UAE Pillar 2 Rules Announced – Introduction of Top-up Tax on MNEs, effective January 2025
On 6th February 2025, the UAE Ministry of Finance has issued Cabinet Decision No. 142 of 2024 for imposition of Top-up Tax on Multinational Enterprises (MNEs).
Key Highlights:
- MNE’s with annual group revenue of EURO 750 million or more are covered.
- For the purpose of revenue threshold, any two out of four immediately preceding years to be considered.
- On account of application of top-up tax, covered entities would be subject to minimum tax of 15% effective January 2025.
- UAE entities of MNE group (“covered entities”), which are either subject to corporate tax at 9% or 0% as per the UAE corporate tax law, would be subject to top-up tax.
- Covered entities would be required to register with the Federal Tax Authority (“FTA”) within the timelines to be prescribed.
- Covered entities would be required to file annual top-up tax return with the FTA, or it can designate other group entity to file on its behalf.
- Entities (to be specified in the Ministerial Decision) would be required to file the Pillar Two Information Return with the FTA
MCA Comments
- UAE’s introduction of top-up tax further demonstrates its commitment to OECD’s inclusive framework of global minimum tax of 15% on large multinational groups.
- UAE entities of MNE group, would be subject to minimum tax of 15%.
- It would be advisable for UAE entities of multinational corporations to commence evaluating the impact and compliance obligations on immediate basis.
- UAE Free Zone entities of MNE group can evaluate taking appropriate position in their first corporate tax return to be filed in 2025.
- UAE headquarter group could be considered as MNE due to entities in multiple jurisdictions.
How MCA Can Help
Our team is ready to support in following ways:
- Advising on impact or compliance obligation
- Assisting in taking suitable tax position
- Assisting in filings with the FTA
- Equipping your team with knowledge on documentation and reporting
Our expert guidance can help mitigate risks and ensure smooth compliance with the updated requirements
Please feel free to contact us for any further clarification/impact assessment.
Contact Details
Email: mcatax@mcagulf.com
Telephone (Dubai UAE): +971 4 3319501
Mobile/WhatsApp: +971 50 5528079
Working Hours: 9AM – 6PM, Monday to Friday
