Multinational companies operating in the UAE and Oman will have tax implications from the recent agreement among 130 countries and jurisdictions to a framework for reform of the international tax rules, according to KPMG

“The UAE and Oman are amongst the 130 Inclusive Framework members that have agreed to the announcement and therefore have signaled their intent to adopt the proposals. As a result, both pillars will impact groups operating in these countries,” said Shabana Begum, Partner, Head of Transfer Pricing, KPMG Lower Gulf.

The new two-pillar plan to reform international taxation rules is aimed at ensuring multinational enterprises pay a fair share of tax wherever they operate. The framework including the implementation plan is expected to be finalized in October this year.

• Pillar One – Ensure a fairer distribution of profits and taxing rights among countries concerning the largest MNEs, including digital companies.
• Pillar Two – Seeks to put a floor on competition over corporate income tax, through the introduction of a global minimum corporate tax rate that countries can use to protect their tax bases.

According to KPMG, following the OECD announcement on July 1, 2021, the next steps will include the formal finalization and adoption of the rules, which may result in changes to domestic legislation.

“Groups and companies operating in the UAE and Oman should be aware that while these are global corporate tax rules, their impact on a local level could be very real. They may have a significant impact on the corporate taxes reported and paid by groups operating in the UAE and Oman. Businesses operating here will also likely face new tax compliance and financial control responsibilities,” said Begum.

(Source: www.gulfnews.com)