Strategizing Multinational Tax Risks

https://www.mof.gov.ae/en/resourcesAndBudget/Pages/FAQ.aspx

The cite above references the FAQ’s from the UAE Ministry of Finance for the upcoming corporate tax for the United Arab Emirates.

The tax will be effective for years beginning on, or after, June 1, 2023, so time is available for planning.

Some items to initially note: Allowance for a tax group, 9% rate for passive income to align with BEPS, a graduated tax rate with cognizance of potential adjustment for a OECD Pillar Two minimum tax provision, continuance of some incentives for free trade zone transactions, qualified dividends and capital gains from shareholdings of a UAE business will be exempt, withholding tax will not be applicable on domestic and cross-border payments, foreign tax credits are available, and transfer pricing rules will reference the OECD Transfer Pricing Guidelines.

These new rules highlight the interaction with upcoming OECD Pillar Two rules to ensure those tax receipts are not allocated elsewhere.