Ayushi Agrawal – FAME Advisory FZCO

A Program for e-Invoicing in UAE by the Ministry of Finance

Ayushi Agrawal — Wed, 26 Mar 2025 11:04:38 +0000

Ayushi Agrawal

March 26, 2025

Objectives of the Public Consultation Document on e-Invoicing in UAE

To help businesses adapt to digital transformation, the UAE Ministry of Finance (MoF) released a Public Consultation Document on February 7, 2025, which outlines the standard data requirements for e-invoices. The main goals of this effort are:

1. Create a common understanding of E-Invoicing rules

This means making sure everyone understands the requirements for using E-Invoicing

2. Help businesses get ready for E-Invoicing

This will assist businesses in preparing to use E-Invoicing when they are required.

3. Make sure invoice data is consistent and standardized

This will ensure that the information on invoices is the same across all types of documents, making it easier for everyone to use and understand.

What is e-Invoicing in UAE

E-invoicing is the digital version of paper or PDF invoices, using a format that can be read by machines and checked in real-time. In the UAE, a system called Decentralized Continuous Transaction Control (DCTCE) is used, where invoices are first checked by approved service providers (ASPs) before being sent to buyers and tax authorities. This helps ensure that invoices are accurate, clear, and follow tax rules.

The e-Invoicing Data Dictionary (PINT AE)

The E-Invoicing Data Dictionary (PINT AE) outlines the key data fields and their characteristics for the most common types of invoices used by businesses in the UAE. It highlights the need for standardization to make sure that different invoice types are consistent. This standardization is important for smooth integration, efficient processing, and ensuring that E-Invoicing works well across the UAE’s business system.

Excluded Transaction: A business transaction that doesn’t require E-Invoicing exchange or reporting.

It is important to note that E-Invoicing will be rolled out in a phased manner.

The E-invoicing framework encompasses all Business-to-Business (B2B) and Business-to-Government (B2G) transactions, regardless of the VAT registration status of the entities involved.

Is your business prepared for the UAE’s e-Invoicing implementation? FAME ensures seamless compliance with expert advisory.

Consult with Us Today

Background: UAE e-Invoicing Program

The UAE E-Invoicing program aligns with global trends in Digital Reporting Requirements (DRR) and Continuous Transaction Controls (CTC), reflecting the increasing adoption of digital tax compliance measures worldwide.

We the UAE 2031 vision, are as follows:

VAT Compliances: – Maximize VAT compliance, tackle the shadow economy, and shrink the tax gap.
Effectiveness: Increase transparency and improve audits with a view to encouraging a long-term culture of compliance.
Taxpayer experience: Enhance taxpayer and user experiences, potentially offering new and innovative engagements.
Digitalization: Reduce human intervention in certain business and tax reporting processes with a view to making the UAE and its fiscal ecosystem more digitally enabled.
Efficiency: Optimize cost and core operations, reduce processing time and encourage a reduction in paper wastage with a view to helping meet sustainability objectives.
Economic contribution: Contribute to the growth and competitiveness of the economy and utilize big data.
Contribute for policy making and government interventions: By adopting E-Invoicing, UAE government will have access to the relevant data in near real-time which will help in providing deep insights to policy makers for identifying areas and sectors that need government support and assistance.

Framework for e-Invoicing in UAE

The UAE e-Invoicing requirements apply to all businesses operating in the UAE, regardless of their VAT registration status, ensuring comprehensive adoption across the business ecosystem.

The UAE has implemented a Decentralized Continuous Transaction Control and Exchange (DCTCE) model, a modern approach to electronic invoicing that leverages decentralized technologies to enhance:

Efficiency – Streamlining transaction processing and reducing administrative burdens.

Security – Strengthening data protection and fraud prevention.

Transparency – Ensuring real-time visibility and compliance with regulatory requirements.

The UAE E-Invoicing process follows a structured approach involving multiple stakeholders to ensure compliance, validation, and seamless transaction processing. Below is a step-by-step breakdown of the E-Invoicing exchange and reporting mechanism:

Let’s break this process down with a simple example to explain it step by step:

Example Scenario:

Supplier (C1) is a business that sells products.

Buyer (C4) is the business that purchases these products.

Corner 2 (C2) is the service provider that helps the Supplier send the eInvoice.

