| Status | Enacted Law |
| Law | Ministerial Decision No. (88) of 2025 issued on April 16, 2025 Cabinet Decision 142 of 2024 issued on February 8, 2025 Federal Decree Law No. 60 of 2023 issued on November 24, 2023 |
| Effective Date | Financial years beginning on or after January 1, 2025 |
| IIR | No |
| UTPR | No |
| QDMTT | Yes (2025) |
| Filing Deadlines | Standard |
| Safe Harbours | Transitional CbCR Safe Harbour and the Simplified calculations for Non-Material Constituent Entities Safe Harbour |
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 from January 1, 2025.
On March 4, 2025, the UAE Ministry of Finance issued updated FAQs on the DMTT, including the expectation that it will be listed as a QDMTT in the OECD peer review process and the general operation of the DMTT in the UAE.
On February 8, 2025, the Ministry of Finance issued Cabinet Resolution 142 of 2024 for the detailed provisions for the application of the DMTT.
On December 9, 2024, the UAE Ministry of Finance confirmed it will implement a 15% DMTT (that will align with the GloBE rules) from January 1, 2025. The legislation has not yet been issued
On 24 November 2023, the UAE released Federal Decree Law No. 60 of 2023, which amends some provisions of the Federal Decree Law No 47 of 2022 (“CIT Law”) to provide for a Pillar 2 top-up tax.
The Income Inclusion Rule (IIR) and Under-Taxed Profits Rule (UTPR) are not being implemented in the UAE.
Article 2 of the Cabinet Decision provides that it will be applicable to Fiscal Years of an MNE Group that begin on or after January 1, 2025.
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 from January 1, 2025.
GLOBE APPLICATION
General
The Attachment to the Cabinet Decision (the ‘Cabinet Decision) provides for the detailed application of the DMTT in the UAE.
The approach taken is essentially to reproduce the OECD GloBE Model Rules, with the same citation references, and then to adjust and amend to implement aspects of the OECD Administrative Guidance and to tailor the DMTT to the UAEs tax regime. In addition, some aspects of the OECD Model Rules are not relevant as the UAE is not implementing an IIR or UTPR.
Safe harbours, as reflected in the OECD Safe Harbour Guidance and the Second Set of OECD Administrative Guidance are also reflected in the legislation (where relevant).
Article 2 of the Cabinet Decision provides that the DMTT applies to:
-Constituent Entities located in the UAE during that Fiscal Year, including those that are members of a Minority-owned Subgroup;
-Joint Ventures and JV Subsidiaries located in the UAE during that Fiscal Year;
-Stateless Constituent Entities created in accordance with the laws of the UAE and that are Reverse Hybrid Entities, with respect to any of their Pillar Two Income or Loss.
However, the Constituent Entities of the Domestic Main Group and a Domestic Minority-owned Subgroup, can appoint a Domestic Designated Filing Entity to pay the DMTT on behalf of the members of their Domestic Groups. Similar provisions also apply to Joint Ventures and Reverse Hybrid Entities.
Whilst the Cabinet Decision expressly includes most aspects from the February 2023, July 2023 and December 2023 OECD Administrative Guidance, Article 16 also provides that it is to be interpreted and applied consistently with the OECD Commentary and Agreed Administrative Guidance (as adopted by the Minister). Ministerial Decision No. (88) of 2025 provides for the application of all OECD Administrative Guidance (in place as at April 2025).
Administrative Guidance
Aspects of the First Set of OECD Administrative Guidance included in the law are:
• 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)
The following provisions of the Second Set of OECD Administrative Guidance (published on July 17, 2023), are included in the law:
• Currency Provisions
• Marketable Transferable Tax Credits
• Interjurisdictional Employees/Assets for the Substance-based Income Exclusion
• Substance-based Income Exclusion: Other Assets
The only aspects of the Third Set of OECD Administrative Guidance (issued in December 2023) included are in relation to the Safe Harbour Rules (see below).
Ministerial Decision No. (88) of 2025, issued on April 16, 2025 expressly provides for the application of all OECD Administrative Guidance, including the June 2024 and January 2025 guidance issued.
Therefore, even if not expressly provided for in the law it will be applicable in the UAE from January 1, 2025.
Safe Harbour and Penalty Relief Guidance
Safe harbours, as reflected in the OECD Safe Harbour Guidance are reflected in the legislation.
