UAE Shifts to 15% Corporate Tax for Large MNEs in 2025
As of January 1, 2025, the UAE will implement a 15% corporate tax rate for multinational enterprises (MNEs) with global revenues exceeding €750 million ($793 million). This marks a significant shift from the country’s hallmark 9% corporate tax rate, which has long been a cornerstone of its reputation as a low-tax haven.
Why the UAE is Raising Corporate Tax
The move is part of the UAE’s alignment with OECD-led global tax reforms, ensuring multinational corporations contribute fairly to the jurisdictions where they generate profits.
This policy is a direct response to challenges posed by globalization and the rise of the digital economy. It aims to:
➞ Limit tax competition between jurisdictions.
➞ Prevent profit shifting by large corporations to low-tax regions.
➞ Establish a fairer global tax system that ensures equitable contributions.
Globally, the measure is expected to raise $220 billion, with the UAE playing its part to support this standard.
Incentives to Support Businesses in the UAE
To cushion the impact of the new tax policy, the UAE is introducing several business-friendly incentives aimed at fostering growth and innovation:
▸ R&D Tax Credits
Starting in 2026, companies investing in research and development will receive 30%-50% tax credits on eligible expenses. This move is designed to attract high-tech industries and reinforce the UAE’s ambition to lead in global innovation.
▸ High-Value Employment Tax Credit
From 2025, companies hiring top-tier talent such as senior executives and key personnel can claim refundable tax credits tied to their salaries. This initiative aims to retain competitiveness and attract top talent to the region.
A Forward-Thinking Approach to Economic Growth
While the tax increase may present challenges for multinational businesses operating in the UAE, it reinforces the nation’s commitment to fostering a globally aligned and balanced economic environment.
Through targeted incentives and a continued focus on innovation, the UAE is ensuring that its tax policies support both economic growth and global fairness, maintaining its position as a premier destination for business and investment.
