Starting January 1, 2024, the United Arab Emirates (UAE) is set to impose a 15% tax on large multinationals (MNCs) operating within its borders, part of sweeping corporate tax reforms mandated by the Organization for Economic Cooperation and Development (OECD). These measures are geared toward curbing tax avoidance, with over 135 jurisdictions agreeing to reform the international tax framework.
The tax initiative, known as the Direct Minimum Top-up Tax (DMTT), targets multinational enterprises with consolidated global revenues of €750 million or more for at least two of the four financial years preceding the financial year when the DMTT takes effect. This follows the UAE’s earlier introduction of a 9% corporate tax on companies with profits exceeding AED 375,000 (approximately $102,100), alongside a 5% value-added tax (VAT) on goods and services implemented back in 2018.
Given its strategic position as a hub for MNCs, particularly through its business-friendly zones developed largely by Dubai, the UAE has often served as a model for attracting foreign direct investment (FDI), with other Gulf Cooperation Council members like Bahrain planning to align with similar tax initiatives from early 2024.
Financial authorities are concurrently exploring new tax incentives aimed at stimulating innovation and growth. By 2026, the UAE plans to introduce research and development tax credits ranging from 30% to 50%, which will be refundable based on the revenue and workforce size of businesses operating locally. This initiative is expected to bolster the UAE’s global competitiveness.
On December 26, 2024, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai and Deputy Prime Minister, unveiled Executive Council Resolution No. (101) of 2024. This mandate focuses on ensuring compliance among banks by detailing administrative guidelines and corresponding penalties for any violations committed by foreign banks operating within Dubai. The Resolution signifies the UAE's commitment to uphold higher governance standards within the banking sector.
The UAE's momentum of progress is reflected not only through tax adjustments but also via numerous developmental projects aimed at enhancing the nation’s cultural and economic standing on the global stage. The country's strategic initiatives for 2024 include the "Unified UAE Numbers" project. This project aims to create impactful statistical frameworks to inform policy decisions across economic, environmental, and social domains by fostering collaboration among federal and local entities.
Through forward-thinking strategies, the UAE aims to double its cumulative foreign direct investment (FDI) between 2025 and 2031. The National Investment Strategy 2031 seeks to raise FDI's share of the national economy from 15% to 30%, with projected growth of the cumulative FDI balance to AED 2.2 trillion as part of the overarching goals.
To bolster food security and sustainable development, the UAE also launched the "Plant the Emirates" initiative, addressing agricultural enhancement. Coupled with the "Zero Government Bureaucracy Programme", which streamlines residency and work permit processes, these programs are anticipated to save approximately 62 million workdays by eliminating redundant bureaucratic inefficiencies.
A comprehensive anti-drug strategy, the National Anti-Drugs Strategy (2024-2031), was also approved, focusing on building public awareness and establishing drug-free communities. To address the needs of youth, the National Youth Agenda 2031 promotes significant skill development and representation opportunities for Emirati youth on global platforms related to national interests.
The introduction of the "Blue Residency" program for individuals who have made notable contributions to sustainability marks another progressive step by the Cabinet, as it prioritizes federal jobs for citizens with private sector experience, asserting their commitment to domestic growth.
Lastly, the UAE's commitment to countering financial crimes is reinforced by the 2024-2027 National Strategy for Anti-Money Laundering and Countering the Financing of Terrorism. Alongside this, they adopted high-level policies focused on science and technology, emphasizing key sectors such as cybersecurity, health, and water resources. To stimulate entrepreneurship among graduates, the government has also set aside AED 300 million under the "Riyada" fund.
With these initiatives, the UAE is not only aiming for economic revitalization but is also committed to sustainability, cultural advancement, and the overall well-being of its citizens, ensuring it continues to adapt and thrive as a global player.
