Breaking: UAE increases Corporate Tax to 15%

Starting January 1, 2025, the UAE increases Corporate Tax to 15 percent for large multinational companies (MNEs) with global revenues exceeding €750 million ($793 million).

This is a big shift from the UAE’s signature 9% corporate tax rate, a key pillar of its appeal as a low-tax haven for global businesses.

The move aligns with international tax reforms and reflects the UAE’s commitment to balancing economic growth with fairness in the tax system.

Reasons Behind the UAE’s New Tax Policy

The 15% minimum tax is part of the UAE’s alignment with global tax reforms led by the OECD.

This initiative addresses critical challenges posed by the digitalization and globalization of the economy, ensuring multinational companies pay their fair share of taxes where profits are earned.

By implementing this measure, the UAE contributes to a global standard that limits tax competition and prevents profit shifting to low-tax jurisdictions.

The new tax is expected to raise around $220 billion worldwide, ensuring that big companies pay their fair share. While this may affect multinational companies in the UAE, the government is also introducing new incentives to ease the impact.

UAE Corporate Tax Incentives to Drive Innovation and Business Growth

To help offset the impact of the new tax, the UAE is introducing several key incentives that encourage businesses to continue growing and innovating under the new regime:

R&D Tax Incentive

Starting in 2026, the UAE will offer 30% to 50% tax credits on eligible research and development (R&D) expenses. This initiative is designed to attract companies investing in advanced technologies and support the UAE’s goal of becoming a global leader in innovation.

Tax Credit for High-Value Employment

In 2025, businesses hiring senior executives and key personnel will be eligible for refundable tax credits based on a percentage of their salaries. This incentive aims to attract more talent to the UAE and help companies remain competitive in the global market.

Adapting to the New Tax Landscape

As the UAE implements these changes, it underscores its commitment to being a forward-thinking and globally aligned business destination.

Contact Savory & Partners to learn more about the new tax changes and how to adapt seamlessly.