March 2026 · Corporate Tax · UAE
Small Business Relief Ends 31 December 2026: Plan the 2027 Transition Now
The AED 3 million Small Business Relief that lets eligible UAE businesses elect a zero Corporate Tax position closes after the tax period ending 31 December 2026. From 2027, those entities move into the standard 9% regime. The planning window is now.
Ministerial Decision No. 73 of 2023 set the revenue threshold for Small Business Relief (SBR) at AED 3 million. Resident persons whose revenue does not exceed that figure in the current tax period and in all previous tax periods can elect a zero Corporate Tax position. The relief is available through tax periods ending on or before 31 December 2026. As of today, no extension has been announced and none is expected.
What changes on 1 January 2027
From the tax period commencing on or after 1 January 2027, businesses that previously elected SBR move into the standard regime: 0% on taxable income up to AED 375,000 and 9% above that. For a business hovering close to the AED 3 million revenue line, the marginal effect is meaningful. For a business well within the relief, the cash-tax impact in 2027 will be the first year of cash Corporate Tax payments, and the run-rate matters.
What to do in the next twelve months
Three priorities for the 2026 planning cycle:
- Verify SBR eligibility for the current tax period. The "all previous tax periods" condition trips up businesses whose revenue spiked in a prior period and then settled back. The election is not available if any previous period crossed the threshold.
- Model the 2027 cash-tax run-rate. On AED 3 million revenue and a 15% net margin, 2027 Corporate Tax is roughly AED 9,750. On 25% net margin, roughly AED 33,000. The figure is not catastrophic for most businesses but it changes the working-capital profile.
- Get the books to Corporate-Tax-compliant standard. SBR businesses have not had the same record-keeping pressure as fully-taxable peers. From 2027, audited financial statements may be required (depending on the AED 50 million revenue test under Ministerial Decision 84 of 2025), the Local File obligation engages on related-party transactions, and the transfer pricing disclosure form must be filed alongside the return.
What might change
The Ministry of Finance has discretion to extend the relief or to vary the threshold. Industry submissions to that effect have been made through the chambers and professional bodies. No outcome should be planned for; if the extension lands, it is a bonus, not the base case.
For Corporate Tax planning around the 2027 transition, our tax practice runs a half-day diagnostic that delivers the cash-tax model, the compliance gap analysis, and a prioritised action list. Complimentary initial scoping.