The UAE Ministry of Finance has unveiled Cabinet Decision No. 142 of 2024, which introduces the UAE Domestic Minimum Top-up Tax (UAE DMTT) for Multinational Enterprises (MNEs).
This new tax framework follows the global tax standards set by the Organisation for Economic Co-operation and Development (OECD) and aims to ensure the UAE remains a competitive investment hub.
The UAE DMTT applies to MNEs with annual global revenues exceeding €750 million, as outlined in the Consolidated Financial Statements of the Ultimate Parent Entity for at least two of the four financial years prior to the financial year when the UAE DMTT is enacted. The tax aims to ensure that profits of foreign companies in the UAE are taxed at a minimum rate, aligning with the OECD’s GloBE Model Rules.
A key feature of the UAE DMTT is the Substance-based Income Exclusion, which reduces the taxable amount by accounting for payroll and tangible asset values. Furthermore, the tax offers an exclusion for entities meeting the de minimis criteria, ensuring certain companies are not subject to the DMTT.
Investment entities, as defined under the new rules, are excluded from the UAE DMTT to preserve the UAE's appeal as a business and investment destination.
Additionally, a transitional measure ensures no UAE DMTT will be applied during the initial phase of an MNE’s activities in the UAE, provided the parent entity is not subject to a Qualified Income Inclusion Rule in another jurisdiction.
The detailed provisions of Cabinet Decision No. 142 of 2024 and guidance on the UAE DMTT can be accessed on the UAE Legislation website.
News Source: Emirates News Agency