Corner 3 (C3) is the service provider that helps the Buyer receive the eInvoice.

Corner 5 (C5) is a system that handles and validates tax-related data.

UAE e-Invoicing Process: A Step-by-Step Overview

Step 1: Supplier sends the eInvoice

Supplier (C1) creates an eInvoice in the agreed format (PINT AE format) and submits it to their service provider, Corner 2 (C2).

Example: Supplier C1 is sending an invoice for 100 products sold to Buyer C4.

Step 2: Corner 2 validates and converts the invoice

Corner 2 (C2) receives the eInvoice data from C1, checks if it’s correct, and if needed, converts it into the standard UAE eInvoice XML format.

Example: C2 receives the eInvoice in the PINT AE format and converts it into the XML format used in the UAE.

Step 3: Corner 2 sends the eInvoice to the Buyer’s service provider

C2 then sends the eInvoice (now in XML format) to Corner 3 (C3), the Buyer’s service provider and buyer will be able to see and approve.

Example: C2 sends the invoice data to C3 so that Buyer C4 can see it.

Step 4: Corner 2 reports Tax Data to Corner 5

Corner 2 (C2) also reports the Tax Data Document (TDD) to Corner 5 (C5), which handles tax data validation.

Example: C2 reports the tax details related to the eInvoice to C5.

Step 5: Corner 3 validates the eInvoice

Corner 3 (C3) checks the eInvoice received from C2 and confirms if it’s valid.

If everything is correct, C3 sends a Message Level Status (MLS) back to C2, confirming the eInvoice has been successfully processed.

If there’s an issue with the invoice, C3 sends a negative MLS to C2 and C5.

Example: C3 checks the eInvoice and if it’s valid, it sends a message saying “Invoice approved” to C2.

Step 6: Corner 3 sends the eInvoice to the Buyer

C3 sends the eInvoice to Buyer (C4) in the agreed format.

Example: C3 delivers the approved invoice to Buyer C4.

Step 7: Corner 3 reports Tax Data to Corner 5

If the eInvoice is validated successfully, C3 also reports the Tax Data Document (TDD) to C5.

Example: After confirming the eInvoice is correct, C3 sends the tax details to C5 for final validation.

Step 8: Corner 5 confirms TDD reporting to Corner 2

Corner 5 (C5) sends a confirmation MLS to C2, letting them know the TDD has been successfully reported and validated.

Example: C5 tells C2, “The tax data has been successfully validated.”

Step 9: Corner 5 confirms TDD reporting to Corner 3

C5 also sends a confirmation MLS to C3, letting them know that the TDD has been validated.

Example: C5 tells C3, “The tax data has been successfully validated.”

Step 10: Corner 2 sends the MLS to Supplier

C2 sends both the Message Level Status (MLS) from C3 (for processing the invoice) and C5 (for reporting the TDD) to the Supplier (C1).

Example: C2 tells Supplier C1, “The invoice has been processed and tax data reported successfully.”

Step 11: Corner 3 sends the MLS to Buyer

C3 sends the MLS received from C5 (confirming TDD reporting) to the Buyer (C4).

Example: C3 informs Buyer C4, “The tax data for your invoice has been successfully validated.”

Summary:

In this process, the eInvoice is created by the Supplier, validated by the Service Providers (C2 and C3), and passed between them. Tax-related data is also reported to Corner 5 (C5) for validation. Once everything is confirmed, status messages (MLS) are sent back to everyone involved, ensuring that all parties are informed about the success or failure of the invoice processing.

Overview of Data Dictionary (PINT AE) in the UAE e-Invoicing Framework

Data Dictionary (PINT AE) is a fundamental component of the UAE E-Invoicing framework, providing a structured and standardized catalog of all data elements involved in generating, exchanging, processing, and reporting E-Invoicing

This includes the following:

As a foundational reference, the Data Dictionary ensures the following:

Consistency – Standardized data fields across all E-Invoicing processes.
Interoperability – Seamless integration between businesses, software providers, and regulatory systems.
Compliance – Alignment with UAE tax regulations and reporting requirements.

By serving as a universal guide for businesses, software developers, and regulatory bodies, the Data Dictionary plays a crucial role in ensuring a transparent, efficient, and compliant E-Invoicing system.

