UAE: Corporate Tax of 15% will be imposed on Large Multinational Enterprises in UAE

Corporate Tax of 15% will be imposed on Large multinational Enterprises in UAE. Corporate Income Tax (CIT) in UAE is now a reality. With the publication of the law on 9 December 2022, there remains no doubt to state that the provisions of the law are progressive in nature and align with global best practices.

The 9% rate of tax remains competitive when compared to other countries in the Gulf Cooperation Council (GCC) and leading economies of the world, large multinational enterprises (having consolidated annual turnover of more than Euro 750 million) could attract a different rate of tax (likely 15%) once the Framework concerning Global Minimum Tax (GMT) under Pillar 2 approach of the Organization of Economic Co-operation and Development (OECD) BEPS 2.0 project becomes effective around the world.

15% Corporate Tax for Large Entities in UAE

With the awaited clarity around the implementation of the GMT Framework in UAE, it would be worth considering/debating whether UAE simply adopts the GMT rules as published by the OECD or it simply adopts a different rate of tax (i.e. 15%) in place of 9% for in-scope large enterprises operating in the UAE. Different corporate tax rates in UAE will be imposed on different taxable threshold.

Any group company with a global turnover of more than 750 million euros ($735 million/2.70 billion UAE dirham) will be liable to a minimum tax of 15% regardless of whether the Organization for Economic Cooperation and Development Pillar Two system is implemented in the future years.

The matter also draws importance since it is also indicated that a 0% rate benefit for Qualifying Free Zone Persons could also be affected in case such an entity is part of in-scope large enterprises. 

Our designated tax team at BMS Auditing will provide the required assistance and clear your queries on corporate tax.