Tax For Multinationals In 2025: Multinational corporations doing business in the United Arab Emirates will soon be subject to a new tax. The minimum effective tax rate that large multinational corporations (MNEs) are required to pay on their profits is 15%.
In an effort to create a transparent and equitable tax system that complies with international standards, the Ministry of Finance declared on Monday that the Domestic Minimum Top-up Tax (DMTT) will go into force for fiscal years beginning on or after January 1, 2025.
Multinational corporations operating in the United Arab Emirates that have consolidated worldwide revenues of €750 million (about Dh300 billion) or more in at least two of the four fiscal years prior to the fiscal year in which the DMTT is applicable will be subject to the DMTT, the Ministry further stated.
The Ministry of Finance will provide further information on this law as it becomes available.
R&D Tax Incentive In The Pipeline
Under Federal Decree-Law No. 47 of 2022, the Ministry of Finance is thinking about implementing the following Corporate Tax Incentives to encourage investment, innovation, and sustainable growth.
To promote research and development (R&D) activities, as well as to stimulate innovation and economic growth in the United Arab Emirates, a tax incentive is being contemplated. The suggested benefit is anticipated to go into effect for tax periods beginning on or after January 1, 2026, based on input obtained during public consultations held in April 2024.
The R&D tax incentive will be expenditure-based, with a potential 30–50% tax credit. It will be refundable dependent on the company’s sales and workforce size in the United Arab Emirates.
The OECD’s Frascati Manual standards will govern the extent of qualifying R&D activities, which must be carried out in the United Arab Emirates.
Tax Credit For High-Value Employment Activities
A refundable tax credit for high-value employment activity is another incentive under consideration. This seeks to incentivise companies to take part in ventures that yield substantial financial gains, foster innovation, and raise the UAE’s standing in the world economy.
This incentive, which is intended to go into effect on January 2, 2025, will be given to employees who participate in high-value employment activities as a percentage of their qualified wage costs. This includes senior staff members, such as C-suite executives, carrying out essential commercial tasks that significantly boost the UAE economy.
Legislative approval is required for the proposed incentives’ final form and execution.
