Learn how the UAE’s new 15% minimum corporate tax for multinational companies, effective in 2025, impacts business operations and global tax compliance. Stay prepared with BMS Auditing.
The United Arab Emirates is the leading business hub around the world and it attracts business globally through its tax-friendly business environment. Effective from January 2025, the country plans to introduce a domestic minimum top-up tax (DMTT) at 15% on large multinational companies. The Organization for Economic Cooperation Development(OECD) established this initiative as a part of the global minimum tax framework to maintain a fair and transparent tax practice and prevent tax evasion.
This transformation is a significant move towards enhancing UAE non-oil revenues while aligning with UAE global standards.
This blog delves into the key aspects of this transformation and implication on UAE corporate tax on multinational companies.
Global Tax Reform: UAE’s Strategic Alignment
The UAE Corporate Tax 2025 aligns with the global tax reform initiatives led by the OECD through the Pillar Two framework. The new law states that businesses must pay a mandatory minimum corporate tax of 15% on the annual turnover of AED 3 billion or more.
Who will be targeted for 15% corporate tax?
The 15% corporate tax will apply to:-
- Multinational companies with a global revenue exceeding EUR 750 million in at least two of the four financial years. According to DMTT, businesses must bear the global minimum corporate tax of 15% on profits earned within the UAE.
- This initiative must align with the OECD’s global tax reform.
This new tax reform applies only to large enterprises, with small and medium-sized enterprises remaining unaffected.
Implication of New Corporate Tax on Multinational Organizations
With the introduction of the new Domestic Minimum Top-Up Tax (DMTT), MNE must overcome challenges and opportunities:-
- Compliance and Reporting: UAE multinational companies must ensure financial statements adhere to the new tax policy. It is important to follow strict adherence to UAE corporate tax compliance.
- Operational Cost: A new corporate tax of 15% results in enhancing operational expenses such as high tax liabilities, tax compliance costs, and reporting, which affect the budget of multinational companies.
- Maintaining Global Competition: The UAE remains an attractive business hub with a robust strategic location, and double taxation treaties despite the new tax policy.
Key Benefits of 15% Corporate Tax for the UAE Economy
The introduction of a 15% corporate tax provides several advantages:-
- Global Alignment: UAE being a global business hub adheres to OECD global standards.
- Higher Revenue: The 15% new corporate tax will boost revenue and strengthen the UAE economy.
- Economic Diversification: The tax revenue will contribute to the government revenue from non-oil sectors such as manufacturing, construction, education, technology, and healthcare.
A Strategic Approach: Preparing for New Tax Changes:
Large and Multinational Organizations operating in the United Arab Emirates or willing to enter the country should meticulously assess the implication of tax policy on financial strategies. Partnering with BMS Auditing is essential to stay updated on the latest changes and keep pace with all the regulatory compliances.
Why partner with BMS Auditing?
As a change in the new tax reform, multinational businesses must prepare for this new transformation. BMS Auditing, a reputed and accredited corporate consultant in Dubai, helps diverse clientele to assist in navigating the regulatory corporate tax changes.
Partner with us:-
- Immensely experienced tax experts
- Strong Regional presence: Saudi Arabia, Kuwait, Bahrain, Oman, Qatar, UAE
- Value Added Service - we will go the extra mile and share valuable, actionable insights along the way
- Periodic Updates from FTA for guaranteed compliance
Our skilled corporate tax consultants with a wealth of experience and knowledge are equipped to help companies of all sizes stay updated and identify new tax frameworks while ensuring corporate tax compliance and OECD guidelines.
Our expert tax team ensures that all our clients stay compliant with the ever-evolving standards of UAE’s dynamic market.
Call BMS Auditing today for a free consultation!
