UAE Introduces New Top-up Tax for Multinationals

The UAE Ministry of Finance issued a Cabinet Decision on a new Top-up Tax for Multinational Enterprises. Aligned with OECD rules, the UAE DMTT targets MNEs with high revenues. Exclusions and exemptions apply, and the tax aims to boost UAE's competitive edge as an investment hub.

The United Arab Emirates' Ministry of Finance has unveiled Cabinet Decision No. 142 of 2024, introducing a new Top-up Tax for Multinational Enterprises (MNEs) operating within its borders. This tax, named the UAE Domestic Minimum Top-up Tax (UAE DMTT), aligns with the Organisation for Economic Co-operation and Development (OECD)'s GloBE Model Rules.

The UAE DMTT targets MNEs with annual global revenues of EUR750 million or more, requiring them to pay additional taxes on Excess Profits calculated after accounting for tangible assets and payroll costs. Importantly, the regulation provides relief via Substance-based Income Exclusion, and exempts entities meeting specified de minimis criteria from taxation.

In fostering an attractive investment climate, the UAE has structured the DMTT to exclude certain Investment Entities, and will not impose the tax during the initial stages of an MNE's international operations, provided that specific ownership conditions are met. Further guidelines and the Cabinet Decision can be accessed on the UAE Legislation's official website.