Mohnish Wadhwa’s Post

The United Arab Emirates (UAE) has announced the implementation of a 15% Domestic Minimum Top-up Tax (DMTT) on large multinational enterprises (MNEs), effective for financial years starting on or after January 1, 2025. This measure aligns with the Organisation for Economic Co-operation and Development’s (OECD) Pillar Two framework, which establishes a global minimum corporate tax rate to prevent base erosion and profit shifting. Key Details: • Applicability: The DMTT targets MNEs with consolidated global revenues of at least €750 million (approximately $793.50 million) (approximately AED 3000 million) in at least two of the four financial years preceding the effective tax period. • Purpose: By introducing this tax, the UAE aims to boost non-oil revenues and ensure that large MNEs operating within its jurisdiction are subject to a minimum effective tax rate of 15%, in line with international tax standards. • Implementation: The UAE’s Ministry of Finance has amended the Corporate Tax Law to incorporate the DMTT provisions, reflecting the country’s commitment to the OECD’s Two-Pillar Solution for a fair and transparent tax system. This development follows the UAE’s earlier introduction of a 9% corporate tax, which included exemptions for numerous free zones that are pivotal to the nation’s economy. The DMTT ensures that large MNEs are taxed at a minimum rate domestically, thereby preventing potential additional taxation in other jurisdictions where their parent companies are based. For businesses operating in the UAE, it’s crucial to assess the impact of the DMTT on their operations and ensure compliance with the new tax requirements. Consulting with tax professionals is advisable to navigate this transition effectively. #UAE #DMTT #CorporateTax #TaxLaw #GlobalTax #OECD #PillarTwo #Multinationals #TaxCompliance #UAEFinance #AED #InternationalTax #EconomicPolicy

With the introduction of the 15% Domestic Minimum Top-up Tax, the UAE aligns with global tax standards under the OECD framework. Multinational businesses operating in the region must now prepare for significant changes in compliance and strategy. Learn what this means for the UAE’s position as a global business hub and the future of corporate taxation. Words by Nivetha Dayanand Follow the link for more details: https://lnkd.in/dKy_9Awv #uaetax

🌍 Major Update to UAE Corporate Tax Rules 🌍 Starting from January 1, 2025, the UAE will implement the Domestic Minimum Top-Up Tax (DMTT) as part of its commitment to the OECD’s Two-Pillar Solution for a fair and transparent global tax system. 📌 Key Highlights: Applicable to Multinational Enterprises (MNEs) with consolidated global revenues of €750 million or more in at least two of the last four financial years. Ensures that these MNEs pay a minimum effective tax rate of 15% on UAE-generated profits, aligning with the OECD's Pillar Two GloBE Model Rules. The DMTT supplements the UAE’s standard corporate tax rate of 9%, helping prevent the reallocation of taxes to other jurisdictions. 💡 This move underscores the UAE’s dedication to global tax fairness, ensuring large MNEs contribute equitably while maintaining compliance with international standards. 📈 Why This Matters: By aligning with OECD guidelines, the UAE strengthens its position as a competitive, compliant, and transparent business hub while ensuring tax revenue benefits the domestic economy. #UAE #Tax #FTA

UAE imposes new 15% tax on multinational companies The UAE is set to implement a new tax on multinational companies operating in the Emirates. Large multinational enterprises (MNEs) must pay a minimum effective tax rate of 15 per cent on their profits. The Ministry of Finance on Monday announced that Domestic Minimum Top-up Tax (DMTT) will be effective for financial years starting on or after January 1, 2025 to establish a fair and transparent tax system aligned with global standards The Ministry added that the DMTT will apply to multinational enterprises operating in the UAE with consolidated global revenues of €750 million (Approx Dh300 billion) or more in at least two out of the four financial years immediately preceding the financial year in which the DMTT applies. Further details on this legislation will be issued by the Ministry of Finance in due course. The UAE continues to enhance its business-friendly environment, reflecting its commitment to national strategic objectives such as strengthening economic competitiveness and improving ease of doing business. This major update is in line with the country’s commitment to implement the Organisation for Economic Co-operation and Development’s (OECD) Two-Pillar Solution. Proposed Tax Incentives for Growth and Innovation As part of its broader strategy to enhance economic competitiveness and foster sustainable growth, the Ministry is exploring corporate tax incentives under Federal Decree-Law No. 47 of 2022. 1️⃣Research and Development (R&D) Tax Incentive To encourage innovation and R&D activities within the UAE, an expenditure-based tax incentive is proposed. Expected to take effect for tax periods starting on or after 1 January 2026, this incentive could offer businesses a refundable tax credit of 30-50%, depending on factors such as revenue and workforce size. Qualifying R&D activities will align with the OECD’s Frascati Manual guidelines and must be conducted within the UAE. 2️⃣Tax Credit for High-Value Employment Activities Another proposed measure aims to incentivize high-value employment. Scheduled for implementation on 1 January 2025, this refundable tax credit will be granted as a percentage of eligible salary costs for employees engaged in high-value roles, including senior executives and personnel performing core business functions that significantly contribute to the UAE economy. #Tax #UAE #DMTT #MOF #Dubai #CorporateTax #TaxPolicy #TaxUpdates #TaxReform #GlobalTax #TaxCompliance #FinanceAndTax #InternationalTax #TaxStrategy

