The United Arab Emirates (UAE) announced on Monday its decision to implement a 15% corporate tax rate starting January 2025, aligning with the global minimum tax framework led by the Organisation for Economic Cooperation and Development (OECD).
“This strategic step reflects the UAE’s commitment to adopting the OECD’s two-pillar solution, which aims to establish a fair and transparent fiscal system,” the country’s finance ministry said in a statement.
Aligning with Global Tax Reforms
In 2021, approximately 140 countries endorsed the OECD’s initiative to set a global minimum corporate tax rate of 15%, targeting profit-shifting by multinational corporations to low-tax jurisdictions.
The UAE, traditionally regarded as a tax haven, introduced a 9% corporate tax last year on profits exceeding 375,000 dirhams ($102,000). The new 15% rate marks a significant shift as the country seeks to align with international tax standards while maintaining its appeal as a business-friendly environment.
Diversifying Beyond Oil
Hosting the regional headquarters of numerous multinational corporations, the UAE has been working to diversify its economy away from oil dependency. The introduction of the higher tax rate coincides with the government’s broader strategy to create a favorable business environment that supports global and regional operations.
The finance ministry emphasized the UAE’s commitment to fostering economic competitiveness while adhering to international fiscal norms.
The move is expected to bolster the country’s position as a global economic hub while contributing to international efforts to ensure a more equitable corporate tax system.
