The UAE’s Federal Tax Authority (FTA) has issued a new top-up tax guide to support multinational businesses understand the country’s evolving tax framework and enable them to meet registration obligations.
The guide provides detailed guidance for multinational enterprises (MNEs) to determine whether a corporation falls within the scope of the Qualified Domestic Minimum Top-up Tax (QDMTT) Legislation.
The guide also outlines the conditions for MNE Groups to be in scope, the types of entities subject to top-up tax and those that are not, as well as the registration process and applicable timelines.
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Additionally, it provides practical explanations and examples to help MNEs understand the relevant requirements, including the treatment of different types of entities, permanent establishments, joint ventures, flow-through entities, and hybrid entities.
Moreover, it addresses the location of entities and permanent establishments, registration requirements and procedures, and the filing of the Pillar Two Information Return — a standardised annual reporting template required under the Organisation for Economic Co-operation and Development.
15% top-up tax for MNEs
The UAE imposes a 15 per cent top-up tax for large multinational corporations that have an annual revenue of €750 million (Dh3.08 million). It forms part of OECD/G20’s Two-Pillar Solution, which aims to address the tax challenges arising from the digitalisation of the economy, including the Global Anti-Base Erosion (GloBE) Model Rules.
The UAE was listed in the OECD central record last August with “transitional qualified” status.
“Through comprehensive guidance and continued engagement with the business community, the authority remains committed to supporting taxpayers and facilitating voluntary compliance,” FTA said.
It added that the guide should be read in its entirety to “gain a comprehensive understanding of the definitions, requirements and interaction between the different rules”.
Source: Khaleej Times