For the past two years, many UAE businesses with revenue under AED 3 million have operated under Small Business Relief, which effectively zeroed out their corporate tax liability and simplified their filing requirements. That window closes on 31 December 2026. What comes next requires action now, not in January.

What Small Business Relief actually gave you

Small Business Relief (SBR), introduced under Ministerial Decision 73 of 2023, allowed eligible businesses to elect to be treated as having zero taxable income for a corporate tax period. The practical effect: no corporate tax payable, and a simplified return rather than a full accrual-based CT filing.

The conditions: revenue must not exceed AED 3,000,000 in the current period and in all previous periods. If you exceeded AED 3 million in any period, you permanently lost eligibility. Qualifying Free Zone Persons and members of multinational groups (consolidated revenue above AED 3.15 billion) were excluded from the start.

The cliff: what changes from 1 January 2027

SBR applies to tax periods ending on or before 31 December 2026. After that, standard corporate tax rules apply to everyone, regardless of size:

  • 0% on taxable income up to AED 375,000
  • 9% on taxable income above AED 375,000

This means a business with AED 500,000 net profit in 2027 would pay AED 11,250 in corporate tax (9% of the AED 125,000 above the threshold). Not dramatic. But the real exposure is the compliance infrastructure required to calculate that number correctly.

The filing mechanics you need to know

Corporate tax returns are due 9 months after the end of the tax period. For a financial year ending 31 December 2026, the return is due 30 September 2027. For a financial year ending 31 December 2027 (the first full post-SBR year for most businesses), the return is due 30 September 2028.

Late filing carries a penalty of AED 500 per month for the first 12 months, rising to AED 1,000 per month thereafter. Late payment attracts 14% per annum. Late registration (if a business has not yet registered for corporate tax) carries a fixed AED 10,000 penalty, waivable if the business registers and files its first return within 7 months of the end of its first period.

Records must be retained for 7 years.

The books problem that most businesses are not thinking about

Under SBR, you could file on a simplified basis. Under standard CT, the Ministerial Decision requires financial statements prepared on the accrual basis of accounting. This is a different standard than the cash-in-cash-out records many small businesses maintain.

Accrual accounting means:

  • Revenue is recognised when earned, not when cash is received
  • Expenses are matched to the period they relate to, not when paid
  • Accounts receivable, accounts payable, and accrued liabilities appear on the balance sheet
  • Depreciation is calculated on fixed assets

If your books today are bank-statement-based, converting to accrual mid-year is substantially harder than starting the year right. The transition months, ideally October to December 2026, are when this preparation should happen.

What to do in the next six months

The businesses that will find 2027 straightforward are those who treat the rest of 2026 as the transition window:

  1. Confirm your FY end date and register for corporate tax if you have not already. Registration is open; the AED 10,000 late penalty is avoidable.
  2. Move to accrual accounting. If your current bookkeeping provider cannot produce accrual-basis statements, that is the conversation to have now.
  3. Calculate a provisional CT estimate for your 2026 financial year. This tells you whether you will owe anything for the period in which SBR still applies (answer: no, if you elected SBR and remain eligible), and what 2027 is likely to look like.
  4. Set a calendar reminder for 30 September 2027. That is when the 2026 CT return is due, and it sneaks up on businesses that assume the 2026 period is too far away to plan for.

The businesses that will find 2027 difficult are those who wait until January to discover their books are not structured for a full CT return.