The year 2025 has had a very busy start with lots of new tax developments in the UAE and wider Gulf region. Whilst international developments, such as the Global Minium Tax (Pillar 2), are driving some of these changes, we have also witnessed modifications to specific areas of tax law in the UAE, in particular regarding the Corporate Income Tax (CIT) Law.
In this edition of Gulf Tax Insights, we explore the latest tax updates within the Gulf Cooperation Council (GCC) member states, highlighting critical changes and insights that impact businesses and investors.
UAE Ministerial Decision introduces certain changes for Tax Groups
In December 2024, the UAE Ministry of Finance (MOF) issued Ministerial Decision No. 301 of 2024 on Tax Groups, which repeals the previous Ministerial Decision regarding this topic. Among others, the new Ministerial Decision covers situations where members of a Tax Group had unutilized carry forward losses, foreign tax credits or carry forward net interest expenses, before joining the Tax Group. The regulations are relatively complex, and Tax Groups are advised to take note of these recent changes.
Kuwait issues Domestic Minimum Top-Up Tax Law
On 30 December 2024, Kuwait has published MR. No 157 of 2024 on the Taxation of Multinational Enterprises. This Law introduce a Domestic Minimum Top-Up Tax (DMTT) of 15% on the profits of Kuwaiti constituent entities of large Multinational Enterprises. This DMTT Law is Kuwait's implementation of the Global Minimum Tax, or Pillar 2, and Multinational Enterprises with entities in Kuwait should consider the new Law, to ensure they comply with the rules, which includes timely registration with the Kuwait Tax Authority.
UAE Ministerial Decision amends and clarifies aspects for the Participation Exemption and Foreign Permanent Establishment Exemption
In December 2024, the UAE MOF issued Ministerial Decision No. 302 of 2024 on the Participation Exemption and Foreign Permanent Establishment Exemption, repealing the previous Ministerial Decision on this topic. Among others, the new Ministerial Decision provides further clarity on the subject to tax rule, as well as on the possibility of deducting a liquidation loss upon the liquidation of a qualifying participation under the Participation Exemption.
Double Tax Treaty Developments
Over the past month, we witnessed the continued strengthening of 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.
