UAE’s Ministry of Finance Seeks Input on Global Minimum Tax Framework

UAEs-Ministry-of-Finance-Seeks-Input-on-Global-Minimum-Tax-Framework

On March 15, 2024, the UAE Ministry of Finance (UAE MoF) initiated a public consultation regarding the prospective framework for implementing Pillar 2, the global minimum tax framework. The deadline for input submission is April 10, 2024.

This consultation is pertinent to all businesses operating in the UAE as part of multinational groups with global revenue exceeding EUR 750 million. Despite the absence of a clear timeline, the release of this consultation underscores the UAE’s dedication to adopting the Pillar 2 framework, entailing a minimum 15% corporate tax rate. Businesses affected by this potential change should assess the consultation and express their perspectives accordingly.

With guidance from our Global Pillar 2 Steering Committee, NR Doshi & Partners will meticulously analyze the consultation and provide support to taxpayers in their submissions, aligning with OECD Model Rules and global practices.

The UAE MoF’s consultation seeks input from taxpayers on the design of the global minimum tax policy. While the specifics of implementation remain unclear, key points highlighted in the consultation document include:

UAE’s Ministry of Finance Seeks Input on Global Minimum Tax Framework

  • The potential adoption of the Income Inclusion Rule (IIR), the Undertaxed Profits Rule (UTPR), and/or a Domestic Minimum Top-Up Tax (DMTT) with emphasis on interaction with the UAE CT regime and reducing compliance burdens.
  • Proposal to exempt smaller UAE-based groups (with global revenue below EUR 750 million) from the IIR to mitigate compliance costs.
  • Limitation of a Qualifying DMTT (QDMTT) to groups above the EUR 750 million threshold and exclusion of domestic-only groups.
  • Non-adoption of Safe Harbour regulations alongside the introduction of a QDMTT.
  • Use of IFRS financial accounting standards.
  • Consideration of substance-based incentives, with consultation questions focusing on understanding global taxpayer benefits from such incentives.

Feel free to reach out for further insights on the consultation and assistance in drafting policy responses to the consultation questions.

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