“Overview of UAE’s implementation of global minimum tax.”
“The UAE Ministry of Finance (MoF) is holding a digital public consultation to seek feedback on implementing the global minimum tax (GMT) and other tax matters.”
The UAE Ministry of Finance (MoF) has initiated a digital public consultation period from March 15 to April 10, 2024, inviting stakeholders to share their views on the implementation of the global minimum tax (GMT) and other tax matters in the country. This move underscores the Ministry’s commitment to transparency and inclusive decision-making processes.
Stakeholders, including multinational groups operating in the UAE, advisors, service providers, and investors, are encouraged to participate in the consultation. The objective is to gather diverse perspectives and insights to inform the formulation of policies related to the global anti-base erosion (GloBE) rules, also known as Pillar Two of the international tax framework.
The digital consultation, accessible through the Ministry’s website, provides a platform for stakeholders to contribute their opinions and suggestions regarding the implementation of the GMT and other relevant tax regulations. The Ministry aims to ensure that all voices are heard, recognizing the importance of engaging with various stakeholders in the decision-making process.
This initiative reflects the UAE’s commitment to aligning with international tax standards and fostering a conducive environment for businesses and investments. By seeking input from stakeholders, the Ministry aims to develop tax policies that promote fairness, efficiency, and compliance while supporting economic growth and sustainability.
The Emirates News Agency (WAM) reported on the significance of the digital consultation, highlighting the Ministry’s belief in the value of engaging with stakeholders. Through this open and transparent approach, the UAE seeks to establish a robust and internationally competitive tax framework that meets the evolving needs of the global business community.
The consultation period provides an opportunity for stakeholders to express their views on various aspects of the GMT implementation, including its potential impact on businesses, compliance requirements, and any challenges or opportunities that may arise. The insights gathered during this process will be crucial in shaping the UAE’s tax policies and ensuring their effectiveness and relevance in the global context.
As the UAE continues to strengthen its position as a leading business hub in the region, the digital public consultation on tax matters demonstrates the government’s proactive approach to engaging with stakeholders and fostering a conducive business environment based on transparency, fairness, and international best practices.
The consultation is divided into two key aspects. Firstly, stakeholders are invited to share their perspectives on potential policy design options for implementing the GloBE Rules in the UAE, including the development of a domestic minimum tax. The Organisation for Economic Co-operation and Development (OECD) has provided the GloBE Model Rules as a reference for jurisdictions seeking to implement qualified rules.
Secondly, stakeholders are encouraged to provide feedback on the introduction of substance-based incentives within the UAE Corporate Tax regime. To facilitate informed responses, the Ministry has released a briefing document on the Global Minimum Tax (GMT) alongside the consultation process.
The global minimum tax is an international tax rate introduced by countries to guarantee that multinational corporations pay a minimum amount of tax, regardless of where they are located or where their profits are generated. The Ministry of Finance’s guidance paper specifies that the global minimum tax applies to multinational enterprises (MNEs) with annual consolidated revenue surpassing $750 million. This measure aims to prevent tax avoidance strategies and ensure that large corporations contribute their fair share of taxes to the countries where they conduct business, thereby promoting fairness and sustainability in the global tax system.