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The United Arab Emirates (UAE) is poised to introduce a minimum top-up tax (DMTT) of 15 percent on large multinational enterprises (MNEs) operating in the country.
This will be implemented on or after January 1, 2025, aiming to establish a fair and transparent system in line with global standards.
According to the Ministry of Finance, the DMTT will be imposed on MNEs with consolidated global revenue of 750 million euros or more in two out of four preceding financial years.
This come a year after the UAE implemented a 9 percent corporate tax, with exemptions for the country’s various free zones.
This strategic step reflects the ‘UAE’s commitment to implementing the Organisation for Economic Co-operation and Development’s (OECD) Two-Pillar Solution’, which is aimed at establishing a fair and transparent tax system aligned with global standards.
The OECD’s two-pillar reform initiative established a worldwide minimum corporate tax to ensure that large MNEs pay at least 15 percent tax on profits in any country where they operate.
According to the OECD, the initiative aims to solve tax difficulties originating from the economy’s digitisation and globalisation, as well as to limit tax competitiveness.
In September, Bahrain announced that it will introduce DMTT on large MNEs starting January 1, 2025.
Kuwait is also set to impose a 15 percent corporate tax rate for large MNEs from the start of 2025.
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