Tax update: UAE gets OECD transitional qualified status for DMTT

Image: Supplied

The UAE Ministry of Finance said on Monday that the Organisation for Economic Co-operation and Development (OECD) has granted its Domestic Minimum Top-up Tax (DMTT) transitional qualified status.

The OECD has published the UAE’s DMTT on its Central Record of Legislation with Transitional Qualified Status, available on its website.

The ministry said the recognition demonstrates the UAE’s commitment to international tax standards and its alignment with the OECD and the Inclusive Framework on Base Erosion and Profit Shifting (BEPS).

The DMTT qualifies to benefit from the OECD Pillar Two Safe Harbour, meaning multinational enterprises (MNEs) operating in the UAE will be exempt from calculating top-up tax in other jurisdictions.

This, the ministry said, reduces administrative burdens and provides greater clarity, transparency and certainty in tax compliance.

OECD’s recognition of DMTT a key development for UAE

“Adherence to international tax standards, coupled with the OECD’s recognition, cements the UAE’s position as a world leading hub for international business and investment and drives its sustainable development agenda,” the ministry said in a statement.

Under the qualified status, the DMTT provides certainty to MNE groups that no foreign tax will be applied to UAE profits, while other jurisdictions will recognise the top-up tax obligations due in the UAE.

The ministry said this minimises the risk of complex and costly multilateral audit challenges and disputes.

The safe harbour qualification also reduces the administrative burden for both MNEs and the tax administration as top-up calculations are not required to be performed in other jurisdictions for UAE in-scope entities.

The ministry said the announcement provides clarity and certainty to MNEs doing business in the UAE.

All cabinet decisions and ministerial decisions relating to the DMTT are available at www.mof.gov.ae