UAE Issues Ministerial Decision to Implement the OECD Administrative Guidance

On April 16, 2025, the Ministry of Finance issued Ministerial Decision No. (88) of 2025 to provide for the application of the OECD Administrative Guidance in the UAE.

This follows Cabinet Decision 142 of 2024 (issued on February 8, 2025) that provided the detailed provisions for the application of the domestic minimum top-up tax (DMTT) in the UAE.

The Income Inclusion Rule (IIR) and Under-Taxed Profits Rule (UTPR) are not being implemented in the UAE.

Both the Cabinet Decision and Ministerial Decision are applicable to Fiscal Years of an MNE Group that begin on or after January 1, 2025.

Ministerial Decision No. (88) of 2025

The April 2025 Ministerial Decision provides for the application of the following in the UAE:

• April 2024 OECD Consolidated Commentary

• June 2024 OECD Administrative Guidance

• January 2025 Central Record of legislation with Transitional Qualifying Status (as updated)

• January 2025 OECD Administrative Guidance on Article 8.1.4 and 8.1.5 of the Model Rules

• January 2025 OECD Administrative Guidance on Article 9.1 of the Model Rules

• January 2025 OECD GloBE Information Return

As the April 2024 OECD Consolidated Commentary already reflects the OECD Administrative Guidance issued in February, July and December 2023, this means that all current OECD Administrative Guidance is included for the purposes of the application of the QDMTT in the UAE (where relevant).

The February 2025 Cabinet Decision that provided in the detailed rules for the application of the QDMTT did expressly provide for a number of aspects of the February, July and December 2023 OECD Administrative Guidance including:

•Rebasing monetary thresholds in the GloBE Rules (Article 1.1)

• The exclusion of sovereign wealth funds from the definition of Ultimate Parent Entity (Article 1.4)

• Clarifying the definition of ‘Excluded Entity’ (Article 1.5)

• The meaning of “ancillary” for Non-Profit Organisations (Article 1.6)

• The foreign exchange hedge election (Article 2.2)

• The debt release election (Article 2.4)

• Provisions for accrued pension expenses (Article 2.5)

• Covered Taxes on deemed distributions (Article 2.6)

• Excess negative tax carry-forward guidance (Article 2.7)

• Substitute loss carry forwards (Article 2.8)

• The equity gain or loss inclusion election (Article 2.9)

• The extension of the taxable distribution method election to insurance investment entities (Article 3.1)

• The exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity (Article 3.2)

• Provisions on restricted tier one capital for insurance companies (Article 3.3)

• Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders (Article 3.4)

• The portfolio shareholding election (Article 3.5)

• The application of the tax transparency election to mutual insurance companies (Article 3.6)

• Deferred tax assets and tax credits under the transitional rules (Article 4.1)

• The transitional rules and transactions similar to asset transfers (Article 4.2)

• Asset carrying value and deferred taxes under the transitional rules (Article 4.3)

• Currency Provisions (AG2)

• Marketable Transferable Tax Credits (AG2)

• Interjurisdictional Employees/Assets for the Substance-based Income Exclusion (AG2)

• Substance-based Income Exclusion: Other Assets (AG2)

• Amendments to the Transitional CbCR Safe Harbour (AG3)

The April 2025 Ministerial Decision now provides that even if not expressly provided for in the February 2025 Cabinet Decision, the OECD Administrative Guidance issued to date will still apply.