Indian MNCs align with UAE’s 15% minimum corporate tax ahead of deadline

Major Indian multinational corporations operating in the United Arab Emirates (UAE) are restructuring their corporate entities and inter-company pricing arrangements ahead of a crucial November deadline. The restructuring comes as the UAE enforces a 15% Domestic Minimum Top-up Tax aligning with global tax norms.

This movement is driven by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) Pillar Two initiative. Designed to prevent multinational enterprises from shifting profits to low-tax jurisdictions, Pillar Two establishes a standardized global minimum effective corporate tax rate of 15% across participating economies.

The tax mandate specifically targets large Multinational Enterprise (MNE) groups generating consolidated annual revenues exceeding €750 million (approximately ₹6,700 crore). Under the Qualified Domestic Minimum Top-Up Tax (QDMTT) rules, if a multinational pays an effective tax rate below 15% in the UAE, top-up taxes will be levied locally.

This policy shift is crucial for UPSC GS-3 (Indian Economy & Tax Reforms) and Banking examinations. Key concepts to master include Base Erosion and Profit Shifting (BEPS), OECD Pillar 1 and Pillar 2 frameworks, Tax Havens, and Double Taxation Avoidance Agreements (DTAA).