The United Arab Emirates (UAE) is making significant strides in aligning its tax framework with global standards. Effective January 1, 2025, businesses operating in the UAE will need to adapt to a new tax landscape, including the introduction of the Domestic Minimum Top-up Tax (DMTT). This blog explores the implications of the upcoming corporate tax changes and offers actionable tips to help businesses stay compliant and thrive.
Understanding the UAE Corporate Tax Framework
In recent years, the UAE has implemented a 9% corporate tax rate for most businesses, establishing a structured and transparent tax environment. Now, with the DMTT, large multinational enterprises (MNEs) must ensure an effective tax rate of at least 15%, in line with the Organisation for Economic Co-operation and Development’s (OECD) Two-Pillar Solution.
Key Features of the DMTT
Applicability: MNEs with global consolidated revenues of €750 million (~$793 million) or more.
Objective: Address profit shifting and promote a fair tax framework by imposing a minimum tax rate of 15%.
Implementation Date: Financial years starting on or after January 1, 2025.
Proposed Corporate Tax Incentives
To further support businesses and drive innovation, the UAE is considering the following tax incentives:
Research and Development (R&D) Tax Credit:
A refundable tax credit of 30%-50% for eligible R&D expenses.
Encourages local innovation and economic diversification.
Expected implementation: January 1, 2026.
High-Value Employment Activities Tax Credit:
Tax credit for companies employing senior-level professionals in core business functions.
Expected implementation: January 1, 2025.
Actionable Steps for Businesses
1. Assess Applicability
Evaluate whether your business meets the revenue threshold for the DMTT or qualifies for proposed tax incentives.
2. Optimize Financial Strategies
Plan your finances to mitigate potential tax burdens. Consider consulting with corporate tax advisors to stay ahead.
3. Leverage Technology
Utilize advanced accounting software to streamline tax compliance and reporting.
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How Sarsan Corporate Services Can Help You Navigate Corporate Tax Changes
At Sarsan Corporate Services, we provide comprehensive support to businesses in the UAE as they navigate the new corporate tax regime. Here’s how we can assist:
- Corporate Tax Advisory
Our team of experts helps you understand your tax obligations, identify tax-saving opportunities, and strategize effectively to remain compliant.
- Compliance and Filing Assistance
We ensure timely filing of corporate tax returns, accurate documentation, and compliance with all legal requirements.
- Tax Incentive Application
Our specialists guide you through the process of applying for R&D tax credits and high-value employment tax credits, helping you maximize your benefits.
- Financial Planning and Strategy
We work with you to create robust financial strategies that align with the new tax requirements while supporting your business growth.
- Technology Integration
Sarsan Corporate Services can recommend and implement cutting-edge accounting and compliance software to streamline your financial operations and reporting.
Conclusion
With a deep understanding of the UAE’s corporate environment, Sarsan Corporate Services offers tailored solutions that go beyond compliance. Our commitment to transparent pricing, customized strategies, and ongoing support ensures your business thrives under the new tax regime.
Don’t leave your tax compliance to chance.
Contact Sarsan Corporate Services today and let us help you prepare for the future!
