UAE's Domestic Minimum Top-up Tax earns recognition from the Organization for Economic Co-operation and Development (OECD)
The United Arab Emirates (UAE) has secured a significant milestone in its pursuit to establish itself as a leading global hub for business and investment. The Organisation for Economic Co-operation and Development (OECD) has officially recognized the UAE's Domestic Minimum Top-up Tax (DMTT), providing multinational enterprise (MNE) groups operating in the UAE with a level of certainty that foreign tax will not be imposed on their UAE profits.
This recognition, published on the OECD's Central Record of Legislation, marks the UAE's DMTT as qualified for the OECD Pillar 2 safe harbor. This qualification offers several advantages, including clarity and stability for businesses, reinforcement of the UAE's attractiveness as a destination for global investment, and a reduction in the risk of multilateral audit disputes for MNE groups.
The qualification for the OECD Pillar 2 safe harbor also removes the need for top-up calculations in other jurisdictions for entities based in the UAE. Instead, MNE groups' top-up tax liabilities will continue to be accepted in the UAE. This recognition underscores the UAE's commitment to international tax standards and strengthens its position as a leading global hub for business and investment.
The Ministry of Finance has stated that the recognition of the DMTT aligns with the nation's sustainable development agenda. The DMTT's qualification for the OECD Pillar 2 safe harbor further reinforces this commitment, providing a strong foundation for the UAE's continued growth and development.
The UAE's DMTT received transitional qualified status from the OECD, with effect from January 1, 2025. This recognition is a testament to the UAE's proactive approach to adopting and implementing international tax standards, underscoring its position as a reliable and attractive destination for global businesses.
In conclusion, the OECD's recognition of the UAE's DMTT is a significant step forward in the country's journey towards becoming a leading global hub for business and investment. This recognition provides MNE groups with the certainty they need to invest in the UAE, contributing to the nation's sustainable development agenda and bolstering its position as a beacon of economic growth and stability in the region.
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