- DMTT is part of the OECD Global Minimum Corporate Tax Agreement.
- The United Arab Emirates is considering introducing corporate tax incentives.
- The incentive would provide a refundable tax credit of up to 50%.
DUBAI: The UAE will impose a 15% minimum additional tax (DMTT) on large multinational companies operating in the country from January, the Finance Ministry said on Monday, as the government seeks to boost non-oil revenues.
The DMTT is part of the OECD’s global minimum corporate tax agreement which has 136 signatories, including the UAE, to ensure large companies pay a minimum of 15% and make it harder to tax evasion.
As part of amendments to the Corporate Tax Law, the UAE Ministry of Finance said the DMTT would apply to companies with a consolidated global turnover of €750 million ( $793.50 million) or more during at least two of the four fiscal years preceding those in which the tax is applied. comes into force.
The UAE, including Dubai, is a hub for multinationals in the Middle East and the tax changes come a year after the UAE began imposing a 9% business tax, with exemptions for many free zones that fuel their economy.
The DMTT is part of the Organization for Economic Co-operation and Development’s (OECD) two-pillar solution, which stipulates that large multinational companies pay a minimum effective tax rate of 15% on profits in each country where they operate.
The UAE Ministry of Finance said it was also considering introducing a number of corporate tax incentives, including one for research and development (R&D), which would apply for tax periods beginning in 2026.
The expense-based incentive would provide a potential refundable tax credit of 30 to 50 percent depending on the size of the company’s operations in the UAE and its revenue, the ministry added.
A refundable tax credit for high value-added professional activities, which would be granted to companies in the form of a percentage of employees’ eligible income costs, is also being studied and could be applied from January 1, 2025, the ministry said.
The proposed incentives remain subject to legislative approval.
($1 = 0.9452 euros)