The legislation includes the simplifications agreed by the OECD. In particular:
-The Transitional CbCR Safe Harbour (Article 8.2.1 of the Cabinet Decision);
-Simplified Calculation Safe Harbour including Non-Material Constituent Entities (Article 8.2.2 of the Cabinet Decision).
The Transitional UTPR Safe Harbour and the QDMTT Safe Harbour are not relevant in the UAE as it is only implementing a DMTT.
The Cabinet Decision implements most of the main amendments to the Transitional CbCR Safe Harbour included in the Third Set of OECD Administrative Guidance (December 2023), including:
-Purchase Accounting Adjustments (consistent reporting condition and the goodwill impairment adjustment)
-Same Financial Statements/Local Financial Statements for Statutory Reporting
-MNEs not required to file CbC Reports
-Treatment of hybrid arbitrage arrangements
Other amendments to the Transitional CbCR Safe Harbour rules (eg as provided in the December 2023 OECD Administrative Guidance) are also included due to the application of all current OECD Administrative Guidance in Ministerial Decision No. (88) of 2025.
ELECTIONS
Elections in the OECD Model Rules
Most of the elections included in the OECD Model Rules are provided in the Cabinet Decision, including:
-Excluded Entity Election (Article 1.5.3 of the Cabinet Decision (also applies to non-profit organisations))
-Stock-Based Compensation Election (Article 3.2.2 of the Cabinet Decision)
-Election to use the Realization Method (Article 3.2.5 of the Cabinet Decision)
-Election to Spread Capital Gains (Article 3.2.6 of the Cabinet Decision)
-Consolidation Election (Article 3.2.8 of the Cabinet Decision)
-Unclaimed Accrual Election (Article 4.4.7 of the Cabinet Decision)
-GloBE Loss Election (Article 4.5 of the Cabinet Decision)
-Prior Year Adjustment Election (Article 4.6.1 of the Cabinet Decision)
-De minimis Election (Article 5.5 of the Cabinet Decision)
-Substance-Based Income Exclusion Election (Article 5.3.1 of the Cabinet Decision)
-Deemed Disposal of Assets Election (Article 6.3.4 of the Cabinet Decision)
-Taxable distribution Election (Article 7.4 of the Cabinet Decision)
-Tax transparency Election (Article 7.3 of the Cabinet Decision)
-Safe Harbour Elections (Article 8.2 of the Cabinet Decision)
The Distribution Tax Regime Election is not included in the Cabinet Decision as this is not relevant to the UAE domestic tax regime.
Elections in the Administrative Guidance
The elections included in the February 2023 OECD Administrative Guidance are included in the Cabinet Decision. This includes the:
-Debt Release Election (Article 3.2.12 of the Cabinet Decision);
-Foreign Exchange Hedge Election (Article 3.2.14 of the Cabinet Decision);
-Portfolio Shareholding Election (Article 3.2.13 of the Cabinet Decision);
-Excess Negative Tax Carry-Forward Election (Article 4.1.6 of the Cabinet Decision); and the
-Equity Investment Inclusion Election (Article 7.5.1 of the Cabinet Decision).
NEW ELECTIONS
There are no new elections in the GloBE law.
DEVIATIONS FROM THE OECD MODEL RULES/EU GLOBAL MINIMUM TAX DIRECTIVE
As noted above, the UAE is only implementing a DMTT (intended to be a Qualified Domestic Minimum Top-Up Tax (QDMTT)). As such a number of aspects of the GloBE rules are not relevant.
For example, the definition of covered taxes in Article 4.2.1 of the OECD Model Rules includes taxes on distributed profits, deemed profit distributions, and non-business expenses imposed under an Eligible Distribution Tax System. This is not included in the Cabinet Decision.
Other aspects of the OECD Model Rules that are not included are:
-Section 5.4.2 (allocation of Additional Current Top-Up Tax in connection with Section 5.4.1);
-Section 5.4.4 (determination as Low-Taxed Constituent Entity);
-Section 6.2.1(h) (application of IIR in respect of acquisition of a target entity);
-Section 6.4.1(b) and (c) (application of IIR and UTPR in connection with Joint Venture and JV Subsidiaries);
-Section 6.5.1(e) and (f) (application of IIR and UTPR in connection with Multi-Parented MNE Groups);
-Article 7.3 (Eligible Distribution Tax Systems);
-Article 7.4 (Investment Entity ETR Calculation).
