The UAE introduced a 9 per cent corporate tax in 2023 for businesses with taxable income above AED 375,000 as part of its alignment with international efforts to curb harmful tax competition, according to The National. The measure sought to deter multinationals from shifting profits to low-tax jurisdictions while sparing smaller enterprises that serve as the foundation of the national economy. A January 2026 article in the publication by David Daly, a partner at the Gulf Tax Accounting Group, framed the policy as addressing a race to the bottom that ultimately harms societies worldwide. The OECD Pillar Two framework, which imposes a 15 per cent global minimum effective tax rate on multinational enterprises generating more than €750 million in annual revenue, has guided much of this evolution, OECD documentation confirms.
UAE authorities enacted a Domestic Minimum Top-up Tax at 15 per cent for qualifying multinational groups beginning in January 2025, a PwC Pillar Two Country Tracker updated on June 25, 2026, reported. This top-up mechanism ensures the effective rate reaches the global benchmark even when the standard 9 per cent corporate tax applies, meaning some compliant local entities may still face additional liabilities. The framework forms part of the broader Base Erosion and Profit Shifting initiative and applies only to the largest players, leaving the majority of UAE businesses unaffected. An IMF assessment from 2024 projected that the overall corporate tax regime could eventually contribute between 2 and 3 per cent of GDP, bolstering non-oil public revenues.
The United States secured an exception to full OECD GloBE adoption and instead operates a parallel system through its updated Net CFC Tested Income rules, which a Grant Thornton alert dated January 2026 described as producing complementary minimum tax results. The NCTI regime, revised in 2025 from the earlier GILTI provisions of the 2017 Tax Cuts and Jobs Act, raises the effective minimum rate and broadens the taxable base while preserving national sovereignty. OECD guidance released in January 2026 formalised a side-by-side safe harbour for US multinationals, reducing duplicative compliance burdens. Tax transparency advocates have criticised the arrangement for potentially slowing broader standardisation, The National noted.
David Daly questioned in the January 15, 2026, article whether other major economies such as those in the EU, UK, China and India would pursue similar parallel regimes, which could fragment the intended global framework. He warned that such moves risk replacing one set of complex rules with another that proves difficult to implement uniformly. “An attempt to simplify and make the marketplace fair for all will then likely have gone from one tower of babbling rules to another,” Daly stated in the publication. Countries still converging toward the OECD model, including the UAE, might therefore extend timelines to observe final outcomes before completing their own adjustments.
In June 2026 the UAE issued Ministerial Decision No 96 of 2026 formally incorporating the latest OECD interpretive materials, administrative guidance and consolidated commentary into its qualified domestic minimum top-up tax regime, oecdpillars.com reported. The decision repeals a prior 2025 measure and applies to fiscal years starting on or after January 1, 2025, ensuring continued alignment. Free-zone entities qualifying for 0 per cent tax on certain income nevertheless remain subject to the top-up where the 15 per cent effective rate is not met, according to analysis by Acclime. These layered requirements have prompted many large groups to review structures, particularly in logistics, finance and trading sectors where cross-border operations are common.
Businesses in the UAE have navigated multiple regulatory overhauls in recent years, and further refinements to the corporate tax law could be welcomed if they provide additional clarity or transitional relief, Daly suggested in The National. The Federal Tax Authority continues to monitor implementation while emphasising that the regime supports the country’s position as a competitive international hub. Updated OECD safe harbours and filing portals agreed in May 2026 have eased some administrative pressures for groups operating across multiple jurisdictions, the PwC tracker indicated.
