UAE to Implement 15% Minimum Tax on Multinationals Starting 2025

The UAE will implement a 15% minimum effective tax rate on multinational enterprises (MNEs) starting from January 1, 2025. This initiative, known as the Domestic Minimum Top-Up Tax (DMTT), targets MNEs with consolidated global revenues of €750 million (approximately Dh3 billion) or more in at least two of the four financial years preceding the financial year in which the tax applies.

Announced by the Ministry of Finance, the DMTT aims to create a fair and transparent tax framework consistent with international guidelines, specifically the OECD's Two-Pillar Solution. This measure underscores the UAE's commitment to maintaining a business-friendly environment while enhancing economic competitiveness and ease of doing business.

Planned Incentives to Foster Innovation and Economic Growth

To promote sustainable growth, the Ministry of Finance is considering additional corporate tax incentives under Federal Decree-Law No. 47 of 2022.

• R&D Tax Incentive: Expected to launch for tax periods starting January 1, 2026, this incentive will support research and development (R&D) within the UAE. Offering a potential 30–50% tax credit, it will be refundable based on revenue and employee numbers. Qualifying R&D activities must adhere to OECD Frascati Manual guidelines and be conducted locally.

• Tax Credit for High-Value Employment Activities: Effective January 2, 2025, this refundable tax credit will encourage businesses to engage in high-value employment roles that significantly benefit the UAE’s economy. The incentive will apply as a percentage of eligible salaries for senior personnel such as C-suite executives performing core business functions.

The final structure of these incentives will depend on legislative approvals, with further details expected to be released by the Ministry of Finance.

 

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