DUBAI: Starting from January, the UAE will implement a 15 percent Domestic Minimum Top-up Tax (DMTT) on large multinational companies operating within the country, according to a statement by the finance ministry on Monday. This move aims to enhance non-oil revenue for the government.
The DMTT is aligned with the OECD's global minimum corporate tax agreement, which has 136 signatories, including the UAE. The agreement ensures that major companies pay a minimum tax rate of 15 percent, making tax avoidance more challenging.
Under amendments to the corporate tax law, the UAE's finance ministry clarified that the DMTT will apply to companies with consolidated global revenue of 750 million euros ($793.50 million) or more in at least two of the four financial years preceding the tax implementation.
The UAE, including Dubai, serves as a key hub for multinational corporations in the Middle East. These tax amendments follow the introduction of a 9 percent business tax in the UAE a year ago, with exemptions for numerous free zones that drive its economy.
The DMTT is part of the Organization for Economic Co-operation and Development’s Two-Pillar Solution, which mandates that large multinational enterprises pay a minimum effective tax rate of 15 percent on profits in every country where they operate.
Additionally, the UAE’s finance ministry is exploring the introduction of several corporate tax incentives, including one for research and development that would be effective for tax periods starting in 2026. This expenditure-based incentive could offer a refundable tax credit ranging from 30 percent to 50 percent, depending on the company's operations and revenue in the UAE.
The ministry is also considering a refundable tax credit for high-value employment activities, which would be granted as a percentage of eligible income costs for employees. This incentive could be applied as early as January 1, 2025.
These proposed incentives are still subject to legislative approval.
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