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The UAE Ministry of Finance has unveiled key updates to the country’s corporate tax framework, including a new Domestic Minimum Top-up Tax (DMTT) aligned with the OECD’s Pillar Two rules, as well as potential tax incentives designed to stimulate innovation and high-value employment.
These changes come at a time when UAE hiring slowed in Q1 2025, as companies adapt to rising operating costs and a maturing business landscape.
Key UAE Corporate Tax Updates for 2025 and Beyond
1. Domestic Minimum Top-up Tax (DMTT)
- Effective Date: January 1, 2025
- Applies To: Multinational Enterprises (MNEs) with global revenues ≥ €750 million
- Goal: Ensure large MNEs pay a minimum 15% effective tax rate in the UAE, in line with OECD GloBE rules
Why it matters: This aligns the UAE with international tax standards and avoids potential “top-up” taxation in other jurisdictions.
2. Proposed Corporate Tax Incentives
To support growth and global competitiveness, two major incentives are being considered:
- R&D Tax Credit (from 2026):
- 30–50% refundable tax credit on qualifying in-country R&D expenditures
- Based on OECD Frascati Manual
- Targeted at tech, science, and innovation-heavy industries
- High-Value Employment Tax Credit (from 2025):
- Refundable credit based on eligible salaries for roles like C-suite and key value-creating personnel
- Aims to attract and retain global talent in the UAE
Note: Final implementation is pending legislative approval. Further guidance will follow from the Ministry of Finance.
UAE Hiring Trends: Efficiency Over Expansion in Q1 2025
While the tax system evolves, UAE companies are pausing hiring to preserve profitability amid rising service fees, corporate tax, and salary expectations, according to Cooper Fitch.
Q1 2025 Hiring Snapshot
- UAE hiring rose just 1.25% quarter-on-quarter
- Dubai leads job creation in legal, tech, real estate, and trade
- Hiring slowed in consulting, supply chain, manufacturing, and HR
- Employers are focusing on retention and strategic hires over volume recruitment
Gulf Hiring Overview: Saudi Arabia Leads the Pack
| Country | Hiring Change Q1 2025 | Growth Drivers |
|---|---|---|
| Saudi Arabia | +3.5% | Vision 2030, tourism, aviation, digital economy |
| Qatar | +3.0% | LNG, smart cities |
| UAE | +1.25% | Strategic recruitment in core sectors |
| Oman | -1.0% | Reassessment of workforce |
| Bahrain | -3.0% | Declines in tourism, logistics |
| Kuwait | 0% | Fiscal caution |
External Pressures on GCC Jobs
Global tensions and US-China trade disputes could ripple into:
- Aluminium and petrochemical exports
- Gulf oil demand and logistics
- Hiring in export-driven industries
However, the shift may also accelerate GCC self-reliance, unlocking new jobs in food production, logistics, and high-tech manufacturing.
What It Means for Businesses in the UAE
- Stay alert for DMTT compliance guidance
- Prepare for tax reporting changes in 2025
- Strategically evaluate eligibility for upcoming incentives
- Focus on retaining key talent amid rising costs
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