Today, on 20 December 2021, the OECD released the Final Pillar 2 or Global Minimum Tax rules. Pillar 2 forms part of the OECD’s two-pillar solution to address tax challenges arising from the digitalization of the economy, which is currently endorsed by 137 countries (including the United Arab Emirates, Jordan, Egypt, Saudi Arabia, Oman, Qatar and Bahrain). The final rules consist of 10 chapters and are intended to be incorporated into domestic legislation or supported by all 137 signatories to the proposals, by early 2023. The introduction of these rules would most likely significantly increase the effective tax rate of GCC businesses, especially for businesses operating in jurisdictions with no or low statutory tax rates, or businesses benefitting from various preferential taxation regimes.
A link to the full OECD release can be found here: Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two) (oecd.org)
We will be releasing further guidance of what these rules mean for companies in the UAE and GCC over the next few days and weeks, and we will be sharing our insights with you in due course. Our global policy team will also host a global webinar on the proposals on 11 January 2022.
To register for this event, please click here.
To supplement the global view, our regional BEPS team will also be hosting a region-specific webinar on what the proposals mean for companies in the UAE and GCC, on 19 January 2022. This will include an in-depth analysis of the rules, with practical examples for GCC based businesses, covering topics that include but are not limited to:
· Excluded entities
· Application of the Income Inclusion Rule (IIR) and Under Tax Payments Rule (UTPR)
· Application of carve outs; and
· Administration of the rules.
For details of how to register for our regional webinar, please click here.
By the end of the webinar, we hope you will have greater clarity on what the rules mean for you and your organization, as well as the next steps that need to be taken.