UAE Announces New Tax Rule 2025
On January 1, 2025, the UAE Ministry of Finance began implementing Cabinet Resolution No. (142) of 2024 regarding imposing an additional tax on multinational companies. Details of the law can be found at the following link:
UAE Announces New Tax Rule 2025
The following table includes the most important details of the UAE Announces New Tax Rule that came into effect in 2025:
| Article | Text |
| Article 1.1. Scope of this Decision |
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| Article 1.2. MNE Group and Group | An MNE Group means any Group that includes at least one Entity or Permanent Establishment that is not located in the Jurisdiction in which the Ultimate Parent Entity of the MNE Group is located. A Group means a collection of Entities that are related through ownership or control such that the assets, liabilities, income, expenses and cash flows of those Entities:
A Group also means an Entity that is located in one Jurisdiction and has one or more Permanent Establishments located in other Jurisdictions provided that the Entity is not a part of another Group described in Article 1.2.2. |
| Article 1.3. Constituent Entity | A Constituent Entity is any of the following:
A Permanent Establishment that is a Constituent Entity under paragraph (b) above shall be treated as separate from the Main Entity and any other Permanent Establishment of that Main Entity. A Constituent Entity does not include an Entity that is an Excluded Entity. |
| Article 1.7. Permanent Establishments of Excluded Entities | Where a Main Entity is an Excluded Entity in accordance with Article 1.5.1, its Permanent Establishments will also be treated as Excluded Entities. For purposes of Article 1.5.2, the activities undertaken by the Permanent Establishments of a Main Entity shall be considered for purposes of determining whether the Main Entity meets the requirements in subparagraphs (i) or (ii) of Article 1.5.2(a), or Article 1.5.2(b). Where the requirements are met, the Permanent Establishments of the Main Entity will also be considered as Excluded Entities in accordance with Article 1.5.2. |
| Article 1.9. Entities held by Non-profit Organisations | An Entity will be treated as an Excluded Entity provided that the following conditions are met:
Where the Fiscal Year of the MNE Group is a period other than 12 months, the computation under Article 1.9.1 (b) shall be adjusted in accordance with Article 1.1.2 |
| Article 4.5. The Pillar Two Loss Election | In lieu of applying the rules set forth in Article 4.4, a Filing Constituent Entity may make a Pillar Two Loss Election for the UAE. When a Pillar Two Loss Election is made for the UAE, a Pillar Two Loss Deferred Tax Asset is established in each Fiscal Year in which there is a Net Pillar Two Loss for the UAE. The Pillar Two Loss Deferred Tax Asset is equal to the Net Pillar Two Loss in a Fiscal Year for the UAE multiplied by the Minimum Rate. The balance of the Pillar Two Loss Deferred Tax Asset is carried forward to subsequent Fiscal Years, reduced by the amount of Pillar Two Loss Deferred Tax Asset used in a Fiscal Year. The Pillar Two Loss Deferred Tax Asset must be used in any subsequent Fiscal Year in which there is Net Pillar Two Income in the UAE in an amount equal to the lower of the Net Pillar Two Income multiplied by the Minimum Rate or the amount of available Pillar Two Loss Deferred Tax Asset. If the Pillar Two Loss Election is subsequently revoked, any remaining Pillar Two Loss Deferred Tax Asset is reduced to zero, effective as of the first day of the first Fiscal Year in which the Pillar Two Loss Election is no longer applicable. Subsequently, the deferred tax assets and liabilities for each Constituent Entity in the UAE, if any, will be taken into account as if they had been calculated under Articles 4.4 and 9.1 for the prior Fiscal Year. The Pillar Two Loss Election must be filed with the first Pillar Two Information Return of the MNE Group or with the first Top-up Tax Return of the MNE Group, whichever is filed earlier, or with both if they are required to be submitted for the first Fiscal Year in which the MNE Group has a Constituent Entity located in the Jurisdiction. A Flow-through Entity that is a UPE of an MNE Group may make a Pillar Two Loss Election under this Article. When such an election is made, the Pillar Two Loss Deferred Tax Asset shall be calculated in accordance with Articles 4.5.1 to 4.5.5, however, the Pillar Two Loss Deferred Tax Asset shall be calculated with reference to the Pillar Two Loss of the Flow-through Entity after reduction in accordance with Article 7.1.2. |
UAE Announces New Tax Rule 2025 PDF
You can download all the details related to the amendments to the UAE tax law that came into effect in 2025 directly “from here” to familiarize yourself with them before paying the tax.
Questions & Answers
The new tax came into effect in the UAE on January 1, 2025.
The new tax in the UAE does not apply to individuals, but rather to businesses and companies.
The new tax for 2025 in the UAE is known as the Supplementary Tax on Multinational Enterprises, according to the cases, terms, conditions, rules, controls, and procedures set forth in Resolution No. 142 of 2024.