The United Arab Emirates (UAE) continues to solidify its position in the global tax framework by issuing Ministerial Decision No. (88) of 2025, which provides administrative guidance on the application of the Top-Up Tax under Cabinet Decision No. (142) of 2024. This step brings clarity to businesses operating in the UAE and reflects the nation’s alignment with the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).
The Global Context: OECD’s Pillar Two :
The Organisation for Economic Co-operation and Development (OECD), through its Base Erosion and Profit Shifting (BEPS) Project, introduced the Pillar Two rules to address tax challenges arising from the digital economy. At its core, the Pillar Two framework ensures that large multinational enterprise (MNE) groups pay a minimum effective tax rate of 15%, regardless of where they operate.
To support this objective, the OECD published the GloBE Model Rules (Global Anti-Base Erosion), which are designed to prevent MNEs from shifting profits to low-tax jurisdictions and eroding the tax base of higher-tax countries.
UAE’s Implementation – What The Ministerial Decision Covers :
The UAE’s Ministerial Decision No. (88) formally recognizes and applies the OECD’s supporting documents as part of the interpretative framework for the UAE Top-Up Tax regime. Specifically, the Decision confirms that the following OECD-issued materials are to be considered when interpreting and applying the UAE Top-Up Tax provisions:
- The OECD Commentary on the GloBE Model Rules (as published in March 2022)
- Agreed Administrative Guidance released by the OECD Inclusive Framework on BEPS (as of February 2023 and December 2023)
This ensures that the UAE’s tax system remains in step with global norms, provides clarity to businesses, and reduces interpretation disputes by referencing internationally accepted materials.
Why This Matters For MNEs In The UAE :
Multinational enterprises with global revenues of EUR 750 million or more fall within the scope of the UAE’s Top-Up Tax regime. The Ministerial Decision ensures that these entities can:
- Apply OECD-approved interpretations confidently
- Maintain compliance across jurisdictions
- Avoid potential tax mismatches or double taxation
By adopting these internationally developed materials, the UAE demonstrates its commitment to tax transparency, regulatory alignment, and global cooperation in fair taxation.
Summary Table: OECD Guidance on Top-Up Tax and Digitalisation Challenges :
| OECD Guidance | Focus Area | Publication Date |
| Consolidated Commentary | Comprehensive interpretation of the Global Anti-Base Erosion (GloBE) Model Rules | 2024 |
| Pillar Two Guidance | Administrative guidance related to the application of GloBE Model Rules under Pillar Two | June 2024 |
| Central Record Guidance | Record-keeping and documentation requirements under GloBE rules | 2025 |
| Articles 8.1.4 and 8.1.5 Guidance | Specific guidance on transitional and special rules | January 2025 |
| Article 9.1 Guidance | Details on safe harbours and simplification mechanisms | 2025 |
| GloBE Information Return Guidance | Reporting format and procedures for GloBE compliance | January 2025 |
Key Takeaway :
The UAE’s incorporation of the OECD’s supporting documents underlines its proactive approach to global tax reforms. For multinational groups operating in or through the UAE, understanding the OECD’s guidance is now integral to staying compliant with local corporate tax obligations.
As tax regulations continue to evolve, businesses are encouraged to review their group structures, assess Top-Up Tax implications, and seek professional advice to navigate this new landscape effectively.
Sources:
- 88-MD-88-on-Commentary-and-Guidance-for-Top-Up-Tax-PIllar 1.
- Tax Challenges Arising from Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two).
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