Corporate Tax Planning for UAE Startups and SMEs: From Exemption Thresholds to Optimization
Introduction:
The UAE’s Corporate Tax regime is designed to support economic diversification and entrepreneurship. Startups and SMEs benefit from special provisions, such as the AED 375,000 profit exemption and the Small Business Relief regime.
Who Qualifies for Small Business Relief?
- Revenue under AED 3 million annually (available until Dec 2026)
- Must not be part of a Multinational Enterprise (MNE) group
- Compliant with all FTA registration and filing obligations
Optimization Strategies:
- Leverage the 0% tax rate for profits under the exemption limit
- Separate taxable from exempt income
- Deduct allowable business expenses
- Track transactions with automated ERP systems
Documentation Essentials:
- Maintain books of accounts per IFRS
- Submit accurate Corporate Tax Returns annually
- Keep bank statements, receipts, and contracts ready for audits
What to Avoid:
- Underreporting revenue
- Late registration or tax return submissions
- Missing deadlines for small business relief applications
