Page 10 - ICAI UAE TAX UPDATE_APRIL 2024

3.1.2 Public Consultation Paper on BEPS Pillar 2/ Global Minimum Tax

On 15 March 2024, the UAE Ministry of Finance (MoF) of 4. The UAE will have to undergo a peer review process
the United Arab Emirates (UAE) released a consultation to establish whether its Domestic Minimum Top-up Tax
paper on the Global Minimum Tax (Pillar Two) or Global (DMTT) is equivalent to GloBE Rules so that it can be
Anti-Base Erosion Model Rules (GloBE Rules) to gather considered a QDMTT.
the views of stakeholders concerning the potential
policy design options to respond to the implementation 5. The MoF is exploring the possibility of having a
of the GloBE Rules worldwide. The deadline to provide separate return for QDMTT in addition to the GloBE
input into the consultation was 10 April 2024. Information Return (GIR). Additionally, it is considering
two options for the payment of Top-up tax liability either
Brief Background prior to the Public Consultation: annually following UAE Corporate Tax law payment
dates or adhering to timelines set by GloBE Rules.
UAE published Federal Decree Law No. 60 of 2023
dated 24 November 2023 amending certain provisions 6. The financial accounting standards that would be used
of Federal Decree Law No. 47 of 2022. This amendment would be IFRS.
introduces two new definitions in the CT Law:
7. The UAE MoF is contemplating the introduction of
(a) Top-up Tax substance-based incentives, with consultation questions
focusing on understanding the global benefits of such
(b) Multinational Enterprise (MNE) incentives for taxpayers.

The Decree released was silent on the size of the MNEs 8. THE UAE MoF will consider the following factors
for applicability of GMT. However, FAQs released by the when implementing tax incentives so that they are in
UAE FTA indicated that this may be as per the OECD alignment with GloBE Rules:
BEPS project.
a. The development of flexible agile and future-oriented
Key Highlights: incentive packages tailored to meet the investor’s need.
b. The monitoring and compliance of incentives.
1. UAE doesn’t have the intention to apply the GloBE c. The approach adopted by other comparable
Rules to UAE Headquartered MNE Groups which does jurisdictions.
not meet the revenue threshold of EUR 750 million. d. Exploration of additional non-tax incentives.
This is to not impose any additional and unnecessary
compliance burden on the small UAE Headquartered By initiating an extensive public consultation, the UAE
MNE Groups. MoF demonstrates a commitment not only to conducting
thorough analysis and review of the relevant regulations
2. The UAE is contemplating using the common Euro but also to offering a crucial forum for stakeholders and
threshold instead of an equivalent threshold in UAE taxpayers to express their views and issues.
Dirhams to prevent discrepancies in the application of
GloBE Rules. This strategy highlights the UAE’s commitment
to harmonizing international standards with the
3. The UAE was evaluating the adoption of the two preservation of its economic environment, with the
interlocking mechanisms to charge the Top-up Tax under ultimate goal of achieving a comprehensive and
the GloBE Rules, the Income Inclusion Rule (IIR) and the informed rollout of the new tax frameworks. As the
Undertaxed Profits Rule (UTPR). Along with it, the UAE consultation is now closed, it will be interesting to see
has the intention to implement the Qualified Domestic rules and further details to be notified by the UAE MoF
Minimum Top-up Tax (QDMTT). and the FTA.

10 www.icaidubai.org

UA E TAX UP DATE NEWSLET TER ISSUE 01 - April 2024