Key Details of the New Tax Policy

Who Will Be Affected?

The new tax rate will apply to multinational enterprises with consolidated global revenues of €750 million or more in at least two of the four financial years immediately preceding the tax year. This threshold ensures that only the largest global corporations will be subject to the increased rate.

Current Tax Landscape

The UAE began implementing a 9% business tax just a year ago, with exemptions for many free zones across the country. The upcoming change represents a significant increase in the tax burden for large MNEs operating in the Emirates.

Regional Context

The UAE is not alone in implementing these changes. Other Gulf Cooperation Council (GCC) countries are also adapting their tax policies:

• Bahrain announced the introduction of a Domestic Minimum Top-up Tax (DMTT) starting from 1 January 2025.
• Kuwait plans to implement a 15% corporate tax rate for large MNEs beginning in 2025.

These moves indicate a broader trend in the region towards aligning with global tax standards and ensuring fair taxation of large multinational corporations.

Implications and Objectives

The UAE Ministry of Finance has stated that 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”.

This initiative is part of a global effort to ensure that large MNEs pay a minimum 15% tax on profits in each country where they operate. As the UAE continues to position itself as a global business hub, this tax policy change demonstrates its commitment to international cooperation and fair taxation practices. The impact on the country’s attractiveness to multinational corporations remains to be seen, but it’s clear that the UAE is prioritising long-term economic sustainability and global integration over short-term tax incentives.

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