Can UAE SMEs Thrive Amid Rising Costs and Taxes?
If you’re running a small or medium business in the UAE, chances are you’ve felt the highs and lows of the current economic climate — from increasing operational costs to the impact of corporate tax and rising borrowing rates. But despite these headwinds, there’s a clear message coming out of RAKBANK’s latest SME Confidence Index: resilience is winning the day.
The latest edition of the SME Confidence Index, developed in partnership with RFI Global, offers a window into how over 1,200 SMEs across the UAE are navigating today’s dynamic market. Conducted between October and December 2024, the report reveals a confidence score of 57, comfortably above the base mark of 50. Yes, it’s a dip from last year’s 61, but the sentiment on the ground remains positive — especially when you consider that 68 percent of SMEs believe the future business environment is favourable, and more than 60 percent have reported revenue growth over the last two years.
So, what’s driving this optimism?
Let’s unpack it. While there are no illusions about the challenges — higher operating costs, new tax structures, and tight credit — SMEs are proving agile. They’re adapting, innovating, and pressing forward with growth strategies that include product innovation, market expansion, and digital transformation.
Take the Consumer & Retail Services sector, for example. It’s leading the pack with a confidence score of 60, buoyed by rising consumer spending and the smart adoption of new sales channels — many of them digital. Construction, manufacturing, transport, and trading sectors are also holding steady, though sectors like professional services are feeling more pressure due to rising debt and cost concerns.
One of the more telling insights? SMEs with revenues up to AED 30 million showed the highest levels of confidence (score: 58), while their larger counterparts (AED 30–100 million) were slightly more cautious (score: 55), likely reflecting more complex operations and greater exposure to borrowing costs.
A digital and sustainable mindset is taking root
The Index also shines a light on how SMEs are evolving. About 22 percent now sell products or services online, and 45 percent use digital banking platforms monthly — a sign that technology is no longer optional, but a core part of how modern SMEs operate.
Sustainability, too, is making its way up the agenda. More than half of the surveyed SMEs are either already on a sustainability journey or plan to start soon, with one in three marking it as a short-term priority. That’s a promising shift toward long-term value creation and responsible growth.
The role of banking in the SME ecosystem
RAKBANK isn’t just observing from the sidelines. According to Raheel Ahmed, Group CEO at RAKBANK, the bank sees its role as a partner in every step of the SME journey. That means not just offering loans or accounts, but providing tailored financial tools, insights, and guidance that enable businesses to make confident decisions in uncertain times.
This commitment was recently underscored by two major developments. First, RAKBANK was named the UAE’s Best Bank for SMEs at the Euromoney Awards for Excellence 2025 — a prestigious nod to its role in championing small business success. And second, it announced a strategic AED 1 billion co-financing partnership with Emirates Development Bank, revealed during the “Make it in the Emirates” forum. It’s a strong statement of intent — financial institutions are stepping up to support the backbone of the UAE economy.
Eyes on the future
What’s especially inspiring from the report is the forward-looking mindset of UAE SMEs. There’s a real drive to expand into new markets, modernise payment systems, and invest in talent. And while the road ahead might not be entirely smooth, the direction is clear: growth, adaptability, and ambition remain at the heart of the UAE’s SME community.