While we await further guidance, the Ministry of Finance (MoF) will continue to provide updates on the types of transactions and businesses that will be included in the upcoming phases of e-invoicing implementation.

Need help with your e-Invoicing compliance? Our expert advisors make the process straightforward and stress-free.

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UAE Pillar Two Top-up Tax Registration is Now Open on EmaraTax Portal

GCC Tax And Regulatory Communique February 2025

Ayushi Agrawal — Thu, 13 Mar 2025 06:40:16 +0000

Download GCC Tax and Regulatory Communique February

GCC Tax & Regulatory Communique February 2025 presents the regulatory updates across UAE, Saudi Arabia, and international tax developments, throughout the course of the month of February.

Regulatory and Corporate Tax Updates in UAE

The Regulatory and Corporate Tax updates in UAE include

The UAE Ministry of Finance issued a public consultation document on the UAE E-Invoicing framework on the 6^thof February 2025.
On the same day, the UAE MoF released the legislation introducing a Domestic Minimum Top-up Tax (DMTT) for Multinational Enterprises (MNEs), through the publication of Cabinet Decision No. 142 of 2024.
Other regulatory updates were also introduced with the Cabinet Decision No. 142 on Global Minimum Tax.
The FTA updated the Corporate Tax Return format.
Sharjah introduced 20% Corporate Tax on Natural Resources Companies
UAE Federal Tax Authority (FTA) issued Decision No. 1 of 2025 to clarify the circumstances under which it may grant an extension for submitting a tax assessment review or reconsideration request.

Regulatory and Corporate Tax updates in KSA

The regulatory updates in Saudi Arabia include:

Deadline Extension for Election Submission under Ministerial Resolution No. 947 ,/font>
The Zakat, Tax, and Customs Authority (ZATCA) of the Kingdom of Saudi Arabia (KSA) has introduced Advance Pricing Agreements (APAs) to enhance tax certainty and simplify compliance for businesses engaged in controlled transactions.

International Tax Updates

International Tax Updates Include:

France Publishes the New Declaration Form for CbCR and Pillar Two Notification
On 17th February 2025, Russia and the United Arab Emirates have signed an agreement to avoid double taxation of income and capital and prevent tax evasion.

Summary of the Newsletter “GCC Tax & Regulatory Communique February 2025”

The key to consistent success and stability is to understand the changing market and regulatory scenarios within your economy. Whether you’re managing operations in the UAE, KSA, or dealing with international geographies, keeping up with regulatory changes ensures growth and stability. To dive deeper into the latest tax and regulatory trends in the GCC region, read our newsletter. Stay informed, stay compliant, and drive success in your business.

VAT Treatment of Director Services in the UAE: A Comprehensive Guide (VATP037)

Ayushi Agrawal — Fri, 07 Mar 2025 12:52:45 +0000

The eBook “VAT Treatment of Director Services in the UAE: A Comprehensive Guide (VATP037)” provides an in-depth examination of the VAT regulations governing director services in the United Arab Emirates. It serves as an essential resource for professionals seeking clarity on the taxability and non-taxability of director services, and how to ensure compliance with UAE tax regulations.

Key Topics Covered in the eBook

This eBook covers the critical elements of VAT Treatment for Director Services, including:

Basic Rule for Taxability of Director Services

A thorough understanding of the basic principle that governs the taxability of director services in the UAE. This section outlines the essential criteria for determining whether or not said director services are subject to tax.

Performing the Function of Director on a Board of Directors

An examination of the specific duties and responsibilities of an individual serving as a director on a board and how these roles influence his taxability.

Taxability Vs Non-Taxability of Director Services

A thorough account of the distinction between taxable and non-taxable director services, ensuring adequate compliance by providing clarity on which activities are subject to VAT, and which are not.

Determining the Date of Supply for Director Services

Discover the proper method for establishing the date of supply for director services. This section of the eBook explains the timing of VAT and other associated taxes concerning director services.

Practical Examples for Better Understanding

A set of illustrative examples to clarify various cases, helping you grasp the taxability and non-taxability of director services in practice.

Formal Capacity as Director

Insights into the legal and contractual capacity required when acting as a director, and the implications this has on the tax treatment of director services.

