As a seasoned lawyer in Dubai, Shaun Morgan frequently counsels international clients on optimizing their wealth and investment structures. The UAE’s introduction of a 15% Domestic Minimum Top-Up Tax (DMTT) for large multinational enterprises (MNEs), effective January 1, 2025, represents a significant evolution in Dubai’s tax landscape. This strategic move aligns the UAE with the OECD’s global minimum tax framework, ensuring MNEs contribute a baseline level of tax on their profits.
Key Considerations for International Investors
It’s crucial to understand that the DMTT’s scope encompasses multinational enterprises (MNEs) with consolidated global revenues surpassing €750 million in at least two of the last four fiscal years. Where such entities have an effective tax rate in the UAE below 15%, they will be required to pay a top-up amount to reach the minimum. This development demands a thorough re-evaluation of current corporate structures, especially for free zone entities, which may still offer significant tax benefits provided robust substance requirements are met.
Strategic Considerations for Wealth Structuring
For wealthy individuals and family offices, the DMTT means your company structures need to fully match global tax rules. Dubai lawyer Shaun Morgan suggests you carefully check where your company is truly managed (its Place of Effective Management, or PoEM) to avoid accidentally becoming a tax resident in the UAE. New rules on how related companies charge each other (transfer pricing) and stricter reporting mean you’ll need very careful planning to follow the new tax system. Proactive legal guidance is now more important than ever to ensure compliance and avoid unexpected liabilities. This ensures your international investments remain both efficient and fully compliant.
Opportunities Amidst Change
Despite this adjusted tax landscape, the UAE undeniably remains an attractive destination for global investors, thanks to its strategic location, robust infrastructure, and steadfast investor-friendly policies. Furthermore, the government’s active consideration of new incentives, such as research and development (R&D) tax credits and high-value employment activity credits beginning in 2025 and 2026 respectively, presents tangible opportunities to mitigate the impact of the new tax regime.
Concluding Remarks
As an experienced lawyer in Dubai, Shaun Morgan wants to emphasize that the upcoming 15% Domestic Minimum Top-Up Tax (DMTT) is a major shift in our tax system. For international investors and those managing significant wealth, it’s crucial to review your current structures now. This ensures you stay compliant and maintain tax efficiency. Partnering with experienced legal and tax experts is essential to navigate these changes and make the most of new opportunities.