Meydan Freezone 
IFZA
Freezone 
DMCC
Freezone
DCC
Freezone 
JAFZA
Freezone 
DUQE
Freezone 
SPC
Freezone 
SHAMS Freezone
SRTIP Freezone
Rakez Freezone
DAO
Freezone
Ajman Freezone
UAQ
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MASDAR Freezone
15% Corporate Tax Rate in UAE from 2025
The United Arab Emirates (UAE) is introducing new tax rules designed to align with global standards while still maintaining a business-friendly environment. Starting from January 1, 2025, large multinational companies operating in the UAE will be subject to a 15% Domestic Minimum Top-up Tax (DMTT). This change is part of the OECD’s Pillar 2 initiative, which sets a global minimum tax rate of 15% for big multinational enterprises. The aim of Pillar 2 is to ensure that large businesses pay a fair share of tax no matter where they operate, reducing the temptation to shift profits to low-tax jurisdictions.
Definition of Large Multinational
A “large multinational” for which the 15% tax rate is applicable is generally defined as a multinational enterprise (MNE) group that meets the following criteria:
- The group has consolidated global revenues of at least EUR 750 million (or its equivalent) in at least two of the four preceding financial years.
- The group operates in more than one jurisdiction, meaning it has entities or operations spread across different countries.
Only these large MNE groups will be subject to the new 15% Domestic Minimum Top-up Tax (DMTT) under the OECD’s Pillar 2 framework. Smaller companies—those that do not meet the EUR 750 million revenue threshold—will not be affected by the 15% minimum tax.
Small Business Tax Relief
While these new rules target multinational groups with annual global revenues exceeding EUR 750 million, the UAE has made it clear that it remains committed to supporting smaller businesses. Under Small Business Tax Relief measures, many small companies can continue paying zero or significantly reduced taxes. By easing the tax burden on early-stage and small enterprises, the UAE ensures these businesses can invest in growth, hire more employees, and contribute to the country’s economy without being weighed down by high tax costs.
9% Tax Rate on Profits
For companies that do not qualify for small business relief, the UAE has introduced a standard corporate tax rate of 9% on profits above a certain threshold. This means businesses only pay taxes when they become more profitable, and even then, only on the portion of profits above that threshold. This approach provides a stepping stone: when companies are just getting started, they can build momentum tax-free, and as they expand and generate higher earnings, they begin to pay a modest and predictable rate.
Free Zone Entities
Companies established in free zones continue to enjoy special tax incentives. Many of them can maintain a 0% tax rate provided they conduct business solely within their free zone or export their goods and services abroad without dealing directly in the UAE mainland. If these conditions are met, free zone entities remain shielded from the standard 9% rate. However, if they step outside these boundaries, they may become subject to the regular corporate tax rate on qualifying profits. Even with the introduction of global minimum tax rules aimed at very large international players, compliant free zone companies can still enjoy a highly favourable tax environment.
Also read: Is Corporate Tax Applicable for Freezone Companies?
A Balanced and Competitive Approach
Overall, the UAE’s new tax framework is designed to strike a balance. On one hand, it aligns the country with international efforts to ensure large multinationals pay a fair share. On the other, it preserves the UAE’s status as a competitive, low-tax business hub, fostering an environment where small and medium-sized enterprises, as well as free zone entities, can prosper. By combining a global minimum tax for big players with incentives, reliefs, and a moderate standard corporate tax rate, the UAE maintains its appeal to investors of all sizes while contributing to the fairness and stability of the global tax landscape.
Filings.AE for UAE Tax Filing
Navigating the evolving tax landscape can be challenging. Filings.AE is here to assist businesses—big or small—in staying compliant with UAE tax regulations. We provide end-to-end support for preparing and filing corporate tax returns, ensuring you apply the correct tax rules for your size and type of business. Additionally, we can help you manage your Value Added Tax (VAT) filings, maintain accurate records, and meet all reporting deadlines. With expert guidance and personalized solutions, Filings.AE can help you understand the new rules, optimize your tax position, and ensure hassle-free compliance.
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FAQs on 15% Corporate Tax Rate in UAE
What is the new 15% tax rate in the UAE?
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The 15% Domestic Minimum Top-up Tax (DMTT) aligns with the OECD’s Pillar 2 initiative. It ensures that large multinational enterprises (MNEs) meeting certain criteria pay a minimum effective tax rate of 15%, helping to prevent profit shifting to low-tax jurisdictions.
Who qualifies as a large multinational subject to the 15% rate?
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A “large multinational” is generally defined as an MNE group with consolidated global revenues of at least EUR 750 million (or equivalent) in at least two of the four preceding financial years, operating across multiple jurisdictions.
Will smaller businesses be affected by the 15% rate?
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No. Small and medium-sized companies that don’t reach the EUR 750 million revenue threshold are not subject to the 15% tax. They may instead benefit from Small Business Tax Relief, paying zero or significantly reduced taxes.
What is the Small Business Tax Relief?
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Small Business Tax Relief allows eligible smaller companies to pay no or very low taxes. This measure helps them invest in their growth, hire new staff, and improve their operations without the immediate burden of high tax costs.
What is the standard corporate tax rate in the UAE?
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For companies not covered by the Small Business Relief and below the 15% large multinational threshold, the standard UAE corporate tax rate is set at 9% on profits above a certain threshold. This ensures that smaller companies pay tax only once they start earning higher profits.
How are free zone entities taxed?
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Free zone entities that conduct their activities solely within their free zone or export to markets outside the UAE mainland generally enjoy a 0% tax rate. If they enter the mainland market or fail to meet the specified conditions, they may become subject to the standard 9% corporate tax rate on their qualifying profits.
When will the new 15% DMTT come into effect?
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The 15% DMTT for large multinationals will take effect from January 1, 2025, providing businesses time to prepare for the changes and ensure compliance with the new rules.
How does this new tax environment maintain the UAE’s competitiveness?
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By implementing a tiered approach—15% for large multinationals, small business relief, a moderate 9% rate, and special incentives for free zones—the UAE balances global tax standards with a supportive environment that encourages investment, innovation, and growth.
How can Filings.AE help with these new tax requirements?
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Filings.AE offers comprehensive support in preparing and filing corporate tax returns, managing Value Added Tax (VAT) filings, and ensuring compliance with all relevant regulations. With expert guidance, businesses can confidently navigate the changes, optimize their tax positions, and avoid penalties.