The United Arab Emirates (UAE) is set to introduce a new tax system known as the Domestic Minimum Top-up Tax (DMTT) starting this January, according to the finance ministry stated on Monday, as the government aims to boost non-oil revenue.
This tax requires a number of large multinational companies with global revenues of at least €750 million ($793.5 million) in two of the last four years to pay a minimum tax rate of 15%.
This action aims to increase non-oil revenue for the government. The DMTT is part of an international agreement led by the OECD.
It will ensure that a large number of global companies pay at least 15% tax in every country where they operate, making it harder for them to avoid taxes.
The UAE is a key hub for multinational businesses in the Middle East, imposes a 9% corporate tax, with many free zones that support the local economy remaining exempt.
The UAE’s Ministry of Finance also explores tax incentives for businesses.
Starting in 2026, companies will receive refundable tax credits of 30-50% for research and development (R&D) expenses.
It will depend upon their size and the revenue they will generate. Another proposal offers tax credits based on employee expenses.
It will start in January 2025. However, these incentives have yet to be legislatively approved by the government.