The UAE Ministry of Finance has announced key updates to its corporate tax framework, including the introduction of a Domestic Minimum Top-up Tax (DMTT) targeting multinational enterprises (MNEs).
Effective from financial years beginning on or after January 1, 2025, the DMTT will apply to MNEs operating in the UAE with consolidated global revenues of at least €750 million in two of the four financial years preceding its implementation. While the UAE’s standard corporate tax rate remains 9%, the DMTT ensures multinationals pay an additional tax to meet a minimum effective tax rate of 15% on profits generated within the UAE.
These regulations align with the OECD’s Global Anti-Base Erosion (GloBE) Model Rules, designed to prevent tax avoidance by requiring MNEs to meet a global minimum tax rate in all jurisdictions they operate.
In addition to these measures, the Ministry plans to boost innovation through an R&D tax incentive program. Following consultations in April 2024, the ministry has proposed expenditure-based tax credits of 30-50% to encourage research and development activities, fostering a more competitive business environment.