The UAE Ministry of Finance has rolled out an ambitious set of updates to its corporate tax framework, signaling a new era of economic innovation and global alignment. Among the standout announcements is the introduction of the Domestic Minimum Top-up Tax (DMTT), set to take effect in 2025, alongside groundbreaking tax incentives targeting research, development (R&D), and high-value employment activities. These initiatives aim to supercharge the nation’s economic growth, attract global investment, and solidify the UAE’s position as a leader in sustainable development.
At the heart of this strategy is the DMTT, a critical element of the UAE’s adoption of the OECD’s Two-Pillar Solution. This framework ensures large multinational enterprises (MNEs) operating within the UAE pay a minimum effective tax rate of 15% on their profits, closing gaps in tax practices and fostering a transparent business environment. The DMTT will apply to MNEs with consolidated global revenues exceeding €750 million in at least two of the preceding four financial years. This move aligns the UAE’s tax policies with global standards, enhancing its reputation as a modern and forward-thinking economic hub.
Complementing the DMTT are two transformative tax incentives. First, the R&D Tax Incentive, designed to drive innovation, will offer eligible businesses a 30-50% tax credit based on their R&D expenditure within the UAE. This initiative, guided by the OECD’s Frascati Manual, underscores the nation’s commitment to fostering groundbreaking advancements across industries. The incentive is anticipated to take effect in 2026, following extensive public consultations and feedback.
The second incentive targets high-value employment activities, encouraging businesses to attract and retain top-tier talent. Starting in 2025, companies can benefit from refundable tax credits tied to the salaries of senior executives and key personnel whose roles significantly contribute to the UAE’s economic landscape.
These updates are not just policy shifts—they are bold steps toward an economically vibrant future. By marrying innovation, sustainability, and global competitiveness, the UAE is setting a new standard for tax policy in a rapidly evolving world, proving that it’s not just keeping pace but leading the charge.