New UAE tax and incentives Following the issuance of Federal Decree Law No. 60 of 2023, a Domestic Minimum Top-up Tax (DMTT) will be effective in the UAE for financial years starting on or after January 1, 2025. This strategic step reflects the UAE’s commitment to implementing the Organisation for Economic Co-operation and Development’s (OECD) Two-Pillar Solution, aimed at establishing a fair and transparent tax system aligned with global standards. The Pillar Two rules require large multinational enterprises (MNEs) to pay a minimum effective tax rate of 15 per cent on profits in every country where they operate. The DMTT will apply to multinational enterprises operating in the UAE with consolidated global revenues of €750m ($794m) or more in at least two out of the four financial years immediately preceding the financial year in which the DMTT applies. #Dubaibusinesssetup #uaerealestate #Dubairealestate

Mutual Agreement Procedure (MAP) in the UAE: A Comprehensive Guide Cross-Border #Tax Issues in the #UAE are guided by a clear process to help in their resolution under the Mutual Agreement Procedure (MAP) of the UAE Ministry of Finance, issued on 7 January 2021.

Winter is here in Dubai (and in the GCC region), so is the Tax excitement! The Ministry of Finance has announced updates (copy of legislation awaited) in relation to certain provisions of the UAE Corporate Tax law to implement QDMTT (i.e. Pillar 2 implementation) and introduce tax incentives to support growth and innovation. Basis the media report, the Cabinet is considering Research and Development (R&D) tax incentive (expenditure-based, refundable depending on the revenue and number of employees of the business) and Tax credit for high value employment activities (percentage of eligible salary costs for C-suite executives and other senior personnel performing core business functions that add substantial value to the UAE economy). While Pillar Two does not allow for tax competition that can temper global minimum tax rate of 15% it does leave room for Qualified Refundable Tax Credits (QRTCs). QRTCs do not decrease the ETR as much as traditional tax credits and tax incentives (example tax holidays/ exemption based tax regime does) and therefore may result in lower top-up taxes. This is because the formula to calculate the ETR is the Adjusted Covered Taxes divided by the net GloBE income, and QRTCs, unlike traditional tax credits and tax incentives, are treated as adjustment to income (denominator) instead of a reduction in the Adjusted Covered Taxes (numerator), lowering the impact on the ETR. Several countries such as the UK, Ireland, Belgium, USA, Singapore have recently introduced their own domestic QRTCs, structured within the Pillar Two framework. Will be interesting to see how QRTC elements are embodied in the tax incentives legislated by the UAE government and how the same passes the muster of OECD (pertinent to note that 'No Benefit Requirement' under Pillar Two needs to be adhered). #OECD #Pillar2 #UAE

UK Tax Implications of Moving to Dubai https://bit.ly/3W7y6Fq We are currently seeing a boom in individuals relocating from the UK to Dubai. We take a look at some of the key UK tax implications of moving to Dubai, whether you are moving there for work, retirement or adventure. #expattax #expattaxadvice #expattaxadviser #expattaxadvisor #tax #taxadvice #expat #expats #dubai #UAE

Breaking news for businesses operating in the UAE and GCC! From January 1, 2025, the UAE will implement the Domestic Minimum Top-up Tax (DMTT), requiring multinational enterprises with global revenues exceeding €750 million (AED 300 billion) to pay a minimum effective tax rate of 15%. This step aligns with the OECD’s Two-Pillar Solution and reinforces the UAE's commitment to a transparent, globally aligned tax framework. What does this mean for your business? It’s time to explore tax incentives, reassess compliance frameworks, and craft sustainable tax strategies to stay ahead in this evolving landscape. Need guidance? Our experts are here to help. Reach out to us today: 📧 [email protected] | 📞 UAE: +971 4 878 6240 | Saudi Arabia: +966 54 511 2494 #UAE #CorporateTax #TaxNews #InternationalTax #GCC #BEPS #OECD #TaxCompliance #CreationBusinessConsultants

Breaking News: UAE Introduces Domestic Minimum Top-up Tax Starting January 1, 2025, the UAE will implement the Domestic Minimum Top-up Tax (DMTT), requiring multinational enterprises (MNEs) with global revenues of €750 million+ (approx. AED 300 billion) to pay a minimum effective tax rate of 15% on profits. This significant move, announced by the UAE Ministry of Finance, aligns with the OECD’s Two-Pillar Solution and demonstrates the UAE's dedication to promoting a fair, transparent, and globally aligned tax system. What Does This Mean for Your Business? As GCC states adopt the 15% corporate tax rate, this step reflects the region’s commitment to international tax reforms. While challenges are anticipated, this also presents opportunities to: ✅ Explore tax credits, incentives, and exemptions. ✅ Reassess compliance frameworks. ✅ Develop sustainable tax strategies for long-term benefits. Next Steps Businesses should act now to: -Prepare for the changes and minimize disruptions. -Enhance their compliance frameworks. -Strategically align with global and regional tax reforms. For more information or to discuss how this impacts your business, reach out to our expert team today: 📧 [email protected] | 📞 UAE: +971 4 878 6240 | Saudi Arabia: +966 54 511 2494 Let’s ensure your business stays ahead. #CreationBusinessConsultants #taxconsultants #taxservices #taxnews #BEPS #Pillar2 #GCC #SaudiArabia #UAE #Zakat #OECD #Tax #InternationalTax #GlobalMinimumTax #CorporateTax