Ministry of Finance Sets Domestic Tax for Multinational Enterprises

The Ministry of Finance has introduced the Domestic Minimum Top-up Tax (DMTT), a new measure aligned with the OECD’s global tax framework. The tax applies to multinational enterprises (MNEs) operating in the UAE with annual global revenues of USD 775 million or more in at least two of the past four financial years.

The DMTT aims to ensure compliance with international tax standards while maintaining the UAE’s appeal as an investment hub. It includes a Substance-Based Income Exclusion, reducing taxable income based on payroll and tangible asset values. Certain entities, such as investment firms and businesses meeting de minimis criteria, will be exempt.

As a transitional measure, newly established MNE groups will not be subject to the tax in their initial phase, provided they are not controlled by a parent entity subject to a Qualified Income Inclusion Rule in another jurisdiction. The policy follows the OECD’s GloBE Model Rules, with further guidance outlined in Cabinet Decision No. 142 of 2024.