DOMESTIC MINIMUM TAX
General
Cabinet Decision 142 of 2024 provides for a QDMTT (or at least a domestic minimum tax that is likely to be classed as a QDMTT) from January 1, 2025.
QDMTT Design Features
The method of calculating the DMTT is generally based on the OECD Model Rules but is then subject to some optional and mandatory deviations (as provided in the OECD Administrative Guidance).
The Top-up Tax that is subject to the DMTT is based on the whole amount of the Jurisdictional Top-up Tax irrespective of the Ownership Interests held in the Constituent Entities located in the UAE by any Parent Entity of the MNE Group (unlike the general GloBE Rules).
Stateless Entities
Under the OECD Administrative Guidance, a domestic minimum tax does not need to apply to Stateless Constituent Entities or permanent establishments to be a QDMTT. However, jurisdictions can impose a QDMTT on these entities when they are created under the domestic law of the jurisdiction (or where a permanent establishment has a place of business in the QDMTT jurisdiction).
Article 2.1 of the Cabinet Decision implements this by applying the DMTT to Stateless Constituent Entities created in accordance with the laws of the UAE and that are Reverse Hybrid Entities, with respect to any of their Pillar Two Income or Loss.
Investment Entities
Article 2.3 of the Cabinet Decision specifically excludes investment entities from the scope of the DMTT.
Accounting Standard
Article 3.1 of the Cabinet Decision provides that instead of using the UPEs accounting standard, MNEs calculate GloBE income based on a Constituent Entities standalone financial statements prepared in accordance with IFRS where:
-all of the Constituent Entities located in the UAE are required to prepare standalone financial statements in accordance with the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) or the applicable laws of the UAE;
-all of the standalone financial statements of the Constituent Entities located in the UAE are prepared in accordance with IFRS; and
-the financial year of all of the separate financial statements of the Constituent Entities located in the UAE is the same as the Fiscal Year of the Consolidated Financial Statements of the Ultimate Parent Entity.
Where these conditions are not met, the Financial Accounting Net Income or Loss is the net income or loss determined for a Constituent Entity in preparing Consolidated Financial Statements of the Ultimate Parent Entity (excluding intragroup transactions and certain purchase price allocation adjustments).
If this is not reasonably practicable, another accepted or approved accounting standard can be used if:
-the constituent entity’s financial statements are prepared in accordance with that standard;
-the information contained in the financial statements is reliable; and
-permanent differences of more than EUR 1 million are conformed with the UPEs accounting standard.
Transitional Year
Article 9.1.12 of the Cabinet Decision provides for the transitional year refreshing rule.
A new transition year, arises in an accounting period in which the entities of an MNE fall within the scope of a qualified IIR or UTPR if this accounting period begins after the beginning of the transition year for QDMTT purposes.
In the new transition year the following attributes of the relevant Constituent Entities are refreshed:
-Any Excess Negative Tax Expense Carry-forward under Article 4.1.5 or Article 5.2.1 is eliminated at the beginning of the new Transition Year.
-The DTL recapture rule in Article 4.4.4 does not apply to any deferred tax liability that was taken into account in computing the ETR under the QDMTT and that was not recaptured prior to the new Transition Year.
-Any GloBE Loss Deferred Tax Asset that arose in a year preceding the new Transition Year must be eliminated. The Filing Constituent Entity may make a new GloBE Loss election in the new Transition Year.
– Article 9.1.2 shall apply to transactions occurring after 30 November 2021 and before the beginning of the new Transition Year.
– If QDMTT was payable due to the application of Article 4.1.5 in respect of a deferred tax asset attributable to a tax loss, the deferred tax asset is not treated as arising from items excluded from the computation of GloBE Income or Loss under Chapter 3 of the OECD Model Rules.
International Activity Exemption
The UTPR exclusion for MNEs in their initial phase of international activity does not need to be included in a QDMTT, however, it can be included. The Second Set of OECD Administrative Guidance provides jurisdictions with three options regarding the temporary UTPR exclusion in their QDMTT legislation.
Option one allows the jurisdiction not to adopt it.
Option two allows the jurisdiction to adopt it but limits it to cases where no Parent Entity is required to apply a Qualified Income Inclusion Rule with respect to Constituent Entities of an MNE Group located in the QDMTT jurisdiction.
Option three allows the jurisdiction to adopt it without any limitations. (Note, if a jurisdiction opts for Option three, for the purposes of the QDMTT Safe Harbour the Switch-Over Rule would apply).
