Global minimum tax in UAE: Here’s all you need to know

The UAE Ministry of Finance (MoF) is conducting a digital public consultation to gather stakeholders’ opinions on the implementation of the global minimum tax (GMT) or global anti-base erosion model rues (Pillar Two) (GloBE Rules) as well as other tax matters in the country.

The consultation period, from March 15 to April 10, 2024, is available on the Ministry’s website.

The digital public consultation reflects the Ministry’s belief in the importance of consulting with all stakeholders including the multinational groups operating in the UAE, advisors, service providers, and investors, the Emirates News Agency (WAM) reported.

Consultation is split into two parts –

• To gather the views of stakeholders concerning the potential policy design options for the implementation of the GloBE Rules in the UAE, in particular the development of a domestic minimum tax. The Organisation for Economic Co-operation and Development (OECD) has published the GloBE Model Rules that serve as the model legislation for jurisdictions wishing to implement qualified rules.

• The second part of the consultation is to understand stakeholders’ views on the introduction of substance-based incentives to be applied in the UAE, which would form part of the UAE Corporate Tax regime.

To familiarise stakeholders with the rules and to ensure informed feedback is received, the Ministry has issued a GMT briefing document alongside the consultation.

What is global minimum tax?

Global minimum tax is an international tax rate proposed by countries to ensure multinational corporations pay a minimum level of tax regardless of their location or profit book.

The MoF’s guidance paper outlines that the global minimum tax targets multinational enterprises (MNEs) with annual consolidated revenue exceeding 750 million dollars.

“Broadly, it ensures that these MNEs pay a minimum tax of 15 per cent in respect of the excess profits derived from every jurisdiction they operate through two interlocking rules, the IIR and UTPR, which are together referred to as the global anti-base erosion rules or GloBE Rules,” it added.