The UAE Ministry of Finance has issued Cabinet Decision No. 142 of 2024, providing further details on the UAE Domestic Minimum Top-up Tax (DMTT). This follows the ministry’s announcement on December 9, 2024, and aligns with the OECD’s GloBE Model Rules.
The UAE DMTT came into effect on January 1, 2025, for multinational enterprises (MNEs) with annual global revenues of €750 million or more, as recorded in at least two of the four financial years preceding its implementation.
To maintain its position as a leading investment and business hub, the UAE has introduced a series of corporate tax incentives aimed at reducing the financial impact of the DMTT and supporting key industries.
Key Tax Incentives for Multinational Enterprises
To provide relief to MNEs operating in the UAE, the government has announced several key incentives and exclusions:
- De Minimis Exclusion – A 0% top-up tax for eligible entities meeting specific criteria.
- Investment Activities Exclusion – Tax exemption for investment entities, reinforcing the UAE’s appeal to global investors.
- R&D Tax Credit (Effective 2026) – A 30-50% refundable tax credit based on qualifying research and development expenditures to encourage innovation.
- High-Value Employment Tax Credit (Now in Effect) – A refundable tax credit for eligible employee costs, supporting businesses in attracting and retaining top talent.
These incentives aim to create a tax-efficient environment that fosters business growth, investment, and innovation while ensuring compliance with global tax regulations.
How the UAE DMTT Aligns with Global Tax Standards
The UAE’s approach to implementing the 15% DMTT closely follows the OECD’s GloBE Model Rules, ensuring that multinational companies in the UAE meet international tax transparency and fairness standards.
Further relief measures include:
- Substance-Based Income Exclusion – Reduces the net Pillar Two income subject to the UAE DMTT by considering payroll and the carrying value of tangible assets.
- Transitional Tax Relief – MNE groups in their early international expansion phase will not be subject to the UAE DMTT, provided they meet specific ownership conditions.
By integrating these measures, the UAE reaffirms its pro-business stance while aligning with international tax frameworks.
What This Means for Businesses in the UAE
With these tax incentives, the UAE continues to position itself as a preferred destination for global businesses. These measures are particularly beneficial for companies engaged in research and development, high-value employment, and investment activities, ensuring they remain competitive in a rapidly evolving tax landscape.
However, adapting to the new tax regulations can be complex, making it essential for businesses to ensure compliance while optimizing their tax structures.
How Creative Zone Can Help
As one of the UAE’s leading business setup and advisory firms, Creative Zone provides expert guidance on corporate tax compliance, business incorporation, and strategic growth planning. Whether you’re an MNE adapting to new tax policies or an entrepreneur looking to expand in the UAE, our team is here to support you at every step.
Get in touch with Creative Zone today for expert assistance in handling the UAE’s evolving tax and business landscape.
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