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Large multinational enterprises will be required to pay a minimum 15% tax on net income earned in the UAE under the Finance Ministry’s new domestic minimum top-up tax (DMTT), an increase from the current 9% corporate tax rate, the Finance Ministry said yesterday. This will apply to financial years beginning on or after January 1, 2025, state news agency Wam reports.
Who is affected? The DMTT applies to multinationals with consolidated global revenues of EUR 750 mn or more in at least two of the four financial years before the tax takes effect.
On the bright side, C-suite execs could start benefitting from a refundable tax credit: High-value employment activities could be eligible for a tax credit as a percentage of eligible salary costs as of 1 January 2025, under a separate proposal pending legislative approvals. The new scheme applies to C-suite executives and senior personnel performing core business functions that enhance the UAE’s global competitiveness.
An R&D tax incentive is also in the works: The ministry is considering an expenditure-based new research and development (R&D) tax incentive that could provide 30-50% refundable tax credits, depending on the company’s revenue and UAE-based workforce. Qualifying R&D activities would need to align with OECD guidelines and be conducted within the UAE. If approved, the incentive could take effect for tax periods starting on or after 1 January 2026.
REMEMBER- The Finance Ministry also recently issued amendments to ease administrative and tax compliance requirements for domestic businesses, foreign partnerships, and family foundations. These include considering foreign partnerships tax-transparent if they hold that status in their home country, allowing foreign firms to apply for tax-transparent status, and fewer requirements for reporting on partner composition.