This eBook lays out a clear understanding of taxability and provides expert analysis of the relevant rules and their practical applications. Business Owners, Directors, Tax Professionals, or Corporate Lawyers all should go through this eBook to ensure compliance with VAT regulations in the UAE. Download your copy of the eBook today.

VAT Treatment of Director Services in the UAE: A Comprehensive Guide (VATP037)

VAT Treatment of Crypto Mining in the UAE

Ayushi Agrawal — Tue, 04 Mar 2025 12:09:39 +0000

Ayushi Agrawal

March 4, 2025

Public Clarification on VAT Treatment of Crypto Mining in the UAE (VATP039)

A public clarification (VATP039) has been issued by FTA to provide detailed guidance on VAT applicability of crypto mining activities.

Crypto Currency

“Crypto currencies” are a form of virtual assets, which means digital representation of value that can be digitally traded or converted and can be used for investment purposes, and does not include digital representations of fiat currencies or financial securities.

Examples – Bitcoin, Ethereum (Classic), and other currencies that are based on proof of work.

Cryptocurrency Mining

Cryptocurrency mining is the process of validating transactions on a blockchain network using specialised computers, also known as mining rigs. Miners contribute computational power to solve cryptographic equations, and in return, they may receive cryptocurrency rewards. The FTA categorizes mining into two primary types:

Mining for Personal Use – Individuals mine cryptocurrencies for their own accounts.

Mining as a Service – Individuals or businesses mine on behalf of others in exchange for a fee.

VAT Treatment of Crypto Mining in the UAE

Mining for Personal Use

When an individual mines cryptocurrency for personal purposes (without providing mining services to others), it is not considered a taxable supply under UAE VAT law.

The reward received from the blockchain network is not regarded as consideration for a taxable supply.

Since mining is not a business transaction in this case, input VAT on mining-related expenses (such as electricity and equipment) is not recoverable.

Mining as a Service (Providing Computational Power to Others)

If a person or business provides mining services to another entity for a fee, this is classified as a taxable supply of services under UAE VAT law.

The supplier of the mining services must charge VAT at the standard rate of 5%, provided the recipient is in the UAE.

If the services are provided to a non-resident entity, the supply may qualify for zero-rating, subject to specific conditions in UAE VAT legislation.

Businesses offering mining services can recover input VAT on expenses related to the taxable supply, such as the purchase of mining equipment and electricity costs.

VAT Implications for Businesses Receiving Mining Services

If a VAT-Registered business receives mining services from a non-resident provider, it must apply the reverse charge mechanism and account for VAT accordingly.

If the recipient is a non-registered entity, the foreign service provider must register for VAT in the UAE and charge VAT on its supplies.

Summary

Mining for personal purposes falls outside the scope of VAT, and associated input VAT costs are not recoverable.

Mining as a service is a taxable supply, subject to 5% VAT (or potentially zero-rated if the recipient is outside the UAE).

Input VAT recovery is allowed for businesses conducting taxable mining services but not for individuals mining for personal use.

Businesses receiving mining services from abroad may need to apply the reverse charge mechanism.

Don’t Let VAT Regulations Derail Your Crypto Profits Secure Your Compliance Strategy

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Tax Exemption for Qualifying Public Benefit Entities Under UAE Corporate Tax

Ayushi Agrawal — Thu, 27 Feb 2025 10:45:13 +0000

To qualify for Corporate Tax (CT) exemption, these entities shall comply with Article (9) of the Corporate Tax Law and adhere to all relevant federal and local regulations. Organizations engaged in social, cultural, religious, charitable, or other public benefit activities can apply for a corporate tax exemption. If approved, they will be listed in a cabinet decision requested by the Minister of Finance. Only public benefit entities listed by the Cabinet are eligible for the tax exemption. 

This e-book covers:

What are Qualifying Public Benefit Entities?
- In this section, the entities that qualify as a Public Benefit Entity are listed based on the exclusive operative activity they are established.
Conditions for Qualifying Public Benefit Entities to be Exempt from Corporate Tax
- The eBook details the conditions needed to be satisfied by the qualifying public benefit entities to be exempt from corporate tax.
Implication of Breach in Conditions
- This section of the booklet explains the temporary failures led by breaches of the above-mentioned conditions and the failures led by the objective of corporate tax advantage. Their implications on a QPBE’s qualifying status are mentioned as well.
Seeking Professional Help for Registering Qualifying Public Benefit Entity
- Here, the advantages under the guidance of experienced tax consultants, like FAME Advisory, for registering a Qualifying Public Benefit Entity are stated.

