The UAE’s Ministry of Finance and the Organisation for Economic Co-operation and Development discussed the Emirates’ progress in implementing international tax standards and ways to further strengthen co-operation.
The ministry and OECD discussed the extension of their strategic partnership by renewing the joint memorandum of understanding for 2022-2024 during a meeting between Younis Al Khoori, undersecretary of the Ministry of Finance, and Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration.
“The UAE is keen to co-ordinate with the OECD in all relevant areas, in line with its commitment to implement international tax standards and practices with the highest levels of transparency with regard to tax-related matters,” Mr Al Khoori said.
He highlighted the UAE’s commitment to meeting OECD standards, especially in exchanging information for tax purposes.
Foreign taxes paid will be credited against any payable UAE corporate tax, meaning there will be no double taxation.
To support small and medium size enterprises, there will be a zero tax rate for taxable profits up to Dh375,000 ($102,000).
Last October, Paris-based OECD said 136 countries had agreed to a global deal to ensure big companies pay a minimum tax rate of 15 per cent from 2023, marking a major reform of the international tax system that makes it tougher for multinationals to avoid taxation.
Under the worldwide accord, countries will collect about $150 billion in new tax revenue annually, while $125bn in multinationals’ profits will be reallocated to the countries in which they operate, the OECD said.
The new minimum tax rate will apply to companies with revenue of more than €750 million ($868m).
During the meeting, officials discussed the OECD’s base erosion and profit shifting (BEPS) initiative, as well as the latest updates on the requirements of the 'country by country' reporting, economic substance regulations and the common reporting standard, a statement said.
The ministry also expressed its readiness to address tax challenges arising from the digitalisation of the economy.
They also discussed an inclusive framework on carbon pricing and reviewed the OECD’s continuing work in the economic field and tax reform in the UAE, the ministry said.
“The UAE adopts well-thought-out balanced financial and tax policies, legislations and systems that meet the objectives of the national development plans, while ensuring commitment to the highest levels of transparency and preventing harmful financial and tax practices,” Khalid Al Bustani, director general of the UAE’s Federal Tax Authority, said.
“This is to meet international requirements for the management and application of tax systems.”
The UAE will continue to support international efforts to combat base erosion and profit-shifting to contribute to the continuous improvement of the global economic environment, he added.
The Ministry of Finance signed a preliminary agreement with the OECD in 2007, which is periodically renewed to build a strong tax partnership by sharing experience and seeking solutions to common problems in the exchange of information for tax purposes.