In this month’s newsletter, we delve into the latest tax developments within the Gulf Cooperation Council (GCC) member states, highlighting critical updates and insights that impact businesses and investors across the region.
In March 2024, the UAE’s Ministry of Finance initiated a public consultation on Pillar Two, preparing the groundwork for the adoption of the Global Anti-Base Erosion (GloBE) rules. This initiative reflects the UAE’s strategic approach in customizing the GloBE Rules to fit its unique environment. Through this consultation, the Ministry of Finance aims to gather input on the policy decisions and design choices concerning the implementation of Pillar Two, demonstrating a commitment to finding a balanced approach that takes into account the views and needs of various stakeholders.
In addition, the UAE’s Federal Tax Authority provided clarity regarding the tax treatment of partnerships and their partners through the release of a comprehensive guide. Recognizing the intricate rules that dictate whether partnerships are considered as fiscally transparent or opaque entities, this guide is expected to be a valuable resource for both businesses and tax professionals.
A notable development in Dubai’s tax landscape is the introduction of a new tax law enabling foreign banks to mitigate the risk of double taxation by crediting federal Corporate Income Tax against Emirates-based tax liabilities. The new law, effective for tax periods commencing after 8 March 2024, exemplifies Dubai’s proactive approach in mitigating double taxation under federal and Emirates-based tax regulations, albeit with a consideration that banks with financial years ending on 31 December 2024 might not immediately benefit from this tax credit.
On the GCC front, March 2024 also marked continued efforts to strengthen international business relations through the expansion and updating of Double Tax Treaty (DTT) networks among GCC Member States. These developments aim to enhance the Gulf region’s attractiveness as a global business hub, facilitating smoother cross-border trade and investment activities.
Through these articles, we aim to provide you with insightful analysis and updates on the evolving tax landscape in the UAE and the wider GCC region. We hope this edition offers valuable knowledge to navigate the complexities of the current tax environment.
As always, we look forward to your thoughts, comments, and feedback.
