G7 leaders meeting in Britain will endorse US President Joe Biden's proposal for global minimum tax of at least 15 per cent on corporations, White House national security adviser Jake Sullivan said on Twitter on Friday.
The US Treasury in May proposed a global minimum corporate tax of at least 15 per cent to try to end a downward spiral of corporate tax rates.
"America is rallying the world to make big multinational corporations pay their fair share so we can invest in our middle class at home," Mr Sullivan tweeted.
By supporting the move, major economies are aiming to discourage multinationals from shifting profits - and tax revenues - to low-tax countries regardless of where their sales are made.
Current global tax rules date back to the 1920s and struggle with multinational tech giants that sell services remotely and attribute much of their profits to intellectual property held in low-tax jurisdictions.
US tech giants such as Facebook and Amazon could benefit from the agreement to create a global minimum 15 per cent corporate tax rate if the final deal also scraps increasingly popular digital services taxes, according to industry lobbyists.
The decision had been expected after G7 finance officials backed a tax rate of at least 15 per cent during a meeting on June 5. The US Treasury has said the G7's endorsement will provide momentum for advancing negotiations towards a broader G20 finance meeting in July in Italy.
US Treasury Secretary Janet Yellen and her counterparts from Germany, Indonesia, Mexico, and South Africa backed the move in a column published on Wednesday by the Washington Post. They said they were confident that the global minimum tax rate could ultimately be pushed higher than 15 per cent, citing "the ambition of the discussions thus far".
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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