Amendments to the Corporate Tax Law to cater for Pillar Two

27 November 2023 - On 24 November 2023, the United Arab Emirates (UAE) published Federal Decree Law No. (60) of 2023, amending specific provisions of Federal Decree Law No. (47) of 2022 on the Taxation of Corporations and Businesses (CT Law) to facilitate the future introduction of domestic minimum taxes. 

The key amendments are as follows:

  • Changes to Art. 1 of the CT Law (definitions): New definitions will be added in the CT Law. “Top-up tax” is defined as a supplementary tax applied to Multinational Enterprises (MNEs) to ensure that MNEs are subject to an effective tax rate of 15% in line with the Pillar Two rules. An “MNE” is defined as an entity or a group of entities with presence in more than one country.
  • Changes to Art. 3 of the CT Law (tax rate): A separate decision shall be issued in due course outlining the mechanisms, terms, conditions, rules and procedures for imposing the top-up tax on MNEs in line with Pillar Two rules.
  • Effective Date: The top-up tax rules will take effect from the date the Minister's upcoming decision is released and published in the Official Gazette. Please refer to our previous alert regarding timing of implementation.

Though the new legislation does not really include anything substantive, it does show that the authorities are taking steps to allow for a smooth implementation of the Pillar Two rules once they come into effect. The public consultation is expected to take place in Q1 2024, and Pillar Two implementation is still planned for after 2024.

Navigate the regulatory requirements and updates on Pillar Two legislation with ease, using our portal as your one-stop guide.

You can also explore our Deloitte’s Pillar Two Tax Advisory services and insights here.

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