UAE Ministry of Finance Introduces New Tax Measures to Boost Growth and Innovation

The UAE Ministry of Finance has announced updates to Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, introducing the Domestic Minimum Top-up Tax (DMTT) and proposed tax incentives to foster growth and innovation.

Domestic Minimum Top-up Tax (DMTT)

The DMTT will take effect from financial years starting on or after January 1, 2025, following Federal Decree Law No. 60 of 2023. This aligns the UAE with the Organisation for Economic Co-operation and Development's (OECD) Two-Pillar Solution, ensuring a minimum effective tax rate of 15% for multinational enterprises (MNEs). The DMTT applies to MNEs with consolidated global revenues of €750 million or more in at least two of the four preceding financial years. It reflects the UAE’s commitment to maintaining a fair and transparent tax system in line with OECD standards.

Proposed Tax Incentives

To support innovation and economic growth, the Ministry is considering two key incentives:

1. R&D Tax Incentive: Effective January 1, 2026, this expenditure-based incentive offers a 30-50% refundable tax credit to promote research and development activities within the UAE, aligned with OECD guidelines.
2. High-Value Employment Tax Credit: Proposed for January 1, 2025, this incentive offers a refundable tax credit on eligible salary costs for senior roles that add significant economic value, such as C-suite executives.

These measures aim to enhance the UAE’s global competitiveness, encourage sustainable investment, and foster innovation. Final implementation is subject to legislative approval, with further guidance to follow.

This announcement underscores the UAE’s dedication to creating a robust and business-friendly tax framework, supporting its long-term strategic goals.

News Source: Emirates News Agency