Indian multinationals assess UAE tax exposure ahead of November deadline
Quick Look
Indian multinational companies are evaluating their tax exposure in the UAE ahead of a November 30 registration deadline for a new 15% global minimum tax, which could affect their existing structures benefiting from the UAE's 9% corporate tax rate and 0% free-zone income levy.
AI-generated summary
Why It Matters
The UAE implemented the OECD's Pillar 2 global minimum tax rules in January 2025, imposing a 15% minimum tax on multinational groups with at least $750 million in consolidated global revenue over two of the preceding four years, potentially requiring top-up taxes when effective rates fall below 15%.
Synopsis
Indian multinationals are assessing their UAE tax exposure before November's deadline. A new 15% minimum tax could affect their existing corporate tax structures. This global minimum tax rule applies to large groups with significant consolidated global revenue. Companies must register for the levy by November 30 this year. UAE authorities have issued guidance on compliance and scope for these firms.
Dubai: As the United Arab Emirates kicks off a new minimum-tax regime, several big Indian multinationals are assessing their exposure and the economics of their structures in the country with the November registration deadline fast approaching, experts said.
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The 15% minimum tax could diminish the advantage of the UAE’s 9% corporate tax rate and 0% levy on qualifying free-zone income for some large multinational groups that fall within the scope of the regime, they said.
Dubai new tax regime
The OECD's Pillar 2 or global minimum-tax rules, as implemented by the UAE in January 2025, apply to multinational groups with consolidated global revenue of at least `750 million ($871 million) in two of the four preceding years, and potentially require additional tax payments when their effective rate falls below 15%. The scope of the tax can cover even relatively small UAE subsidiaries, free-zone companies and branches of large Indian groups.
Tax experts said that some Indian multinational conglomerates had been assessing their exposure and data readiness since 2024.
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Several other Indian companies falling within the remit are now assessing their potential tax coverage, reassessing freezone structures and exploring available exclusions as the deadline approaches.
“We are seeing a noticeable increase in queries from large Indian multinational companies following the recent scope and compliance related guidance issued by the UAE federal tax authority,” said international tax advocate Priyanshi Chokshi. “Among them is a large pharmaceutical group with a setup in the free zone, and a large multinational group that has entities across the UAE, India, the UK, Mauritius, and the US.”
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The UAE ministry of finance last week specified the entities required to file the Pillar 2 Information Return. Under the UAE domestic minimum top-up tax (DMTT) regime, the revenue threshold will be tested at the group level. This means a relatively small UAE entity can fall within the rules if it forms part of a sufficiently large Indian-headed multinational group.
The qualifying firms under the top-up tax regime need to register for the levy by November 30 this year.
What to Watch
AI outlook — possibilities, not facts
Indian multinational companies will increase tax compliance investments and consultancy engagements ahead of the November 30 deadline
Likely · Within weeks
Some Indian multinational groups will reassess or restructure their UAE free-zone entities to optimize tax exposure under the new regime
Possible · Within months
Open Questions
- How many Indian multinational groups will be affected by the UAE's DMTT regime?
- What specific exclusions or reliefs are available under the UAE's top-up tax structure?
- Will Indian companies restructure their UAE operations in response to the new tax?
