The UAE is ushering in a new chapter in its tax framework: a Domestic Minimum Top-up Tax (DMTT) took effect on 1 January 2025 as the country formally embraces the OECD's international taxation system. The move reflects the UAE's commitment to reasonable, transparent taxation while continuing to support a favourable environment for business and investment.
What Is the UAE Domestic Minimum Top-Up Tax?
The DMTT applies to multinational enterprises (MNEs) with total operations in the UAE and global consolidated revenues of €750 million ($794 million) or more in at least two of the previous four financial years. Under the new rules, those companies must pay a minimum effective tax rate of 15% on their profits in every jurisdiction they operate in.
This directly corresponds with the OECD's Pillar Two rules under its Two-Pillar Solution to global tax challenges — a framework designed to curtail profit-shifting by large multinationals. The UAE's DMTT has since received provisional recognition as a "qualified" DMTT by the OECD, reinforcing the country's fiscal sovereignty and alignment with international norms.
New Business Incentives to Balance the Tax Burden
Beyond the DMTT, the UAE Ministry of Finance is introducing two significant corporate tax incentives aimed at encouraging innovation and attracting high-value talent.
R&D Tax Credit: This expenditure-based credit targets qualifying research and development activities conducted within the UAE. Eligible businesses can receive a tax credit of 30% to 50% of qualifying R&D expenditure, with a non-refundable credit capped at AED 5 million. The R&D Tax Credit is expected to apply for tax periods starting on or after 1 January 2026.
High-Value Employment Tax Credit: Starting from 1 January 2025, this incentive provides refundable tax credits on eligible salary costs for senior executives and other key personnel who perform core business functions that add substantial economic value to the UAE. It is designed to attract and retain top-tier global talent.
UAE's Broader Strategic Goals
Together, these measures seek to improve the UAE's competitive position in the global economy, facilitate inward investment, and promote sustainable development. The Ministry of Finance has indicated it will share further legislative details to give businesses clarity on implementation.
Through these tax reforms, the UAE is reinforcing its reputation as an international hub for innovation, economic growth, and business excellence — while meeting its obligations under a rapidly evolving global tax landscape.
