UAE To Introduce 15% Minimum Tax For Enterprises In 2025

Starting January 1, 2025, the UAE will introduce a Domestic Minimum Top-up Tax (DMTT), targeting large multinational enterprises (MNEs). This tax ensures that these companies pay a minimum of 15% effective tax on their profits, aligning with international tax standards. The DMTT applies to multinationals with global revenues exceeding €750 million (approximately AED 3 billion) in at least two of the four financial years prior to the tax’s implementation. Further details on the legislation will be provided by the UAE’s Ministry of Finance in the coming months, but keep reading to find out all the important details we have so far.

Why This Change Coming To UAE?

The UAE is taking steps to match the Organisation for Economic Co-operation and Development’s (OECD) Two-Pillar Solution, a global framework designed to ensure fairer corporate taxation. These tax measures also align with the UAE’s broader goals of boosting its economic competitiveness and fostering an environment where businesses thrive. By introducing fair tax policies, the UAE aims to balance attracting global investments with meeting international standards.

Incentives To Fuel Innovation & Growth

Encouraging High-Value Roles

From January 2025, businesses will benefit from a new tax incentive designed to promote high-value employment activities.

• How It Works: Companies can claim a refundable tax credit on the salaries of senior executives and key personnel involved in critical business functions that drive economic value in the UAE.
• Why It Matters: This incentive is expected to attract top talent and further enhance the UAE’s global standing as a center for innovation and leadership.

Promoting Research & Development (R&D)

To further encourage innovation, the UAE also plans to introduce an R&D tax incentive starting in 2026. This initiative aims to stimulate research-driven economic growth by offering companies significant tax benefits.

• Benefits: Businesses can claim a refundable 30-50% tax credit on qualifying R&D expenses, depending on their size and revenue.
• Eligible Activities: Only R&D conducted within the UAE and aligned with international standards (based on the OECD’s Frascati Manual) will qualify.

With more updates expected soon, businesses can prepare for a new era of growth and opportunity in the Emirates. Stay tuned to Gulf Buzz to know the latest updates as these changes progress.