Dubai Corporate Tax: Small Business Relief Is Ending in 2026 — What to Do

Answer Capsule: Small Business Relief allows companies with revenue under AED 3 million to pay zero corporate tax. This relief expires on December 31, 2026. From January 2027, all companies must compute taxable income and pay 9% on amounts exceeding AED 375,000. Companies currently relying on Small Business Relief should start preparing now — engage an accountant, set up proper bookkeeping, and understand which expenses are deductible.

If your company has been claiming Small Business Relief, you have been living in a comfortable grace period. That period ends in less than 9 months. Here is what you need to do.

What Changes on January 1, 2027

From 2027, every mainland company — regardless of revenue — must maintain proper accounting records, compute taxable income (revenue minus allowable deductions), file a tax return with the FTA within 9 months of their financial year end, and pay 9% on taxable income above AED 375,000.

Your Preparation Checklist

1. Engage an accountant if you do not already have one. Tax filing requires professional financial statements.
2. Set up proper bookkeeping. If your records are informal (spreadsheets, bank statements only), upgrade to proper accounting software.
3. Understand deductible expenses. Every legitimate business expense reduces your taxable income — salaries, rent, PRO fees, marketing, insurance, depreciation.
4. Plan for cash flow. Tax payments are due within 9 months of year-end. Budget for this.
5. Review your structure. Companies with mixed mainland and international revenue may benefit from restructuring. Consult a tax advisor.

The Silver Lining

For most small businesses, the effective tax burden will be modest. A company with AED 2 million in revenue and AED 1.8 million in expenses has taxable income of AED 200,000 — below the AED 375,000 threshold, meaning zero tax. The 9% rate only applies to income above that threshold.

Not sure of your exact deadline? See our full breakdown of UAE corporate tax registration, filing and payment deadlines for 2026 — including the 30 September 2026 filing date and the penalties for missing it.

Frequently Asked Questions

What is Small Business Relief in the UAE? Small Business Relief lets UAE companies with revenue under AED 3 million elect to be treated as having no taxable income — effectively paying zero corporate tax — provided they meet the Federal Tax Authority's conditions. It is a temporary measure to ease small businesses into the corporate tax regime.

When does Small Business Relief end? Small Business Relief is available for tax periods ending on or before 31 December 2026. From 1 January 2027 it is no longer available, and companies must compute and pay corporate tax in the normal way.

Will my company pay corporate tax if revenue is under AED 3 million? Until the end of 2026 you can elect Small Business Relief and pay zero tax. From 2027, tax is based on taxable income, not revenue — you pay 9% only on taxable income above AED 375,000, so a genuinely small profit may still result in little or no tax.

What is the corporate tax rate in the UAE? The standard UAE corporate tax rate is 9%, applied only to taxable income above AED 375,000. Taxable income up to AED 375,000 is taxed at 0%.

What should I do before Small Business Relief expires? Engage an accountant, set up proper bookkeeping, learn which expenses are deductible, and budget for a tax payment due within nine months of your financial year-end. Preparing early avoids a scramble when the relief ends.

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