The United Arab Emirates has been a target for most multinational firms due to its low tax environment. For years, it felt safe, simple, and effortless to plan ahead. But now things are changing, and that change has raised concerns. Large companies are asking how their profit will be taxed, how the new rules will work in the new tax year, and what this means for their future in the UAE.
The new system is not as heavy as it seems. With Tax Gian’s professional corporate tax services in the UAE, you can learn what the UAE expects, what remains the same, and how global groups can adjust without losing the benefits that brought them here.
A Quick Look at Corporate Tax Before 2025
Corporate tax began in the UAE on June 1, 2023. It was the first time the country applied a federal tax on company profits. The rule was simple:
- Profit up to AED 375,000 → 0%
- Profit above AED 375,000 → 9%
This supported small and medium firms while making sure bigger companies contributed more. Filing is once a year, within nine months after the financial year ends. Everything is done online through the FTA portal.
For most businesses, this structure stayed clear and predictable. But 2025 introduced a major step that affects only a specific group: multinational companies.
The Big Change in 2025: Domestic Minimum Top-Up Tax (DMTT)
On January 1, 2025, the UAE introduced the Domestic Minimum Top-Up Tax. This rule applies only to multinational groups with global revenue above €750 million (around AED 3 billion).
These companies must pay at least 15% tax on profits earned in the UAE. If their current tax is lower, the DMTT adds a “top-up” so that the final rate reaches 15%.
This rule matters for one major reason. Without it, other countries could impose their own top-up tax on profits earned in the UAE. That could reduce the UAE’s ability to keep major global groups here. By bringing in the rule itself, the UAE keeps the tax collected inside the country and avoids losing ground to foreign tax authorities.
Who Must Follow the New 2025 Rules?
Affected Companies
The 15% rule applies to:
- Multinational groups with revenue of €750 million or more in at least two of the last four financial years.
- UAE entities that belong to these groups, even when they are registered in a Free Zone.
- Groups that fall under the global minimum tax rules set by the OECD.
These groups must now look closely at how much profit they allocate to the UAE and how their internal reporting works. They may seek help from corporate tax agents in the UAE for expert guidance.
Companies Not Affected
The 15% rule does not apply to:
- Small and medium businesses.
- Local companies below the global revenue threshold.
- Free Zone firms that are not part of large multinational groups.
- Local entrepreneurs, startups, and early-stage founders with normal CT obligations only.
The core federal CT rate of 9% still applies to regular companies. Nothing has changed for them in 2025. Still questioning? Ask from corporate tax consultants in Dubai to learn what has changed for your business.
Key CT Compliance Points for Multinational Groups
- Updated Accounting and Reporting Systems
Every affected company must show its UAE profits clearly. Reporting must match the FTA standards.
- Review of Transfer Pricing Arrangements
Multinationals often have intercompany charges. These now need a careful, obvious check.
- Internal Restructuring Considerations
Some activities may shift, and some functions may be moved to avoid mismatched reporting.
Why the UAE Introduced the 15% Rule
The OECD pushed for a global minimum tax to stop large companies from shifting profits to low-tax countries. The UAE aligned with this system to stay credible and keep its place as a trusted business hub.
If the UAE did not bring in this rule, other countries could collect top-up tax from profits earned here. That would weaken the UAE’s position.
Why Multinational Companies Still See the UAE as a Good Choice
Even with the new tax, the UAE remains attractive for several reasons:
- The 15% rate is still lower than in many other countries.
- Free Zones continue to offer 100% foreign ownership and repatriation of profit.
- The country has strong trade agreements and easy access to global markets.
- The rule brings more certainty, not less. Global groups prefer clear rules over unclear ones.
The new system also avoids future issues between the UAE and foreign tax authorities.
What Multinationals Should Do Now
Now that the year 2026 is at the door, multinational companies working in the UAE should:
- Assess their global group revenue.
- Check whether the DMTT applies to their UAE entities.
- Review their internal profit reporting.
- Update their systems to match FTA requirements.
Seek guidance from professional corporate tax agents in the UAE to avoid errors.
How can Tax Gian help?
Tax Gian has helped many businesses in CT compliance in 2025, and our CT experts will continue to provide their comprehensive CT services in 2026. From CT registration and filing to TP disclosure and reporting, you will find every efficient CT service at Tax Gian.
