15% Corporate Tax: UAE Aligns with Global Standards

On December 9, 2024, the UAE Ministry of Finance announced a significant update to its corporate tax framework. Starting from January 1, 2025, the UAE will implement a 15% Domestic Minimum Top-up Tax (DMTT) for large multinational enterprises (MNEs). This move aligns the UAE with the OECD’s global minimum corporate tax agreement, which aims to curb tax avoidance and ensure large corporations contribute fairly to national revenues.

The DMTT will apply to multinational companies with consolidated global revenues exceeding €750 million (£620 million) across at least two out of the last four financial years. This marks a notable increase from the current 9% corporate tax, introduced last year.

While the UAE has long been recognized for its business-friendly environment, with numerous free zones exempt from taxes, this shift signals the nation’s commitment to international tax transparency and alignment with global standards.

Implications for Multinational Enterprises

The introduction of the 15% DMTT has significant ramifications for large multinational corporations operating in the UAE:

1. Increased Tax Burden: Businesses exceeding the €750 million revenue threshold will face a higher effective tax rate, impacting their overall financial planning and profitability.
2. Compliance Challenges: Adapting to these new regulations will require companies to reassess their tax strategies and ensure compliance with UAE's evolving tax framework.
3. Opportunities for Incentives: To mitigate the impact, the Ministry of Finance is considering research and development (R&D) incentives starting in 2026, offering a refundable tax credit between 30%-50%. Additionally, credits for high-value employment activities could become available as early as January 2025.

How TAG Can Help

At TAG, we specialize in guiding businesses through complex regulatory landscapes. With the introduction of the 15% DMTT, our team of tax experts and business advisors is here to ensure your company is prepared, compliant, and well-positioned to thrive in this new tax environment.

Our Services Include:

1. Tax Advisory and Compliance: We will assess your company’s tax position, implement strategies to optimize your tax liability, and ensure compliance with the new regulations.
2. Corporate Structuring: Our team will help you evaluate whether your current business structure is still the most effective under the new tax framework.
3. Incentive Navigation: TAG Consultancy will assist your business in applying for potential tax credits for R&D and employment activities, maximizing your savings.
4. Global Tax Strategy: Multinationals with operations in multiple jurisdictions require a cohesive strategy to manage taxes globally. Our experts will align your global tax strategy with UAE and OECD requirements.

Why Choose TAG Consultancy?

1. Expertise in UAE Tax Regulations: With years of experience navigating the UAE's dynamic tax environment, we provide solutions tailored to your business needs.
2. Commitment to Compliance: Stay ahead of regulatory changes with our proactive compliance support.
3. End-to-End Support: From documentation to implementation, we manage the entire process so you can focus on growing your business.

Preparing Your Business for 2025 and Beyond

The UAE’s financial landscape is evolving rapidly, and businesses must adapt to stay competitive. Whether your company is already within the scope of the new tax or you’re preparing for potential growth, early action is essential.

Contact TAG today to assess your readiness, develop a tailored tax strategy, and unlock growth opportunities in the UAE’s evolving marketplace.

📞 +971 (0) 58 518 4291
📧 info@tagconsultancy.ae
🌐 www.tagconsultancy.ae

Prepare today to succeed tomorrow. Let TAG Consultancy guide your business through the changes ahead.