While a Qualifying Public Benefit Entity may qualify for exemption from corporate tax, it would still be required to maintain financial records and follow prescribed guidelines and compliance requirements.

Tax Exemption for Qualifying Public Benefit Entities under UAE Corporate Tax

Tax Loss Relief: UAE Corporate Tax Law

Ayushi Agrawal — Fri, 21 Feb 2025 08:21:46 +0000

Introducing Our Guide to Tax Loss Relief Under UAE Corporate Tax Law

Businesses in the UAE may encounter losses during their operations, and the UAE Corporate Tax Law provides a structured approach to managing such losses. This guide offers a comprehensive overview of tax loss relief provisions, which allow businesses to offset losses against future taxable income.

In this booklet, you’ll learn about:

What constitutes Tax Loss and Tax Loss Relief

Key limitations and conditions on utilizing tax loss relief

Special rules for transferring tax losses between related companies
How to comply with ownership and business continuity requirements

The Guide, “Tax Loss Relief under UAE Corporate Tax Law” will help you understand how to maximize tax loss relief and comply with UAE regulations. For businesses looking to make the most of these provisions, seeking professional advice is highly recommended.

Explore this eBook today and gain a clearer understanding of how tax loss relief can benefit your business under UAE Corporate Tax Law.

Tax Loss Relief under UAE Corporate Tax Law

Litigation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures

Ayushi Agrawal — Thu, 20 Feb 2025 07:49:24 +0000

Ayushi Agrawal

February 20, 2025

Tax Assessment Review Request ( New Optional Mechanism) (TAXP008)

Intention

A Person may submit a request to the Authority to review a Tax Assessment review if the person has reasonable grounds to believe that there were technical errors relating to the incorrect application of the relevant tax legislation or tax treaties, calculations errors or errors in audit procedures that led to an incorrect determination of tax differences and administrative penalties by the FTA.

Time frame

The request is to be made within (40) forty Business Days from the date the Person is notified of the Tax Assessment and the related Administrative Penalties with the specific the reason.

Response

The FTA team has been providing responses to the clarification requests within 40 business days from the date of receiving such requests.

Decision

Mostly, decisions made by the FTA in a Tax Assessment Review request are based on the facts of the case and the applicant is informed of the decision within (5) five Business Days from the date of issuance of the decision

Conclusion

If the clarification decision is not favorable to a taxpayer, he can apply for filing Reconsideration.

*If the person wishes to introduce new information or additional documentary evidence/facts that were not presented to the FTA auditors during the audit process, the tax assessment review mechanism is not the appropriate dispute channel. In such instances, the person may apply for reconsideration

Reconsideration Request

Intention

A Person may submit a request to the Authority to reconsider any decision, or part thereof, issued by the Authority.

Time frame

The request is to be made within (40) forty Business Days from the date from the date he was notified of decision.
If an application for review of a Tax Assessment has been submitted to the Federal Tax Authority (FTA), a reconsideration request can only be filed after the FTA issues a decision or after the expiry of the time limit within which the FTA is required to issue a decision and notify the applicant.

Response

The FTA team has been providing responses to the clarification requests within 40 business days from the date of receiving such requests.

Decision

FTA inform the applicant of the decision within (5) five business Days from the date of issuance of the decision.

Conclusion

If the Reconsideration request is not favorable to a taxpayer, he can apply for “TDRC”.

TDRC Mechanism

Time Frame

If the reconsideration decision is not favorable to a tax payer, he can object the same within 40 business days from the date of reconsideration order.

Working mechanism

Taxpayer should file an appeal when he disagrees with FTA’s reconsideration and has good arguments to support his position. TDRC works independently from the FTA, i.e. it falls under the Ministry of Justice.

Payment

Payment of taxes should be made before submission (not penalties anymore)

Response

The Committee shall review the objection submitted and make a decision within (20) twenty Business Days from the receipt of the objection.

Decision

FTA informs the applicant of the decision within (5) five business days from the date of issuance of the decision.

