UAE Update Corporate Tax Rate for Large Multinational Company
To align with global fiscal standards, the UAE is set to implement new tax reforms in 2025. The new tax framework introduces 15% corporate tax rate for large multinational Companies in UAE. As compare to that the local businesses will stick to 9% corporate tax rate. This change in UAE marks another step towards more transparent tax system.
Why Change in Corporate Tax for Large Multinational Companies?
The basis of this change is OECD two-pillar tax framework, which aims to deal with tax evasion and ensure that big companies pay their due share of taxes. Previously, the multinational companies have took advantage of the low tax in the region. The 15% tax rate will reaffirm UAE reputation as a responsible global economic hub.
Who Will Feel the Impact?
The aim of this tax is to target large multinational corporations. If you are company has reported a global revenue of €750 million (approximately AED 3.15 billion) in at least two of the last four financial years then you are subject o 15% corporate tax. Whereas, small and medium enterprises established in UAE Free zones will remain unaffected. This also provide UAE an edge as it is still remain favourable for SMEs.
Business Implications and Strategic Adjustments
All the multinational companies will have to reassess their financial strategy. The increase in tax rate will result in increased operational cost which means MNCs will have to redefine their financial strategies and streamline their taxes. Most of the companies will require tax experts to understand the new regulations and how they can optimize their taxes. In beginning it might be a challenge for multinational companies but in the longer run it will be beneficial for them to streamline their taxes.
Embracing Global Standards
A new policy shift in tax increase highlight UAE’s commitment to meet the international fiscal standards. An equitable tax system will help them define a robust tax system enhance the network of double taxation treaties. Another important aspect is to enhance investor confidence as UAE is strengthening its position in global market.
Preparing for 15% Corporate Tax
It is important for all the multinational companies in UAE to prepare for the changes. They will have to reassess the financial impact and review their operational cost. It is crucial for MNCs to start early and prepare financials based on the latest tax requirements.
How Alpha Auditing can help you optimize your Corporate Tax in UAE?
An important aspect of these changes is to understand the tax laws and obligations. Our tax experts can help you understand all the latest changes in UAE corporate tax. Maintaining financial records is also very crucial in terms of optimizing corporate tax. As a professional accounting and auditing firm we help you maintain and manage you financial records as per UAE laws and regulations.
If you are facing any challenges regarding corporate tax in UAE, get in touch!