UAE to Introduce 15% Minimum Tax for Large Multinationals in 2025
Amie Roberts • May 8, 2025
Starting from January 1, 2025, the UAE will implement a 15% Domestic Minimum Top-Up Tax (DMTT)
The UAE Ministry of Finance has announced a major policy shift that will affect large multinational corporations operating in the country.
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Starting from January 1, 2025, the UAE will implement a 15% Domestic Minimum Top-Up Tax (DMTT) for multinational enterprise (MNE) groups with global revenues exceeding €750 million.
This move brings the UAE into alignment with the OECD's global minimum tax framework and signals a clear intent to strengthen its standing as a responsible international tax jurisdiction.
What Is the 15% DMTT?
The Domestic Minimum Top-Up Tax is a new concept introduced under the OECD's Pillar Two rules.
It ensures that large multinationals pay at least a 15% effective tax rate on their profits, regardless of where those profits are booked.
The goal is to reduce tax base erosion and profit shifting to low- or no-tax jurisdictions.
Who Will Be Affected?
The DMTT will apply to MNE groups that meet the following criteria:
- Have consolidated global revenues of €750 million or more in at least two of the four preceding financial years.
- Operate entities within the UAE.
These businesses will be required to calculate their effective tax rate in the UAE and, if it falls below 15%, pay the difference.
Why Is the UAE Implementing This?
The UAE has traditionally been seen as a low-tax environment, which has contributed to its appeal as a regional headquarters hub.
However, as international pressure grows for tax transparency and fairness, the UAE is aligning with global standards to:
- Maintain its reputation among international investors
- Avoid the risk of other countries imposing their own top-up taxes on UAE-based profits
- Prepare the economy for long-term resilience beyond oil revenues
What Should Affected Businesses Do?
Review Global Structures: Companies should analyse how profits are currently reported and whether their effective tax rates fall below the 15% threshold.
Evaluate Substance and Transfer Pricing: Entities must demonstrate economic substance in the UAE, with accurate documentation to support intercompany transactions.
Update Forecasts and Budgets: Financial models and tax projections for 2025 and beyond should incorporate the impact of DMTT.
What about Freezones?
While some activities in free zones can enjoy preferential tax rates, the new DMTT will still apply to MNE groups even if their UAE entities are in free zones, depending on group size and financial structure.
Conclusion
This new tax regime is a significant development in the UAE's fiscal policy.
While it only targets the largest multinational groups, it reflects the broader shift towards responsible taxation and transparency.
Final Thoughts
If your business is part of a multinational group operating in the UAE, now is the time to prepare for the DMTT.
We provide practical guidance on corporate tax structuring, economic substance, and global tax alignment. Whether you’re a group CFO or a professional adviser supporting one, we welcome the opportunity to work with you.
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