UAE will impose minimum 15% top-up tax on large multinationals beginning Jan 2025

The United Arab Emirates (UAE) would impose a minimum top-up tax (DMTT) on large international corporations in order to harmonise its tax system with global standards.

The DMTT, which will go into effect for the financial years beginning on or after January 1, 2025, is part of the OECD’s global minimum corporate tax agreement, which was signed by 136 nations, including the UAE, according to the UAE’s Ministry of Finance on December 9.

The OECD is a 38-member group of industrialised economies. Point to be note that ICIS does not spell out OECD.

The new tax will apply to multinational corporations operating in the UAE that have had consolidated global revenues of at least €750 million in the previous two years, according to the ministry.

The UAE’s traders and small petrochemical converters are unlikely to be affected by the new tax.

These amendments to tax follow the implementation of a 9% business tax in 2023, with exclusions for special free zones that operate under different rules and regulations.

Along with the DMTT, tax incentives for research and development and a refundable tax credit for “high-value employment activities” would be implemented, according to the ministry.

Beginning January 1, 2026, the Research and Development tax incentive will provide a potential 30-50% tax credit, while the high-value employment tax incentive begining Jan 1, 2025, will be “granted as a percentage of eligible salary costs” to eligible employees, including C (chief)-suite executives.

According to the ministry, the efforts aim to “enhance the UAE’s global competitiveness” while also promoting innovation and growth.