UAE Embracing the OECD Guidelines on Global Minimum Tax Rules: An Initiative for International tax Compliance
UAE has been going through a significant development in terms of its Tax landscape. The Ministry of Finance has declared that they will be adopting the OECD (Organization for Economic Cooperation and Development) guidelines, specifically for the Global Anti Base Erosion Rules (GloBE), synonymously called Pillar Two. This has been further confirmed via Ministerial Decision No. (88) 2025, which is an initiative purposely taken for enhancing the country’s international tax framework.
The main agenda behind this Global Minimum Tax implication is to ensure that the minimum tax rate for the larger multinational corporations will be 15%. This detailed guidance and information about the rule has not just provided sufficient knowledge to the larger corporations and MNCs working within the borders of UAE, but it has also provided sufficient clarity and certainty for the businesses working under the scope of GloBE Rules.
An earlier announcement has been made by UAE’s Cabinet in 2024, which laid a basic framework for Top-up Tax for MNEs. UAE has further aligned its domestic tax policies with the OECD’s Inclusive Framework, specially on Base Erosion and Profit Shifting (BRPS). The country is adamant to continue demonstrating its commitment with the international tax standards and best of the practices.
In this Ministerial Decision, all the relevant administrative guidance, along with the commentary from OECD up to January 2025, is included. All this conversation ensures that the initiative taken by UAE’s Cabinet, for Domestic Minimum Top-up Tax (DMTT) harmonizes with the OECD’s GloBE Model Rules. With the help of this harmony, it is further expected that all the multinational corporations in the UAE will be streamlined, and it will further reduce the complexity of their tax obligations.
This move has the ability to strengthen the UAE’s position in the market, and it will allow the country to have a strong position as a cooperative jurisdiction when it comes to the global tax matters and issues. With the help of this initiative, there will be increased transparency, and the business ventures will also be provided with sufficient confidence and support to continue their operations within the region.
