Dubai’s 2025 Tax Shake-Up: What Expats and Business Owners Must Know Now

Dubai has long been celebrated for its tax-friendly environment, attracting entrepreneurs, professionals, and multinational enterprises (MNEs) from around the globe.

However, significant tax reforms are underway in 2025 that could impact expats and businesses operating in the UAE. Understanding these changes is crucial for anyone considering relocation or business operations in Dubai.

📌 Key Tax Changes in 2025

1. Introduction of the 15% Domestic Minimum Top-Up Tax (DMTT)

Effective from January 1, 2025, the UAE will implement a 15% Domestic Minimum Top-Up Tax (DMTT) targeting large multinational enterprises. This move aligns the UAE with the OECD's Pillar Two global tax framework, ensuring that MNEs pay a minimum effective tax rate of 15% on profits in each jurisdiction they operate.

The DMTT applies to MNEs with consolidated global revenues of €750 million or more in at least two of the four financial years preceding the tax year. If such an MNE's effective tax rate in the UAE falls below 15%, the DMTT will "top up" the tax to meet this minimum threshold .

2. Continuation of the 9% Corporate Tax

Introduced in 2024, the UAE's federal corporate tax imposes a 9% rate on taxable profits exceeding AED 375,000. Profits up to this threshold remain tax-free, supporting small businesses and start-ups .

3. No Personal Income Tax

Importantly for expats, the UAE continues to impose no personal income tax. Salaries, wages, and other personal income remain tax-free, maintaining the country's appeal to foreign professionals

👤 Impact on Expats and Business Owners

For Expats:

• Personal Income Remains Untaxed: Your salary and personal income are not subject to taxation in the UAE.

• Business Income May Be Taxed: If you engage in business activities generating income over AED 1 million annually, you are required to register for corporate tax and may be subject to the 9% rate on profits exceeding AED 375,000.

For Business Owners:

• Small Businesses: Entities with taxable profits up to AED 375,000 benefit from a 0% tax rate.

• MNEs: Large multinational enterprises must assess their global revenue and effective tax rates to determine DMTT applicability.

• Compliance Requirements: Businesses must ensure timely registration, accurate record-keeping, and adherence to the new tax regulations to avoid penalties.

📝 Real-World Example

Consider a multinational corporation operating in Dubai with a global revenue of €800 million.

If this company's effective tax rate in the UAE is 9%, the DMTT will impose an additional 6% tax to meet the 15% minimum, aligning with the OECD's Pillar Two requirements.

✅ Steps to Ensure Compliance

• Assess Your Tax Obligations: Determine if your business activities or income levels subject you to the new tax regulations.

• Register with Authorities: Ensure timely registration for corporate tax if required.

• Maintain Accurate Records: Keep detailed financial records to facilitate compliance and reporting.

• Consult Tax Professionals: Seek advice from tax experts familiar with UAE regulations to navigate the changes effectively.

In Conclusion

While Dubai maintains its reputation as a tax-friendly destination, the 2025 tax reforms signify a shift towards greater alignment with global tax standards. Expats and business owners must stay informed and proactive to ensure compliance and optimise their financial strategies in this evolving landscape

👉 Need tailored tax advice? Visit The Tax Faculty website or call one of our expert advisors today for a free consultation.