UAE Top Up Tax: Four Essential Steps for Multinationals in 2025

The UAE is introducing a 15% Domestic Minimum Top-Up Tax (DMTT) on large multinational enterprises (MNEs) starting in 2025. This change aligns the country with global tax reform initiatives led by the Organisation for Economic Co-operation and Development (OECD) and aims to ensure fair tax practices across jurisdictions. The UAE top up tax represents a significant development for businesses operating in the region, particularly multinational corporations.

Understanding the UAE Top Up Tax

The UAE top up tax will apply to multinational companies with consolidated global revenues of €750 million or more in at least two of the four financial years preceding its implementation. Large multinational enterprises (MNEs) are required to pay a minimum of 15% tax on the profits generated in the UAE, up from the current corporate tax rate of 9%, effective for financial years starting on or after January 1, 2025.

This move adheres to the OECD’s GloBE (Global Anti-Base Erosion) Model Rules, which are part of the Two-Pillar Solution designed to address tax base erosion and profit shifting. The UAE top up tax ensures large MNEs pay their fair share in every jurisdiction where they operate, promoting greater transparency and equity.

Read our article “Understanding the Dubai Tax Framework” to explore all the taxes currently implemented in the UAE.

Key Features of the UAE Top Up Tax

1. Who Is Affected? The tax applies exclusively to MNEs meeting the €750 million revenue threshold, leaving smaller businesses unaffected and maintaining a supportive environment for growth.
2. Scope of the Tax The 15% minimum tax is calculated on profits generated within the UAE, ensuring compliance with OECD standards and reducing the potential for profit shifting.
3. Implementation Date The tax will take effect for financial years beginning on or after January 1, 2025, giving companies sufficient time to prepare.
4. Future Incentives The UAE Ministry of Finance is exploring tax incentives, including research and development (R&D) tax credits and credits for high-value employment activities, to support economic growth and competitiveness alongside the UAE top up tax.

Implications for Businesses

The UAE top up tax represents a shift in the corporate tax landscape. For multinational enterprises, it necessitates careful planning and adjustment. Companies must:

• Review their global revenue structures to determine eligibility and potential tax liability.
• Develop strategies to ensure compliance while minimising operational disruptions.
• Explore available incentives, such as R&D and high-value employment tax credits, to mitigate the impact of higher tax obligations.

The UAE’s approach to balancing its tax framework with economic growth objectives means businesses can expect both challenges and opportunities.

WellTax offers comprehensive support to navigate these complexities, helping clients with tailored strategies for compliance, tax planning, and leveraging available incentives to optimise their operations.

Incentives on the Horizon

The UAE Ministry of Finance is considering new measures to encourage economic growth and innovation. These include:

• R&D Tax Incentives: Set to take effect in 2026, these incentives may provide 30-50% tax credits for qualifying R&D activities conducted in the UAE. These measures align with OECD guidelines and aim to stimulate innovation within the country.
• Employment Tax Credits: From 2025, businesses may benefit from refundable tax credits for high-value employment activities, aimed at enhancing the UAE’s economic competitiveness. This incentive targets senior personnel and other key roles that contribute significantly to the economy.

By incorporating these incentives, the UAE is creating an environment that balances compliance with opportunities for growth, even as the UAE top up tax is introduced.

WellTax can assist businesses in identifying and applying for these incentives, ensuring clients maximise their benefits while maintaining full compliance with the evolving regulatory landscape. Visit our page Tax Incentives & Reliefs to discover how WellTax can support your company.

Preparing for the UAE Top Up Tax

As the 2025 implementation date approaches, businesses should take the following steps to prepare for the UAE top up tax:

1. Assessment: Evaluate whether your company meets the criteria for the UAE top up tax and estimate its financial impact. Understanding your position is crucial for planning.
2. Compliance Planning: Develop a strategy to adapt to the new tax requirements while maintaining operational efficiency. Early preparation will reduce the likelihood of disruptions.
3. Leverage Incentives: Evaluate opportunities to utilise available tax incentives to reduce liabilities and support business growth. These incentives could offset some of the financial impacts of the UAE top up tax.
4. Engage with Experts: Consult with tax professionals, like WellTax, who have expertise in the UAE’s regulatory landscape to ensure compliance and strategic alignment.

Expert Support for the UAE Top Up Tax

For businesses seeking guidance, professional tax consultants can provide valuable assistance. WellTax, for example, specialises in helping companies understand and adapt to changes in tax regulations. With expertise in tax and accounting, WellTax supports businesses in achieving compliance while identifying opportunities to optimise their tax strategies.

Conclusion

The introduction of the UAE top up tax reflects the country’s commitment to aligning with global tax standards. While the new tax regime presents challenges, it also offers opportunities for businesses to innovate and grow within a compliant framework.

As companies prepare for these changes, leveraging available incentives and seeking expert guidance will be crucial. The UAE top up tax marks a new phase in the country’s tax landscape, one that balances transparency with economic opportunity. By acting now, businesses can ensure a smooth transition and position themselves for success in 2025 and beyond.

Read our article “Corporate Tax Planning in the UAE” for a detailed guide on how to keep your company compliant with the ever-changing UAE regulations.