EqualOcean has learned that on December 9, the UAE Ministry of Finance announced that starting from January 2025, it will impose a 15% Domestic Minimum Tax Top-Up (DMTT) on large multinational companies operating in the country. This move is expected to drive growth in the country's non-oil revenues. The measure reflects the UAE's commitment to implementing the Organisation for Economic Co-operation and Development (OECD) two-pillar solution, aiming to establish a fair and transparent tax system that meets global standards.
DMTT is part of the OECD's global minimum corporate tax agreement, which has been signed by 136 countries, including the UAE, to ensure that large companies pay at least 15% in taxes and make tax avoidance more difficult. The UAE Ministry of Finance stated in a corporate tax law amendment that DMTT will apply to companies with global consolidated revenues of €750 million (approximately $793 million) or more in at least two of the four fiscal years prior to the tax's effective date.
The UAE Ministry of Finance also announced that it is considering introducing some corporate tax incentives, including a new research and development (R&D) tax incentive, which will come into effect in 2026. This initiative aims to encourage R&D activities and support innovation, with potential tax credits ranging from 30% to 50%, depending on the company's scale of operations and revenue in the UAE. Additionally, the Ministry is considering refundable tax credits for high-value employment activities, such as senior management and other key personnel contributing to the UAE's economy. These credits will be granted as a percentage of qualifying salary costs and will be applied starting in 2025.
This tax reform by the UAE not only aligns with global tax norms but also represents a strategic decision to further enhance international tax transparency and compliance. Through this measure, the UAE aims to continue attracting high-quality investments while deepening its economic cooperation with the global economy.
Picture Source : WAM