Avoid Costly Tax Errors: Key tips to prevent overpaying UAE Corporate Tax this September

Let’s talk about money. Not profits. Not revenue. Let’s talk about the kind of money you lose when your tax filing isn’t spot on.

1. “But my books are clean. I should be fine, right?”

Clean books are good. But clean books don’t mean smart tax filing.

The UAE Corporate Tax Law, which kicked in under Federal Decree-Law No. 47 of 2022, is nuanced. There’s a 0% rate for taxable income up to Dh375,000. Above that? You’re taxed at 9% (MoF, UAE Government).

That threshold sounds clear, but how you calculate taxable income is where many businesses get tripped up. Not everything you call an expense is deductible under the new rules.

2. Common Mistake #1: Misclassifying expenses

Let’s say you’re a tech founder. You bought a laptop for Dh8,000. Is that a deductible business expense?

Maybe. Maybe not. If it’s not properly capitalised and depreciated, claiming it all at once might raise a flag with the FTA. Boom — your deduction gets disallowed. Your tax bill goes up.

Same story with marketing spends, entertainment, travel. Personal vs. business use matters. Document everything. Allocate correctly.

3. Common Mistake #2: Forgetting about exempt income

Yes, there is such a thing. Certain types of income — like dividends from qualifying shareholdings or profits from foreign branches — may be exempt under Article 22. But many SMBs don’t realise this. So they lump everything into the taxable bucket and pay more than they should.

Let me say this clearly: If you’re earning exempt income and still paying tax on it, you’re leaving money on the table.

4. Common Mistake #3: Not taking full deductions

Missed claiming start-up costs? Loan interest? Bad debts? You’re not alone.

Most small business owners aren’t tax pros. That’s fine. But it’s not fine to miss deductions just because no one flagged them to you. This is where having a UAE tax expert in your corner helps. Not just to file, but to optimise.

5. So what should you do before you file this September? Here’s a quick checklist:

• Revisit your revenue and expense classifications

• Verify what’s deductible vs. capitalised

• Check for exempt income

• Ensure proper documentation is ready (invoices, contracts, proofs)

• Use the FTA’s official guidelines — not just online hearsay

• Consider a tax simulation before filing (we do this for clients all the time)