UAE To Impose 15% Minimum Top-up Tax On Large Multinationals From January

RIYADH: The UAE will impose a 15 percent minimum top-up tax on large multinational companies starting in January, according to the country’s Finance Ministry.

This move is part of the UAE’s strategy to increase non-oil revenue and align with global tax reforms.

The Domestic Minimum Top-up Tax is part of the OECD’s global minimum corporate tax agreement, which has been signed by 136 countries, including the UAE.

The initiative aims to ensure that large corporations pay a minimum tax rate of 15 percent and address tax avoidance practices.

Under amendments to the corporate tax law, the DMTT will apply to companies with consolidated global revenues of €750 million ($793.5 million) or more in at least two out of the four financial years leading up to the tax’s implementation.

“The UAE has shifted from a tax haven to a low-tax jurisdiction with the introduction of a 9 percent corporate tax rate in 2023,” said Bal Krishen, chairman of Century Group.

The DMTT is part of the OECD’s “Two-Pillar Solution,” which mandates that large multinational enterprises pay a minimum effective tax rate of 15 percent on profits earned in each country where they operate.

Krishen said: “This move aims to create a fair tax system and boost revenues for economic diversification beyond oil.”

He said despite the 15 percent rate, the UAE will still be competitive compared to countries like the UK.

The UAE’s Finance Ministry also revealed that it is considering additional corporate tax incentives, including one focused on research and development that would apply to tax periods starting in 2026. This expenditure-based incentive could provide a refundable tax credit of 30 percent to 50 percent, depending on the size and revenue of the company.

The ministry is also exploring a refundable tax credit for high-value employment activities, which would be offered to companies based on eligible employee income costs. This incentive could come into effect as early as Jan. 1, 2025.

Such proposed incentives remain subject to legislative approval.