Federal Decree-Law No. 60 of 2023 introduces key amendments to Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The law defines “Top-up Tax” as an additional tax applicable to multinational enterprises in line with OECD Pillar Two rules, and “Multinational Enterprise” as a group with one or more entities operating in the UAE or abroad, as specified by Cabinet decision.
The law imposes a 15% Top-up Tax on multinational groups with global revenues exceeding EUR 750 million, where their effective tax rate in a jurisdiction falls below the required minimum. It also replaces Article 65 to establish a mechanism for revenue sharing between federal and local governments based on local legislative provisions.
Under Article 3, the Domestic Minimum Top-up Tax will take effect from 1 January 2025, following its publication in the Official Gazette. The Ministry of Finance has confirmed that this aligns with the UAE’s implementation of OECD Pillar Two and supports national objectives to maintain a competitive and transparent tax environment.
Multinational enterprises operating in the UAE should assess whether they fall below the 15% effective tax rate and prepare for new compliance requirements. These may include quarterly tax reporting, enhanced transfer pricing documentation, and benchmarking of related party transactions such as director remuneration. Incentives are also under consideration, including R&D tax credits and reliefs for entities contributing to economic development and job creation. Early and coordinated tax planning will be essential to manage exposure and benefit from available reliefs.
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For more information on how any of these developments may affect your organisation or your clients, please contact Suneer Kumar, Head of Corporate Practice on suneer@alsuwaidi.ae and Vida Grace Serrano, Corporate Senior Associate on Vida@alsuwaidi.ae.
Alsuwaidi & Company’s corporate team advises on a wide range of matters including regulatory compliance, investment structuring, M&A, employment, and tax strategy. We support multinational and regional businesses across sectors with practical, commercially grounded legal guidance.