Domestic Minimum Top-Up Tax on Multinational Enterprises in UAE
The United Arab Emirates (‘UAE’) had issued Cabinet Decision 142 of 2024 to implement imposition of Top-Up Tax on Multinational Enterprises (‘MNE’) in UAE with effect from 1 January 2025 to align itself with the OECD’s Pillar 2 framework to introduce a Global Minimum Tax (‘GMT’) of 15% on MNEs. 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. UAE has currently adopted only the Qualified Domestic Minimum Top-up Tax (‘QDMTT’) rules for implementing top up taxes.
Due to the complexities of the provisions, rapid developments and with the year 2025 already over, Pillar 2 related assessments for MNEs are in full swing to determine the applicability of the said provisions, eligibility for transitional and safe harbour reliefs and appropriate provisioning and disclosures in the books of accounts.
In view of the above, we have summarized the provisions of the aforesaid Cabinet Decision and encourage businesses to immediately evaluate impact of the said provisions on their group entities in UAE. In case you require any assistance from our side, please feel free to reach out and we will be happy to assist.
GCC Tax Monday
GCC Tax Monday is a weekly publication that provides valuable insights into tax developments across the GCC region. Each week, we cover key updates, regulatory changes, and expert analyses to keep you informed and prepared for the evolving tax landscape.
Contact Us