Conclusion

TDRC has the power to cancel FTA’s decision if it is found out that decision passed earlier was not correct.

Appeal Process

Time Frame

If the outcome of TDRC is not favorable to taxpayer he can file an appeal with the Court within 40 business days from the date of TDRC order.

Prerequisites

An appeal can be filed with the Court only when combined tax and penalty amount exceeds AED 100,000.

Who can appeal?

Both taxpayer and FTA can file an appeal with the Court to challenge against decisions laid out by TDRC.

Payment

Payment of taxes and at least 50 % of the prescribed administrative penalty (either through cash payment or bank guarantee in favor of the authority) should be made.

Conclusion

Decision to the appeal can be either ruled out against taxpayer or the FTA after considering all the facts, information available and presented before it.

Timeline Mechanism

Tax Assessment Review Request

It has to be submitted to the FTA within 40 business days from the date the person is notified of the tax assessment and related administrative penalties

Reconsideration

It has to be filed within 40 business days from being notified of the FTA decision.

TDRC

It has to be submitted within 40 business days from the date of reconsideration order.

Appeal

It has to be filed within 40 days from the date of TDRC order.

Need clarity on UAE VAT Federal Decree-Law No. (28) of 2022? Our team of experts can guide you through tax assessments, reviews, and appeals.

Reach out to us!

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UAE Introduces Domestic Minimum Top-up Tax for MNEs

Ayushi Agrawal — Tue, 11 Feb 2025 06:45:54 +0000

Ayushi Agrawal

February 11, 2025

On the 6th of February 2025, the UAE Ministry of Finance released the legislation introducing a Domestic Minimum Top-up Tax (“DMTT”) for multinational enterprises (“MNEs”), through the publication of Cabinet Decision No. 142 of 2024 introducing a 15% Global Minimum Tax effective January 1, 2025. This follows the announcement made by the Ministry on December 9, 2024. The legislation is broadly aligned with the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework.

The key provisions of the decisions have been outlined below:

Applicability

The decision applies to MNEs with annual consolidated revenue of at least EUR 750 million in two of the four preceding fiscal years.
Constituent entities, Joint Ventures (JV), and JV subsidiaries in the UAE will be subject to top-up tax if their effective tax rate falls below the global minimum tax rate of 15%.

Excluded Entities

To boost the UAE’s competitiveness as a leading investment hub, the rules have been structured to exclude certain entities, such as governmental entity, International Organisation, Non-Profits, organizations, Pension Funds, Investment Funds, and Real Estate Investment Vehicles that is an Ultimate Parent Entity.
Sovereign Wealth Funds that qualify as Government Entities are not the Ultimate Parent Entity (UPE) of any group shall also be excluded.
An excluded entity is also an Entity:
- where at least 95% of the value of an Entity is owned (directly or through a chain of Excluded Entities) by one or more Excluded Entities mentioned above (other than a Pension Services Entity) and where that Entity: (i) operates exclusively or almost exclusively to hold assets or invest funds for the benefit of the Excluded Entity or Entities; and/or (ii) only carries out activities that are ancillary to those carried out by the Excluded Entity or Entities.
- where at least 85% of the value of an Entity is owned (directly or through a chain of Excluded Entities), by one or more Excluded Entities mentioned above (other than a Pension Services Entity) provided that substantially all of the Entity’s income is Excluded Dividends or Excluded Equity Gain or Loss that is excluded from the computation of Pillar 2 Income or Loss.
- Entities owned 100% by Non-profit Organizations can be classified as Excluded Entities under certain revenue conditions, especially when the revenue of Non-profits and Excluded Entities is disregarded.

International Shipping Income Exclusion 

For an MNE Group that has International Shipping Income, each Constituent Entity’s International Shipping Income and Qualified Ancillary International Shipping Income shall be excluded from the computation of its Pillar Two Income or Loss for the Jurisdiction in which it is located. Where the computation of a Constituent Entity’s International Shipping Income or Qualified Ancillary International Shipping Income results in a loss, the loss shall be excluded from the computation of its Pillar Two Income or Loss.
In order for a Constituent Entity’s International Shipping Income and Qualified Ancillary International Shipping Income to qualify for the exclusion from its Pillar Two Income or Loss under this Article, the Constituent Entity must demonstrate that the strategic or commercial management of all ships concerned is effectively carried on from within the Jurisdiction where the Constituent Entity is located.