The UAE applies Option two in Article 9.3 of the Cabinet Decision.
Currency
Where the calculations of the Top-up Tax are based on the standalone financial statements, all calculations are to made using the functional currency of the standalone financial statements.
The Second set of OECD Administrative Guidance provides that where not all Constituent Entities in the jurisdiction use the local currency as their functional currency, the Filing Constituent Entity may make a Five-Year Election to undertake the QDMTT computations for all Constituent Entities in the jurisdiction either:
– in the presentation currency of the Consolidated Financial Statements; or
– in the local currency (UAE Dirhams).
This is provided in Article 10 of the Cabinet Decision.
Registration
Article 13 of the Cabinet Decision requires any Entity that is subject to the DMTT and a Domestic Designated Filing to register with the Federal Tax Authority (in the form and manner and within the timeline prescribed by it).
Filing
Article 8.1.1 of the Cabinet Decision provides that each Constituent Entity, Joint Venture and JV Subsidiary located in the UAE must file a Top-up Tax Return with the Federal Tax Authority. The return may be filed by either the Constituent Entity, Joint Venture or JV Subsidiary itself or by a Domestic Designated Filing Entity on its behalf.
The Top-up Tax Return must be submitted within 15 months after the last day of the Reporting Fiscal Year or 18 months after the last day of the Reporting Fiscal Year that is the first Transition Year of any Constituent Entity of the MNE Group.
The Top-up Tax Return will require the equivalent information and reporting requirements set out in the Pillar Two Information Return.
Article 15.1 of the Cabinet Decision also provides that entities specified in a decision of the Minister will be required to file a Pillar Two Information Return with the Federal Tax Authority. This is to be based on the standard OECD GloBE Information Return template.
The Pillar Two Information Return and any associated notifications must be filed within 15 months of the last day of the Reporting Fiscal Year.
Payment
Article 11.2 of the Cabinet Decision provides that the Constituent Entity, Joint Venture, JV Subsidiary or Domestic Designated Filing Entity must pay any Top-up Taxes in UAE Dirhams, by the date the Top-up Tax Return is due.
Penalties
The Cabinet Decision applies the following provisions of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) for DMTT purposes:
Article 50 – General Anti-abuse Rule
Article 56 – Record Keeping
Article 59 – Clarifications
Article 60 – Assessment of Corporate Tax and Penalties
Therefore, the standard penalty regime will apply. However, Article 14 of the Cabinet Decision applies transitional penalty relief for fiscal years beginning on or before December 31, 2026 but not including a Fiscal Year that ends after June 30, 2028.
None issued.
| UAE | |||
|---|---|---|---|
| Effective Date: | Accounting periods beginning on or after January 1, 2025 | ||
| Section/Article | |||
| First Set of OECD Administrative Guidance | |||
| 1.1 | Rebasing monetary thresholds in the GloBE Rules | 10 | |
| 1.2 | Deemed consolidation test | Ministerial Decision No. (88) of 2025 | |
| 1.3 | Consolidated deferred tax amounts | Ministerial Decision No. (88) of 2025 | |
| 1.4 | Sovereign wealth funds and the definition of Ultimate Parent Entity | 1.6 | |
| 1.5 | Clarifying the definition of ‘Excluded Entity’ | 1.8 | |
| 1.6 | Meaning of ancillary for Non-Profit Organisations | 1.9 | |
| 2.1 | Intra-group transactions accounted at cost | Ministerial Decision No. (88) of 2025 | |
| 2.2 | Excluded Equity Gains or Loss and hedges of investments in foreign operations | 3.2.14 | |
| 2.3 | Excluded Dividends- Asymmetric treatment of dividends and distributions | Ministerial Decision No. (88) of 2025 | |
| 2.4 | Debt release Election | 3.2.12 | |
| 2.5 | Accrued Pension Expenses | 18 | |
| 2.6 | Covered Taxes on deemed distributions | 4.3.2 | |
| 2.7 | Excess Negative Tax Carry-forward guidance | 4.1.6/5.2.6 | |
