UAE Implements Domestic Minimum Top Up Tax

| Sheikh Maktoum Bin Mohammed, Deputy Ruler of Dubai, Deputy Prime Minister & Minister of Finance, during the meeting for the General Budget Committee, 2024 June 11. | Image credits: @MaktoumMohammed (X)

The Ministry of Finance has announced updates to certain provisions of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. These changes are intended to enhance the UAE's business environment and align with global standards for tax transparency and fairness.

KEY UPDATES

New Definitions Added to Article (1):

• Top-up Tax: A tax imposed on Multinational Enterprises (MNEs) under this Decree-Law, with rules and controls determined by the Cabinet for implementing the OECD’s Pillar Two rules.

• Multinational Enterprise: An entity and/or its member entities located in the UAE or a foreign jurisdiction, as specified by a Cabinet decision on the Minister’s recommendation.

New Clause Added to Article (3):

• Article (3) Clause (3): The Cabinet, based on the Minister’s suggestion, will issue regulations on the conditions, rules, and procedures for imposing the Top-up Tax on MNEs. This ensures an effective tax rate of 15%, including exemptions where applicable.

Amendment to Article (65):

• Revenue Sharing: Corporate Tax, Top-up Tax revenues, and Administrative Penalties will be shared between the Federal Government and Local Governments, as outlined in relevant federal law.

Effective Date for Top-up Tax:

• The provisions of the Top-up Tax (as specified in Clause 2 of Article One) will take effect on a date determined by a Cabinet decision, issued upon the Minister’s recommendation.

PURPOSE OF THE AMENDMENTS

• Enhancing Business Environment: Supporting businesses through clearer tax regulations.

• Global Compliance: Aligning with international standards for tax fairness and transparency.

Taxpayers are strongly advised to refer to official UAE authorities’ communications for the most accurate and up-to-date information on tax-related matters. 

SOURCE/ RECOMMENDED READ: 

• Federal-Decree-Law-No.-60-of-2023-Amending-Certain-Provisions-of-the-Federal-Decree-Law-No.-47-of-2022-on-the-Taxation-of-Corporations-and-Businesses.pdf