UAE’s 2025 Tax Updates: What You Need to Know

UAE’s 2025 Tax Updates: What You Need to Know

As of January 1, 2025, the UAE has introduced key tax changes, including a 15% Domestic Minimum Top-Up Tax (DMTT) for large multinational enterprises (MNEs) with global revenues exceeding €750 million ($790 million or ₹7,000 crores). This aligns with OECD’s global minimum tax framework under Pillar Two.

Understanding the UAE’s Tax System in 2025

The UAE continues to offer a competitive tax environment with the following key rates:

15% DMTT: Applicable to large multinational companies.
9% Corporate Tax: Applies to businesses with taxable profits over AED 375,000.
0% Personal Income Tax: Salaries, capital gains, rental income, and investment returns remain tax-free for individuals.
5% VAT: Levied on goods and services within the GCC but not on exports outside the region.

New Tax Initiatives for 2025

R&D Tax Incentives (2026 Onward): Businesses investing in innovation may receive 30-50% tax credits.
Refundable Tax Credits for High-Value Employment: Encourages high-skill jobs by offering tax credits on eligible salaries.
Mandatory Corporate Tax Registration: Individuals conducting business in the UAE must register by March 31, 2025, if their turnover exceeded AED 1 million in 2024.

What This Means for Businesses

While large MNEs are now subject to the 15% DMTT, most UAE-based businesses, especially in free zones, still enjoy significant tax advantages. The 0% personal income tax remains unchanged, making the UAE an attractive destination for professionals and investors.