| 2.8 | Substitute Loss carry forwards | 4.4.8 | |
| 2.9 | Equity Gain or loss inclusion election | 7.5 | |
| 2.9 | Qualified Ownership Interest/Flow through entity | 3.5.6/7.5 | |
| 2.1 | Allocation of taxes arising under a Blended CFC Tax Regimes | Ministerial Decision No. (88) of 2025 | |
| 3.1 | Application of Taxable Distribution Method Election to Insurance Investment Entities | 18 | |
| 3.2 | Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity | 18 | |
| 3.3 | Restricted Tier 1 Capital | 3.2.10 | |
| 3.4 | Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders | 18 | |
| 3.5 | Simplification for Short-term Portfolio Shareholdings | 3.2.13 | |
| 3.6 | Application of Tax transparency election to Mutual insurance companies | 7.3.3 | |
| 4.1 | Deferred tax assets with respect to tax credits under Article 9.1.1 | 9.1.4 | |
| 4.2 | Applicability of Article 9.1.3 to transactions similar to asset transfers | 9.1.7 | |
| 4.3 | Asset carrying value and deferred taxes under 9.1.3 | 9.1.9 | |
| Second Set of OECD Administrative Guidance | |||
| 1 | Currency conversion rules | 10 | |
| 2 | MTTCs | 3.2.4/18 | |
| 3 | SBIE Rules | ||
| – Foreign rules | 5.3.10/5.3.11 | ||
| Stock-based compensation election | Ministerial Decision No. (88) of 2025 | ||
| Leases | 5.3.12 | ||
| – Impairment losses inc in tangible asset value | 5.3.5 | ||
| 4.1 | QDMTT Safe Harbour | ||
| 4.2 | UTPR Safe Harbour | ||
| Third Set of OECD Administrative Guidance | |||
| 1 | Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) | 8.2.1.10 | |
| 2.2.1 | Transitional CbCR – JVs | Ministerial Decision No. (88) of 2025 | |
| 2.3.1 | Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting | 8.2.1.4 | |
| 2.3.2 | Transitional CbCR – Using different accounting standards | Ministerial Decision No. (88) of 2025 | |
| 2.3.3 | Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches | Ministerial Decision No. (88) of 2025 | |
| 2.3.4 | Transitional CbCR – MNEs not required to file CbC Reports | 8.2.1.8 | |
| 2.3.5 | Transitional CbCR – Qualified Financial Statements for PEs | Ministerial Decision No. (88) of 2025 | |
| 2.4.2 | Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities | Ministerial Decision No. (88) of 2025 | |
| 2.6 | Transitional CbCR – Treatment of hybrid arbitrage arrangements | 8.2.1.3 | |
| 3.1 | Identifying Consolidated Revenue | Ministerial Decision No. (88) of 2025 | |
| 3.2 | Mismatch between Fiscal Years of the UPE and another Constituent Entity | Ministerial Decision No. (88) of 2025 | |
| 3.3 | Mismatch between Fiscal Year and Tax Year of Constituent Entity | Ministerial Decision No. (88) of 2025 | |
| 4.2.1 | Blended CFCs -multiple GloBE Jurisdictional ETRs | Ministerial Decision No. (88) of 2025 but not relevant for a QDMTT as no pushdown | |
| 4.2.2 | Blended CFCs – not required to calculate an ETR | Ministerial Decision No. (88) of 2025 but not relevant for a QDMTT as no pushdown | |
| 4.2.3 | Blended CFCs – income of non-GloBE Entities | Ministerial Decision No. (88) of 2025 but not relevant for a QDMTT as no pushdown | |
| 5.3 | 30 June 2026 Filing deadline | Ministerial Decision No. (88) of 2025 | |
| 6 | NMCE Simplified Calcs | 8.2.2 | |
| Fourth Set of OECD Administrative Guidance | |||
| 1.2.1 | Aggregate DTL Category basis | Ministerial Decision No. (88) of 2025 | |
| 1.2.1 | Exclusion of certain types of GL accounts and separate tracking | Ministerial Decision No. (88) of 2025 | |
| 1.2.1 | Exclusion of GL accounts that generate standalone DTAs | Ministerial Decision No. (88) of 2025 | |
| 1.2.1 | Exclusion of swinging accounts and separate tracking | Ministerial Decision No. (88) of 2025 | |
| 1.2.2 | FIFO/LIFO Basis | Ministerial Decision No. (88) of 2025 | |
| 1.2.3 | Aggregation of Short-term DTLs | Ministerial Decision No. (88) of 2025 | |
| 1.2.2 | Reversal of DTLs that accrued before the Transition Year | Ministerial Decision No. (88) of 2025 | |
| 1.2.2 | 5 year unclaimed accrual election | Ministerial Decision No. (88) of 2025 | |
