Updated Emiratisation target
Updated Emiratization target Emiratisation represents a pivotal step, with ambitious goals to boost local workforce participation in key industries. These targets offer UAE nationals career growth and businesses the chance to benefit from government incentives, creating a win-win for all as the nation advances toward its economic vision. Starting in 2025, private sector companies with a workforce of 20 to 49 workers will be required to hire at least two Emirati citizens. Previously, this mandate applied only to companies with 50 or more employees, said the Ministry of Human Resources and Emiratisation (Mohre). Administrative fines on private sector companies that do not meet their 2025 Emiratisation targets will amount to Dh108,000, to be collected as of January 2026.Participating in false Emiratisation practices will also result in administrative fines ranging from Dh20,000 to Dh100,000 for each instance, depending on the number of offences. Meanwhile, non-compliant establishments of this size will face financial contributions of Dh96,000 for not achieving this year’s target, which will be collected starting January. Connect with us for any queries on Emiratization and any other matters!
Introduction of a Domestic Minimum Top-up Tax (DMTT)
Introduction of a Domestic Minimum Top-up Tax (DMTT) The Ministry of Finance has announced updates in relation to certain provisions of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. One of these amendments includes the introduction of a Domestic Minimum Top-up Tax (DMTT). Following the issuance of Federal Decree Law No. 60 of 2023, a DMTT will be effective in the UAE for financial years starting on or after 1 January 2025. This strategic step reflects the UAE’s commitment to implementing the Organisation for Economic Co-operation and Development’s (OECD) Two-Pillar Solution, aimed at establishing a fair and transparent tax system aligned with global standards.The Pillar Two rules require large multinational enterprises (MNEs) to pay a minimum effective tax rate of 15% on profits in every country where they operate.The DMTT will apply to multinational enterprises operating in the UAE with consolidated global revenues of €750 million (approximately Dh3.15 billion) or more in at least two out of the four financial years immediately preceding the financial year in which the DMTT applies. The UAE’s implementation of the DMTT will closely align with the OECD’s Globe Model Rules. This amendment aims to enhance the business environment in the UAE and promote greater compliance with global standards for tax transparency and fairness. Connect with us for any queries on DMTT and any other tax matters!
UAE CORPORATE TAX (CT)
UAE CORPORATE TAX (CT) The Federal UAE CT Law was signed on October 2022 and published on December 2022 and the CT regime became effective for financial years (FY) starting on or after 1 June 2023. CT applies to juridical persons incorporated in the UAE (including Free Zones) and juridical persons effectively managed and controlled in the UAE, as well as to foreign juridical persons that have a permanent establishment in the UAE. Individuals will be subject to CT only if they are engaged in a business or business activity in the UAE, either directly or through an unincorporated partnership or sole proprietorship. CT RATES0%– Taxable income not exceeding AED 375,000– Qualifying income of a Qualifying Free Zone Person (QFZP) 9%– Taxable income exceeding AED 375,000– Non-qualifying income of a QFZP. CT FILING AND PAYMENTCT return filing and payment are due 9 months after the end of the FY – see examples:– Companies that adopts a FY starting on 1 June 2023 and ending 31 May 2024 is subject to CT starting 1 June 2023 and the first return filing and payment were due on 31 December 2024– Companies that adopts a FY starting 1 January 2023 and ending 31 December 2023 is subject to CT starting 1 January 2024 and the first return and payment are due on 30 September 2025 There are no preliminary/advance filings or tax payments. CT REGISTRATIONJust to remind you that UAE companies must apply to register for CT within three months from the date of incorporation. An administrative penalty of AED 10,000 shall be imposed in case of failure to submit a CT registration application within the timeframe. Connect with us for additional information on CT!
UAE announced implementation of mandatory e-invoicing from July 2026 and amends Law provisions
UAE announced implementation of mandatory e-invoicing from July 2026 and amends Law provisions As part of UAE’s broader digital transformation and tax compliance initiatives to enhance transparency, reduce fraud and streamline business processes, the Ministry of Finance announced the issuance of Federal Decree-Law No. 16 of 2024 (Law No. 16) and Federal Decree-Law No. 17 of 2024 (Law No. 17). Law No. 16 amends certain provisions of the Value Added Tax (VAT) Law to include the general concept of e-invoicing, the Electronic Invoicing System, the Tax Reporting Mechanism, and the system to be used to store invoices once they are issued electronically while Law No. 17 amends key provisions of Federal Decree-Law No. 28 of 2022 concerning tax procedures. The e-invoicing system is set to be deployed using the Open Peppol network, functioning as a decentralized continuous transaction control and exchange five corners model. The following steps provide an overview of this model:1. Supplier (Corner 1) transmits eInvoice data in an agreed format with its UAE accredited Service Provider (Corner 2).2. C2 validates the eInvoice data received from C1 and converts it into the UAE standard eInvoice xml format (if C2 has received the eInvoice in a different format from C1).3. C2 transmits the eInvoice (in the xml format) with the buyer’s UAE accredited Service Provider (Corner 3).4. C3 send an acknowledgement to the C2 that the eInvoice has been received successfully and transmits the eInvoice to the buyer (Corner 4).5. C2 reports the tax related data of the eInvoice to the central data platform that is managed by the FTA (Corner 5).6. C5 sends an acknowledgement to the C2 that the eInvoice has been successfully reported.7. C2 forwards the C3 exchange acknowledgment and C5 reporting acknowledgement to C1. The implementation of e-invoicing is expected to occur in three stages:– First: scheduled for the last quarter of 2024, includes accrediting service providers of e-invoicing solutions – Second: expected to be completed by the second quarter of 2025, involves updating local legislation to mandate the use of e-invoices– Third: covers the system’s launch, requiring taxpayers to comply with the mandate and tax authorities to process and validate the issued invoices. This stage is planned to start in July 2026. In order to prepare for this new requirement, businesses should start assessing their internal processes, particularly their invoicing technology and data landscape to align it with the expected compliance requirements and inform their internal stakeholders on the implications of e-invoicing. Connect with us for any queries on e-invoicing and accounting matters!