UAE implements 15% minimum tax for multinationals in 2025
A new tax will be levied on multinational companies in the Emirates by the UAE. Mega-multinationals (MNEs) have to incur an effective tax rate at the minimum of 15 per cent on profits.
Ministry of Finance announced Monday that Domestic Minimum Top-up Tax (DMTT) will be introduced for financial years starting on or after 1 January 2025 in order to provide a level and transparent taxation system which meets international standards.
The DMTT will apply to multinational companies operating in the UAE that generate global consolidated revenues of €750 million (about Dh3 billion) or more in at least two of the four years immediately preceding the financial year for which the DMTT applies, the Ministry said.
We shall get additional information about this law from the Ministry of Finance in due course.
Dubai is ensuring that business has become more business-friendly with commitment to national strategic goals of increasing economic competitiveness and business environment. This important update is in line with the country’s pledge to follow the Organisation for Economic Co-operation and Development’s (OECD) Two-Pillar Solution.
R&D tax incentive to come
In order to encourage sustainable growth, innovation and investment, Ministry of Finance plans to issue the following Corporate Tax Incentives under Federal Decree-Law No. 47 of 2022.
We are looking at a research and development (R&D) tax incentive to spur research and development (R&D) activity and contribute to innovation and economic development in the UAE. Based on input provided in public consultations in April 2024, the incentive will be effective for tax years beginning or ending after January 1, 2026.
This R&D tax incentive will be an expenditure based (30-50 per cent tax credit), refunded on the basis of the business’s revenue and number of workers in UAE.
Qualifying R&D activities will fall within the parameters of the OECD’s Frascati Manual and be conducted within the UAE.
Tax rebate on specialised high-quality jobs activities
The other possible boost is a tax credit for high-value job creation. It is meant to make companies feel compelled to do business that generates economic value, spurs innovation, and makes the UAE more globally competitive.
The incentive is slated to be available from January 2, 2025 and will be granted in the form of a percentage of qualifying salary costs for workers performing high value employment activities. This also includes C-suite executives and other senior level staff that work on core business operations which create a great deal of value to the UAE economy.
Final versions and implementation of the incentives proposed would need legislative support.
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