| 2.1.2 | Recalculated deferred tax where GloBE carrying value differs from accounting carrying value | Ministerial Decision No. (88) of 2025 | |
| 2.1.2 | GloBE and accounting carrying values and the Transition Rules | Ministerial Decision No. (88) of 2025 | |
| 2.1.2 | Additional provisions for Intragroup transactions accounted for at cost | Ministerial Decision No. (88) of 2025 | |
| 2.1.2 | Exclusion of GloBE carrying value from SBIE | Ministerial Decision No. (88) of 2025 | |
| 3.1.3 | General rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps | Ministerial Decision No. (88) of 2025 implements the AG. However, no taxes are pushed down under the QDMTT rules | |
| 3.1.3 | Specific rules for foreign PEs/CFCs, Hybrids/rev hybrids with domestic source income | Ministerial Decision No. (88) of 2025 implements the AG. However, no taxes are pushed down under the QDMTT rules | |
| 3.1.3 | Cross-crediting between Permanent Establishments and distributions from foreign subsidiaries | Ministerial Decision No. (88) of 2025 implements the AG. However, no taxes are pushed down under the QDMTT rules | |
| 4.1 | Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and rev hybrids | Ministerial Decision No. (88) of 2025 | |
| 4.2 | Allocation of deferred tax expenses and benefits from a Parent Entity to a CFC, PE Hybrid or Rev Hybrid: 5 step process | Ministerial Decision No. (88) of 2025 implements the AG. However, no taxes are pushed down under the QDMTT rules | |
| 4.2.2 | Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Rev Hybrids | No – not relevant for a QDMTT as no taxes pushed down | |
| 4.2.3 | Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules | No – not relevant for a QDMTT as no taxes pushed down | |
| 5.2.2 | Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity | Ministerial Decision No. (88) of 2025 | |
| 5.3.2 | Non-group owners: Partially owned Flow-through Entities | Ministerial Decision No. (88) of 2025 | |
| 5.3.5 | Non-group owners: Indirect minority ownership | Ministerial Decision No. (88) of 2025 | |
| 5.4.2 | Taxes allocated to a flow-through entity | Ministerial Decision No. (88) of 2025 | |
| 5.5.2 | Hybrid entities – Taxes pushed down include indirect owners | Ministerial Decision No. (88) of 2025 implements the AG. However, no taxes are pushed down under the QDMTT rules | |
| 5.5.4 | Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system | Ministerial Decision No. (88) of 2025 implements the AG. However, no taxes are pushed down under the QDMTT rules | |
| 5.6.2 | Extension of taxes pushed down to include Reverse Hybrids | Ministerial Decision No. (88) of 2025 implements the AG. However, no taxes are pushed down under the QDMTT rules | |
| 6.1.4 | Option to exclude a Securitization Entity from scope of QDMTT | Ministerial Decision No. (88) of 2025 | |
| 6.1.4 | Option to not impose top-up tax liabilities on SPVs used in securitization transactions | Ministerial Decision No. (88) of 2025 | |
| 6.1.4 | Amendments to the Switch-Off rule | Ministerial Decision No. (88) of 2025 | |
| 6.1.4 | New definition: Securitization Entity | Ministerial Decision No. (88) of 2025 | |
| 6.1.4 | New definition: Securitization Arrangement | Ministerial Decision No. (88) of 2025 | |
| January 2025 OECD Administrtive Guidance | |||
| 1 | Articles 8.1.4 and 8.1.5 | Ministerial Decision No. (88) of 2025 | |
| 1 | Amendments to CbCR Safe Harbour for 9.1 | Ministerial Decision No. (88) of 2025 | |
| 1 | Amendments to QDMTT Safe Harbour for 9.1 | Not applicable | |
| 1 | Article 9.1 of the GloBE Rules | Ministerial Decision No. (88) of 2025 | |
| 1 | Central Record of Legislation with Transitional Qualified Status | Ministerial Decision No. (88) of 2025 |
| Note | UAE | |
|---|---|---|
| QDMTT?(Enacted/Draft) | Is there a QDMTT in the Legislation? | Yes – Enacted |
| Effective Date: | Fiscal years beginning on or after January 1, 2025 | |
| Administrative Guidance/Safe Harbour Guidance? | Are the provisions of the OECD Administrative Guidance and Safe Harbour Guidance reflected in the current legislation? | Yes |
