15% Corporate Tax for Multinational Enterprises in the UAE from 2025 (Pillar Two Explained)
The United Arab Emirates introduced a federal Corporate Tax (CT) through Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, effective for financial years beginning on or after 1 June 2023. While most businesses in the UAE continue under the standard 9% rate (or 0% for qualifying Free Zone income), from 2025 onwards the landscape changes significantly for large Multinational Enterprises (MNEs).
Under the OECD’s Pillar Two framework, the UAE will apply a 15% global minimum tax to certain multinational groups. This ensures alignment with global tax reforms and prevents large groups from shifting profits to low-tax jurisdictions.
What Is Pillar Two and the 15% Minimum Tax?
The OECD/G20 Inclusive Framework on BEPS (Base Erosion and Profit Shifting) Pillar Two sets a minimum effective tax rate of 15% for large multinational groups. The UAE has embedded this through Cabinet Decision No. 142 of 2024, which provides for the imposition of a top-up tax on MNEs where their effective tax rate falls below 15%.
Further detail is provided through Ministerial Decision No. 88 of 2025, which issues commentary and administrative guidance for the operation of the top-up tax. In addition, the Ministry of Finance continues to release updates and clarifications to ensure businesses understand their obligations.
Who Qualifies as a Multinational Enterprise (MNE)?
Not every business with foreign connections is an MNE for Pillar Two purposes. To fall within scope of the 15% tax, three conditions must be satisfied:
- Consolidated Group Requirement – The company must belong to a group that prepares consolidated financial statements at the parent level. Simply having foreign shareholders or related-party transactions abroad does not, on its own, make a business an MNE.
- Cross-Border Operations – The group must operate in at least two jurisdictions, for example through subsidiaries, branches, or permanent establishments outside the UAE.
- Revenue Threshold – The group’s consolidated global revenues must exceed EUR 750 million (approx. AED 3.15 billion) in at least two of the four preceding financial years.
This means that a UAE-based trading company with a related-party supplier in another country is not automatically an MNE. Similarly, a Free Zone company with a foreign owner is not in scope unless it is part of a consolidated multinational group. On the other hand, a UAE-headquartered group with subsidiaries in Saudi Arabia and the UK, consolidated financial statements, and annual global revenues of AED 4 billion would be considered an MNE and therefore subject to the 15% tax.
A large UAE-only group, even with revenues of AED 10 billion, would not be an MNE under Pillar Two if all its operations are domestic.
Why Is the UAE Implementing the 15% Regime?
The UAE has adopted this reform for several reasons:
- Global Alignment – To comply with the OECD Inclusive Framework and avoid being perceived as a low-tax jurisdiction.
- Reputation & Transparency – To reinforce the UAE’s standing as a credible global financial and business hub.
- Fairness & Stability – To ensure that large multinational groups make equitable tax contributions.
- Preventing Profit Shifting – To stop large groups from using the UAE’s lower tax rate to artificially reduce their global tax bills.
Key Compliance Requirements for MNEs
Large multinational groups operating in the UAE must prepare for several obligations under the new regime:
- Effective Tax Rate Calculations in line with the OECD methodology.
- Transfer Pricing Documentation as required under Article 55 of the Corporate Tax Law, supported by Ministerial decisions on master file and local file obligations.
- Record-Keeping Obligations under Article 56 of the Corporate Tax Law, which requires records to be maintained for seven years.
- Preparation of Special Purpose Financial Statements, following Ministerial Decision No. 84 of 2025, which updated earlier rules on audited and aggregated statements.
- Attention to Guidance Notes regularly issued by the Ministry of Finance and the Federal Tax Authority, which include public clarifications and administrative commentaries.
Practical Example
Consider a multinational group headquartered in Europe with subsidiaries in the UAE. The group earns AED 4 billion globally and its UAE operations are taxed at 9%. If the effective tax rate in the UAE is calculated to be below 15%, a top-up tax will apply to bring the effective tax in the UAE up to 15%.
This ensures the group cannot use the UAE’s competitive 9% rate to lower its global tax obligations.
Legal and Regulatory Framework
The following instruments form the backbone of the UAE’s corporate tax system and specifically the 15% regime for MNEs:
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the main Corporate Tax Law).
- Federal Decree-Law No. 60 of 2023, which amended certain provisions of the CT Law.
- Cabinet Decision No. 142 of 2024 on the imposition of the top-up tax for MNEs (Pillar Two).
- Ministerial Decision No. 88 of 2025 providing administrative guidance and commentary on the top-up tax.
- Ministerial Decision No. 84 of 2025 requiring audited or special-purpose aggregated financial statements for tax purposes, particularly for tax groups.
- Ministerial Decision No. 229 of 2025 on qualifying and excluded activities for Free Zone persons.
- Ministerial Decision No. 173 of 2025 clarifying depreciation adjustments for investment properties held at fair value.
- Cabinet Decision No. 55 of 2025 expanding the list of exempt persons for corporate tax purposes.
Together, these legal provisions and ministerial decisions set the compliance roadmap for multinational groups.
How Accruon Auditing LLC Can Help
At Accruon Auditing LLC, we are assisting multinational clients in preparing for this change. Our services include:
- Impact assessments for groups likely to fall under the 15% regime.
- Advisory on structuring and transfer pricing in line with OECD and UAE requirements.
- Preparation of audited special-purpose financial statements under the latest Ministerial rules.
- Corporate Tax filings, disclosures, and voluntary corrections where required.
Conclusion
From 2025 onwards, the UAE will implement the 15% Corporate Tax on Multinational Enterprises in line with OECD Pillar Two. While this does not affect SMEs and most Free Zone entities, it has a major impact on global groups that exceed the EUR 750 million revenue threshold.
By aligning with international tax reforms, the UAE strengthens its reputation while ensuring fairness in the global tax system. For affected groups, compliance will require careful planning, detailed documentation, and professional guidance.
Contact Accruon Auditing LLC today to assess your position and prepare for the global minimum tax era.