 2025 who cannot elect for 2026, even though 2026 revenue fell to AED 1.9 million.

Two groups cannot elect at all: qualifying free zone persons, and members of a multinational group with consolidated revenue above AED 3.15 billion. And the FTA can treat a business that splits itself into several companies to stay under the threshold as an artificial separation.

Electing relief means the period is treated as having no taxable income. The consequence is that a tax loss made in that period cannot be carried forward. Disallowed net interest from that period is also lost.

Worked example: a Dubai software start-up has revenue of AED 900,000 and a tax loss of AED 400,000 in 2026. It expects taxable income of AED 1.5 million in 2028, when revenue will have passed AED 3 million. If it elects relief for 2026, the AED 400,000 loss disappears. If it does not elect, it files a normal return showing the loss, which can later offset up to 75% of 2028 taxable income. At 9%, that loss is worth up to AED 36,000 of future tax.

Map your revenue for the next three years. If you are growing past AED 3 million soon, the relief ends for good once you cross, so the remaining relief years may be few. If you are a steady AED 1.5 million business with consistent profits, electing every year until 2029 is usually straightforward.

Keep the same records either way. Relief does not reduce record-keeping or the duty to file. If the FTA reviews a period where you elected, it will look at whether revenue was genuinely below AED 3 million, so revenue recognition and cut-off at year end matter.

• Check revenue for every past tax period, not just this one
• Decide per year; the election is made in each return
• Model expected losses before electing in a loss year
• Watch group structures that could look like artificial separation

A Dubai beauty salon with revenue of AED 1.8 million every year since opening elects every year until 2029 with little thought. A Sharjah trading company that hit AED 3.4 million in 2024 and dropped to AED 2.6 million in 2026 cannot elect, because one earlier period was over the threshold. A new Abu Dhabi fintech with revenue of AED 600,000 and heavy losses should probably not elect in its loss years, so the losses survive.

The pattern: steady, profitable, small businesses benefit most. Growing businesses and loss-making start-ups need to think before ticking the box, and a short conversation with a tax agent each year is cheaper than a lost loss.

The AED 3 million test is only as good as your revenue figure. HelloBooks' AI agent drafts invoices, matches receipts from uploaded bank statements and flags revenue invoiced after year end that relates to work done before it. Ask 'what is my revenue for the tax period so far?' and it answers from the ledger, with a running comparison to AED 3 million.

Your accountant still decides whether to elect, and records the election when filing on EmaraTax. If you want an alert at a revenue level of your choosing, say AED 2.5 million, the team can set that up as a custom rule; email hello@hellobooks.ai.