| Separate/Transposed QDMTT | Is the QDMTT a Separate QDMTT or a Transposition of the GloBE Rules (with Amendments) | Separate |
| Domestic Groups | A QDMTT can also apply to purely domestic groups. | No (must be an MNE group) |
| Scope Definitions | The definitions of Ultimate Parent Entity, MNE Group, and Constituent Entity correspond with the definitions in the GloBE Rules. | Art 2(1) |
| Income and covered taxes of Constituent Entities | The QDMTT must compute the tax liability for the jurisdiction by taking into account the income and covered taxes of Constituent Entities under the GloBE Rules. | Art 3/4 |
| Separate ETRs | A QDMTT must determine a separate ETR and Top-up Tax amount for MOCEs, Joint Ventures and JV Subsidiaries. | Art 5 |
| Charging | A QDMTT must impose a Top-up Tax on one or more domestic Constituent Entities on the Excess Profits of all domestic Constituent Entities, including the domestic Parent Entity. | Art 2/5.24 |
| Enforceability | The legal liability for the domestic top-up tax needs to be enforceable against at least one Constituent Entity in the jurisdiction. | Art 12 |
| Different Accounting Standard? – Optional | Is the use of a local accounting standard optional? | No |
| Different Accounting Standard? – Mandatory | Is the AG2 guidance followed? | Yes – local accounting standard rule |
| Different Accounting Standard? – Default GloBE rules | Do the general GloBE rules apply for the QDMTT accounting standard? | No |
| Require 100% ownership? | The QDMTT )can require 100% ownership | No |
| Differences to GloBE Rules: tighter restriction is consistent with local tax rules | The QDMTT can be more restrictive than the GloBE Rules where the tighter restriction is consistent with local tax rules. | No |
| Differences to GloBE Rules: Not relevant to in the context of its domestic tax system | The QDMTT can exclude adjustments that are not relevant to in the context of its domestic tax system. | Yes (eg no distribution tax regime election) |
| Income/Loss of a PE | The QDMTT must exclude the income or loss of a foreign Permanent Establishment from the income or loss of the Main Entity. | Art 2 |
| Tax Transparency | A QDMTT must include certain tax transparent provisions. | Art 3.5 |
| Adjusted Covered Taxes Consistency | The range of taxes included in Covered Taxes needs to be the same or narrower, as under the GloBE rules. | Art 4 (nb excludes distribution tax) |
| GloBE Loss Election? | Not Required in QDMTT | Art 4.5 |
| No Pushdown to CFC or PE | A QDMTT must exclude: (1) tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules and (2) tax paid or incurred by a Main Entity that is allocated to a PE in the jurisdiction. | Art 4.3.2 |
| Exclude tax allocated to Hybrids | Second AG Guidance | Art 4.3.2 |
| Exclude allocated net basis tax on dividends (except WHT) | Second AG Guidance | Art 4.3.2 |
| UPE that is a Flow-Through Entity | Second AG Guidance | Art 7.1 |
| UPE subject to Deductible Dividend Regime | Second AG Guidance | Art 7.2 |
| Eligible Distribution Tax Systems | Second AG Guidance | No |
| ETR Computation for Investment Entities | Second AG Guidance | No |
| Investment Entity Tax Transparency Election | Second AG Guidance | Art 7.3 |
| Taxable Distribution Method Election | Second AG Guidance | Art 7.4 |
| Multi-Parented MNE Groups | Second AG Guidance | Art 6.5 |
| Additional Top-Up Tax/Excess Negative Tax Expense | A QDMTT needs to have provisions for additional top-up tax where there is no Net GloBE Income and the Adjusted Covered are less than zero and less than the Expected Adjusted Covered Taxes. Amount. Excess Negative Tax Carry-forward rules also need to be in place. | Art 5.2.6 |
| Modified Top-Up Tax Formula | The QDMTT top-up tax formula needs to be modified as the GloBE Rules subtract tax paid under a QDMTT from the current GloBE Top-up Tax. | Art 5.2.3 |
| Same Approach As GloBE Rules | A QDMTT must require that top-up tax is taken into account by the relevant Constituent Entity at the same time and in the same manner as under the GloBE Rules (eg it can’t be carried forward). | Yes |
