On February 8, 2025, the Emirati Ministry of Finance published UAE Cabinet Resolution No. 142, which introduces a top-up tax on multinational enterprise (MNE) groups in line with the OECD Pillar Two initiative. The resolution applies to MNE groups with annual consolidated revenue of 750 million euros (US$780.8 million) or more in at least two of the last four fiscal years. It outlines the calculation of net income or loss for constituent entities, including adjustments, temporary differences, and deferred tax considerations. The resolution also details how to calculate the effective tax rate (ETR) and top-up tax, covering substance-based income exclusions and de minimis exemptions. It clarifies the rules for filing top-up tax returns, and introduces transitional safe harbor provisions, including simplified calculations for MNEs meeting certain tests. The decision applies to fiscal years starting on or after January 1.
To access the Resolution, click here.