UAE Introduces Corporate Tax for Multinational Enterprises and New Incentives
The UAE will impose a 15% corporate tax on large multinational enterprises (MNEs) effective for financial years starting January 1, 2025. This applies to MNEs with consolidated global revenues exceeding €750 million ($793 million) in at least two of the four financial years prior.
This move aligns with the OECD’s global minimum tax initiative under its two-pillar solution to address profit shifting and tax competition. The initiative ensures MNEs pay a minimum tax rate of 15% on profits in every country where they operate, reflecting the UAE’s commitment to global tax standards.
While the standard corporate tax rate of 9% remains for other businesses, this new Domestic Minimum Top-Up Tax (DMTT) complements the UAE’s existing tax policies, introduced in 2023, which exempt profits below Dh375,000 and tax only business turnover exceeding Dh1 million annually.
New Incentives to Boost Competitiveness
The UAE is also exploring new tax incentives to strengthen its economic position. Proposals include:
- R&D Tax Credits: Offering 30%-50% tax credits for qualifying in-country R&D activities starting January 1, 2026.
- High-Value Employment Incentives: Refundable tax credits for salaries of senior executives performing high-value activities, effective January 1, 2024.
These measures aim to stimulate innovation, attract talent, and enhance the UAE’s global competitiveness.