| SBIE Included? | Not Required in QDMTT | Art 5.3 |
| SBIE Rates same as GloBE? | Not Required in QDMTT | Art 5.3 |
| De Minimis Rule Included? | Not Required in QDMTT | Art 5.5 |
| Restructuring Rules? | A QDMTT needs to include restructuring rules as provided in the GloBE rules to the extent necessary to conform to the tax reorganization rules in the jurisdiction. | Art 6 |
| Safe Harbours? | A QDMTT needs to contain GloBE safe harbours. | Art 8.2 |
| Deferred Tax Transition Rule? | A QDMTT must include the deferred tax starting point under Article 9.1.1 of the Model Rules. | Art 9.1 |
| SBIE Transitional Rates? | Not Required in QDMTT | Art 9.2 |
| Initial Phase of International Activity Exemption | Not Required in QDMTT | Art 9.3 |
| Elections? | Where the GloBE Rules permit an election, a QDMTT must generally also provide for the election and require the MNE Group to make the same election under the QDMTT as is made under the GloBE Rules. | Yes (not deemed distribution tax election) |
| Deferred Tax transition: First time or refreshing rule? | Second AG | Yes – refreshing |
| New transition year – amend tax attributes? | Second AG | Art 9.1.12 |
| Currency provisions? | Second AG | Art 10 |
| DTL Recapture rules – Aggregate DTL Categories | Fourth AG, 1.2.8 | No |
| DTL Recapture rules Unclaimed Accrual Five-Year Election | Fourth AG, 1.2.8 | No |
| Reverse Hybrid Pushdown | Fourth AG, 5.6.2 | No |
| Securitization Entities – A QDMTT may also exclude a Securitisation Entity from its scope | Fourth AG, 6.1.4 | No |
| Securitization Entities – A jurisdiction may allocate the QDMTT liability for any QDMTT top-up tax to another Constituent Entity (if any) that is located in the jurisdiction | Fourth AG, 6.1.4 | No |
| Note |
| UAE | ||
|---|---|---|
| Effective Date: | Fiscal years beginning on or after January 1, 2025 | |
| Section/Article | ||
| Safe Harbour & Penalty Relief Guidance | De Minimis Test | 8.2.1.1 |
| Safe Harbour & Penalty Relief Guidance | Simplified ETR Test | 8.2.1.1 |
| Safe Harbour & Penalty Relief Guidance | Routine Profits Test | 8.2.1.1 |
| Safe Harbour & Penalty Relief Guidance | Simplified Covered Tax defn (inc exclusion of uncertain tax positions) | 8.2.1.11 |
| Safe Harbour & Penalty Relief Guidance | Simplified ETR defn | 8.2.1.11 |
| Safe Harbour & Penalty Relief Guidance | Transition Period | 8.2.1.11 |
| Safe Harbour & Penalty Relief Guidance | Transition Rate | 8.2.1.11 |
| Safe Harbour & Penalty Relief Guidance | Defn of Qualified Financial Statements | 8.2.1.11 |
| Safe Harbour & Penalty Relief Guidance | Special Rule for Joint Ventures | 8.2.1.2 |
| Safe Harbour & Penalty Relief Guidance | Special Rule for Tax Neutral UPEs | 8.2.1.4 |
| Safe Harbour & Penalty Relief Guidance | Special Rules for Investment Entities and their Constituent Entity-owners | 8.2.1.3 |
| Safe Harbour & Penalty Relief Guidance | Special Rule for Net Unrealised Fair Value Loss | 8.2.1.3 |
| Safe Harbour & Penalty Relief Guidance | Exclusions | 8.2.1.4 |
| December 2023 OECD Administrative Guidance | ||
| 1 | Transitional CbCR – Purchase Accounting Adjustments(consistent reporting condition, goodwill impairment adjustment) | 8.2.1.10 |
| 2.2.1 | Transitional CbCR – JVs | Ministerial Decision No. (88) of 2025 |
| 2.3.1 | Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting | 8.2.1.4 |
| 2.3.2 | Transitional CbCR – Using different accounting standards | Ministerial Decision No. (88) of 2025 |
| 2.3.3 | Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches | Ministerial Decision No. (88) of 2025 |
| 2.3.4 | Transitional CbCR – MNEs not required to file CbC Reports | 8.2.1.8 |
| 2.3.5 | Transitional CbCR – Qualified Financial Statements for PEs | Ministerial Decision No. (88) of 2025 |
| 2.4.2 | Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities | Ministerial Decision No. (88) of 2025 |
| 2.6 | Transitional CbCR – Treatment of hybrid arbitrage arrangements | 8.2.1.3 |
| January 2025 OECD Administrtive Guidance | ||
| Amendments to CbCR Safe Harbour for 9.1 |
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