Beginning in January 2024, the United Arab Emirates will impose a minimum top-up tax (DMTT) of 15% on multinational corporations with considerable global revenue. This action is consistent with the OECD’s global minimum corporate tax accord, which seeks to ensure that major firms pay a fair share of global taxes while discouraging tax avoidance.
Key Points:
- Scope: The DMTT will apply to companies with consolidated global revenue exceeding 750 million euros in at least two of the preceding four financial years.
- Implementation: The tax is part of the OECD’s Two-Pillar Solution, requiring multinational enterprises to pay an effective tax rate of at least 15% in each country of operation.
- UAE’s Response: The UAE has been proactively implementing tax reforms, including the introduction of a 9% business tax in 2023 with exemptions for free zones.
Government Incentives:
To help enterprises and stimulate innovation, the UAE’s finance ministry is exploring several corporate tax breaks:
- Research and Development (R&D) Incentive: A potential 30-50% refundable tax credit for R&D expenses, applicable from 2026.
- High-Value Employment Incentive: A refundable tax credit for companies with significant employment costs, potentially applicable from January 1, 2025.
Impact of the UAE Minimum Top-Up Tax on Businesses
The DMTT will most likely affect the tax tactics of huge international corporations operating in the UAE. It is critical that businesses understand the consequences of this new levy and calculate their tax liability appropriately.
Emirates Express Can Help:
Emirates Express, a prominent business setup and consultancy organization in the UAE, can help businesses navigate the complexity of the new tax legislation. Our skilled team can offer help on:
- Tax planning and optimization strategies
- Compliance with the DMTT and other relevant tax laws
- Claiming available tax incentives
Contact us today to schedule a consultation and ensure your business is well-prepared for the upcoming changes in the UAE’s tax landscape.