The United Arab Emirates (‘UAE’) has issued Cabinet Decision 142 of 2024 to implement imposition of Top-Up Tax on Multinational Enterprises (‘MNE’) in UAE to align itself with the OECD’s Pillar 2 framework to introduce a Global Minimum Tax (‘GMT’) of 15% on MNEs. 

Further, in addition to the said Decision, certain Frequently Asked Questions (‘FAQs’) are also issued subsequent to the issue of decision.

As per the said framework, MNE groups are subjected to a minimum Effective Rate of Tax of 15% by the respective jurisdiction which has adopted the said provisions.

As per the aforesaid Cabinet Decision, UAE has currently adopted only Qualified Domestic Minimum Top Up Tax (‘QDMTT’), whereas the FAQs released states that the decision to implement Income Inclusion Rule (‘IIR’) has not been made and the provisions will be closely monitored and accordingly assessed if IIR is required to be implemented.

In addition to the above, the FAQs also state that the FTA will publish further guidance on the aforesaid Cabinet Decision on the imposition of the Top-Up taxes in UAE in due course.

In this regard, we have summarized the key provisions of the law adopted by the UAE vide the aforesaid Cabinet Decision.

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