Tax Update - Ministerial Decision No. 88 of 2025 on Commentary and Administrative Guidance for Application of UAE's Pillar Two Top-Up Tax Rules
18 Apr 2025
The UAE Ministry of
Finance has issued Ministerial Decision No. 88 of 2025, formally
adopting the OECD Commentary and Administrative Guidance on the Global
Anti-Base Erosion (GloBE) Model Rules (Pillar Two) for the application
of Cabinet Decision No. 142 of 2024 concerning the imposition of
Top-Up Tax on Multinational Enterprises (MNEs).
This step is a critical
alignment of the UAE’s domestic implementation of the OECD/G20 BEPS Pillar
Two framework aimed at introducing a global minimum tax of 15% on
MNE groups with consolidated revenues of EUR 750 million or more.
Key Highlights
The Decision formally
adopts and incorporates by reference several key OECD publications as
guidance for applying the UAE’s Top-Up Tax rules, including:
- The 2024 Consolidated OECD Commentary on
the GloBE Rules;
- OECD’s Administrative Guidance (2024 and 2025
editions), covering provisions under Articles 8.1.4 & 8.1.5
(pertaining to filing obligations), 9.1 (pertaining to tax attributes upon
transition i.e. deferred tax assets), and the GloBE Information Return;
and
- The Central Record of Administrative
Guidance consolidating interpretations under the GloBE framework.
The Decision ensures consistent
interpretation and application of Top-Up Tax provisions by UAE MNE
groups and authorities in line with international standards.
What this means for UAE
MNEs
- MNE Groups in scope of Cabinet Decision 142 of 2024 must
ensure their corporate structures, effective tax rate calculations and
compliance framework aligns with the latest OECD administrative
guidance;
- The inclusion of OECD's GloBE Information Return
guidelines (Jan 2025) indicates the likely standardized
reporting obligations that UAE-headquartered MNEs will need to
prepare for; and
- MNEs should stay updated on how these administrative
clarifications affect local Top-Up Tax calculations, exemptions,
exclusions and transitional provisions.
Effective Date
- The decision takes effect for the tax periods
commencing on or after 1 January 2025.
