The UAE Ministry of Finance has announced updates regarding some of the provisions of the Federal Legislative Decree No. 47 of 2022 regarding corporate and business taxes.
Publish dateWednesday 11 December 2024 - 10:14
According to Amac News: Citing the ministry, these updates include the introduction of the Domestic Minimum Tax (DMTT) and tax incentives to support growth and innovation.
Domestic Minimum Tax (DMTT) will come into effect in the UAE from 1 January 2025 for financial years commencing on this date.
According to the Ministry of Finance of the UAE, this action shows the country's commitment to implementing the Organization for Economic Cooperation and Development (OECD) two-tier solution, which aims to create a fair and transparent tax system in accordance with global standards.
The second base rules require large multinational corporations to pay a minimum effective tax rate of 15 percent on their profits in each country in which they operate.
The DMTT will apply to multinational companies with a combined worldwide turnover of €750 million or more. This income must have been recorded in at least two of the four financial years immediately preceding the financial year in which the DMTT is applicable. The implementation of the DMTT in the UAE will be closely aligned with the OECD's GloBE model rules.
The UAE Ministry of Finance said that it will announce more details about this law in the near future.
The ministry also said that it is considering introducing several corporate tax incentives under Federal Legislative Decree No. 47 of 2022.
One of the proposed incentives is the research and development (R&D) tax incentive, which aims to encourage research and development activities and economic growth in the UAE.
Based on feedback received in public consultations conducted in April 2024, the incentive is expected to take effect on January 1, 2026 for new tax periods.
This tax incentive will be cost-based and suggests a possible tax rate of 30-50%, which will be refundable depending on the company's revenue and number of employees in the UAE.
Eligible R&D activities will be aligned with the OECD Knowledge Access Guidelines and must be conducted within the UAE.
Domestic Minimum Tax (DMTT) will come into effect in the UAE from 1 January 2025 for financial years commencing on this date.
According to the Ministry of Finance of the UAE, this action shows the country's commitment to implementing the Organization for Economic Cooperation and Development (OECD) two-tier solution, which aims to create a fair and transparent tax system in accordance with global standards.
The second base rules require large multinational corporations to pay a minimum effective tax rate of 15 percent on their profits in each country in which they operate.
The DMTT will apply to multinational companies with a combined worldwide turnover of €750 million or more. This income must have been recorded in at least two of the four financial years immediately preceding the financial year in which the DMTT is applicable. The implementation of the DMTT in the UAE will be closely aligned with the OECD's GloBE model rules.
The UAE Ministry of Finance said that it will announce more details about this law in the near future.
The ministry also said that it is considering introducing several corporate tax incentives under Federal Legislative Decree No. 47 of 2022.
One of the proposed incentives is the research and development (R&D) tax incentive, which aims to encourage research and development activities and economic growth in the UAE.
Based on feedback received in public consultations conducted in April 2024, the incentive is expected to take effect on January 1, 2026 for new tax periods.
This tax incentive will be cost-based and suggests a possible tax rate of 30-50%, which will be refundable depending on the company's revenue and number of employees in the UAE.
Eligible R&D activities will be aligned with the OECD Knowledge Access Guidelines and must be conducted within the UAE.
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Source : news agency wam
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