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New top-up tax relief package: The Finance Ministry issued a cabinet decision providing further details on the domestic minimum top-up tax (DMTT) for large multinational enterprises (MNEs), Wam reports. The tax, which took effect this year, raises the minimum corporate tax rate from 9% to 15% for MNEs with global revenues of EUR 750 mn or more in at least two of the four preceding financial years.
New relief measures + exclusions introduced: A tax carve-out has been introduced, offering relief through a substance-based income exclusion, reducing taxable excess net income based on payroll and the carrying value of tangible assets. Additionally, a de minimis exclusion allows certain qualifying entities to be fully exempt from the UAE DMTT, though the specific eligibility criteria were not disclosed. Alvarez and Marsal says the criteria includes revenues being less than EUR 10 mn or an income of less than EUR 1 mn or a loss.
Investment entities are also excluded, and transitional measures ensure no DMTT applies during the initial phase of a multinational’s international activity, provided it is not controlled by a parent entity subject to a qualified income inclusion rule in another jurisdiction.
REMEMBER- The Finance Ministry was mulling tax credits: A separate proposal pending legislative approvals suggested tax credits as a percentage of eligible salary costs for high-value employment activities, including C-suite executives and senior personnel performing core business functions that enhance the UAE’s global competitiveness. The ministry was also considering a new research and development tax incentive, potentially offering 30-50% refundable tax credits, depending on the company’s revenue and UAE-based workforce.
The UAE ❤️ foreign investments : The Finance Ministry also issued amendments in November to ease administrative and tax compliance requirements for domestic businesses, foreign partnerships, and family foundations. These include considering foreign partnerships tax-transparent if they hold that status in their home country, allowing foreign firms to apply for tax-transparent status, and fewer requirements for reporting on partner composition.
