Abu Dhabi, UAE – The United Arab Emirates (UAE) is set to implement a 15% minimum top-up tax on large multinational corporations starting from January 2024. This move aligns the UAE with the global tax reforms outlined by the Organization for Economic Co-operation and Development (OECD).
The Domestic Minimum Top-up Tax (DMTT) is designed to ensure that multinational corporations with global revenues exceeding €750 million pay a minimum effective tax rate of 15% worldwide. This initiative aims to curb tax avoidance practices and generate additional revenue for the UAE.
“The UAE has transitioned from a tax haven to a low-tax jurisdiction with the introduction of a 9% corporate tax rate in 2023. The DMTT, as part of the OECD’s Two-Pillar Solution, further solidifies the UAE's commitment to a fair and equitable tax system,” said Bal Krishen, chairman of Century Group.
Despite the new tax, the UAE remains a competitive destination for businesses, particularly when compared to higher-tax jurisdictions like the UK.
To further incentivize business activity and innovation, the UAE's Ministry of Finance is exploring additional corporate tax incentives. These include:
Research and Development Tax Credit: A refundable tax credit of 30% to 50% for eligible R&D expenditures, effective from 2026.
High-Value Employment Tax Credit: A refundable tax credit based on eligible employee income costs, potentially effective from January 1, 2025.
These proposed incentives, subject to legislative approval, aim to attract and retain talent, drive economic growth, and position the UAE as a global business hub.
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