UAE tech startups funding surges in Q1 2025

Tech start-ups in the UAE raised AED3.2 billion ($872 million) in the first quarter of 2025, an 865% rise from the $90.5 million raised in Q1 2024 and a substantial increase of 194% compared with the $297 million raised in Q4 2024.

In its latest Q1 2025 UAE Tech Funding Report, Tracxn reported that the UAE witnessed “a significant rebound in venture funding during the quarter, marked by an influx of late-stage capital and an uptick in $100 million+ mega deals.

“With key sectors such as enterprise applications, fintech and retail driving investment momentum, the ecosystem appears to be entering a phase of renewed investor confidence,” the report said.

In the UAE, late-stage funding drove the overall funding surge, with $760 million raised in Q1 2025, an impressive 660% increase over the $100 million raised in Q4 2024.

Seed-stage funding in Q1 2025 totalled $23.4 million, marking a significant decline of 77% compared with $100 million in Q4 2024, and a 62% drop from $61 million in Q1 2024.

And early-stage investments amounted to $89 million in Q1 2025, a modest decline of 8% from the $96.5 million raised in Q4 2024, but an increase of 202% over the $29.5 million tech startups in the UAE raised in Q1 2024.

Enterprise applications emerged as the leading sector in Q1 2025, with UAE tech startups securing a total of $688.1 million in funding. This represents a 664% increase on the $90.1 million raised in Q4 2024 and a 1111% surge over the $56.8 million raised in Q1 2024.

Second came the fintech sector, with $215.6 million in funding, a 73% increase from $124.6 million in Q4 2024 and a 574% jump from $32 million in Q1 2024.

Meanwhile, the retail sector saw $171.5 million in funding in Q1 2025, a 134% rise from $127.6 million in Q4 2024 and a huge 13,092% increase compared with $1.3 million in Q1 2024.

Dubai-based tech firms accounted for 96% of all funding seen by tech startups across the UAE in Q1 2025. Abu Dhabi followed at a distant second.

The Tracxn report added: “While seed-stage investments declined, the dominance of Dubai in attracting capital, along with a strong uptick in acquisitions, highlights the growing maturity of the region’s tech sector.”

Tracxn, a public company based in Bengaluru, is a cloud-based market intelligence platform offering private market data.

UAE corporate tax rules amended

The UAE’s Ministry of Finance has announced amendments the rules around audited financial statements for corporate tax purposes.

In the updated ministerial decision, the ministry clarified the requirements for the preparation and maintenance of audited financial statements in accordance with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law).

The updated decision sets out clear requirements for tax groups to prepare audited financial statements. All tax groups will be required to prepare audited special purpose aggregated financial statements.

However, to mitigate the compliance burden on tax groups and in line with the UAE’s commitment as a business-friendly jurisdiction, the underlying members of the tax group will not be required to prepare audited stand-alone financial statements.

The UAE’s Federal Tax Authority (FTA) said it will issue further guidance on the framework for the preparation of special-purpose aggregated financial statements for Corporate Tax purposes.

The new decision also clarifies procedures for Qualifying Free Zone Persons engaged in distributing goods or materials in or from a Designated Zone, for which the FTA will issue further guidance.

This guidance will ensure that distribution businesses are able to enjoy the benefits of the Corporate Tax Free Zone regime with certainty.