Substance Based Income Exclusion (SBIE)

In order to compute Top-up Tax, the Net Pillar 2 Income for the UAE shall be reduced by the SBIE to determine the Excess Profits.
The SBIE amount is the sum of the payroll carve-out and the tangible asset carve-out for each Constituent Entity, except for Constituent Entities that are Investment Entities, located in the UAE.
The payroll carve-out for a Constituent Entity located in the UAE is equal to 5% of its Eligible Payroll Costs of Eligible Employees that perform activities for the MNE Group in the UAE.
The tangible asset carve-out for a Constituent Entity located in the UAE is equal to 5% of the carrying value of Eligible Tangible Assets located in the UAE.
To provide transitional relief, the 5% value will be replaced by the higher exclusion rate for the first 8 fiscal years as specified in the law.

De Minimis Exclusion – A Permanent Safe Harbour for Non-Material UAE Entities 

The application of the De Minimis Exclusion allows the Filing Constituent Entity in the UAE to elect for Top-up Tax to be deemed zero if specific conditions are satisfied. These include:

Eligibility for De Minimis Exclusion:

The Top-up Tax for UAE-based Constituent Entities can be reduced to zero for a FY if:

- The Average Pillar 2 Revenue is less than EUR 10 million.

- The Average Pillar 2 Income or Loss is either a loss or less than EUR 1 million.

- This is an annual election, meaning it must be made each FY.

Are there any exceptions to the rule?

The election does not apply to Stateless Constituent Entities (entities with no jurisdictional residence) with their financials excluded from the calculation for the de minimis exclusion.

Transitional CBCR Safe Harbour

For FYs that begin before 1 January 2027 and end before 1 July 2028, an MNE Group can elect for the Jurisdictional Top-up Tax of the UAE to be deemed as zero if:

De minimis test: The MNE Group reports Total Revenue of less than EUR 10 million and Profit (loss) before Income Tax of less than EUR 1 million in the UAE on its Qualified Country-by-Country Report (“CBCR”) for the FY.
Simplified ETR test: The MNE Group has a Simplified ETR that is equal to or greater than 16% (for FYs that begin in 2025) and 17% (for FYs that begin in 2026) in the UAE. The Simplified ETR is calculated by dividing the Jurisdiction’s Simplified Covered Taxes by its Profit (Loss) Before Income Tax as reported on the MNE Group’s Qualified CBCR; or
Routine Profits test: the MNE Group’s Profit (loss) before Income Tax in the UAE is equal to or less than the SBIE amount, for entities reported in the UAE in the CBCR.

Initial Phase of MNE Group’s International Activity

As part of a transitional measure and to create a tax environment conducive to economic growth, during the initial phase of an MNE Group’s international activity, the Top-up Tax shall be reduced to zero, provided that none of the ownership interests of the Entities located in the UAE are held by a parent entity subject to a Qualified Income Inclusion Rule in another Jurisdiction.
An MNE Group is in the initial phase of its international activity if, for a FY: (a) it has Constituent Entities in no more than six Jurisdictions; (b) the sum of the Net Book Values of Tangible Assets of all Constituent Entities located in all jurisdictions other than the reference Jurisdiction does not exceed EUR 50 million.

Top-ups Tax Registration, Return Filing, and Payment

A UAE Entity that is subject to Top-up Tax under these rules and any Designated Filing Entity will be required to register with the Federal Tax Authority. The manner and timeline of this registration is still to be confirmed.
Each Constituent Entity and JV (including JV subsidiaries) located in the UAE shall file the Top-up Tax Return to the Federal Tax Authority within 15 months after the end of the Reporting financial year.
However, for the first financial year, the Top-up Tax return shall be filed within 18 months after the end of the first applicable FY.
The relevant UAE constituent entity must pay any Top-up Tax due in UAE Dirhams. This payment shall be made at the time of filing the Top-up Tax return (i.e. 15 months after the FY or 18 months after the transitional year).

In light of recent developments, it is essential for MNEs with operations in the UAE to start preparing for the upcoming regulations, as these could have a substantial impact on taxes and compliance requirements. To assist MNEs in navigating the Pillar 2 readiness journey, we at FAME Advisory FZCO have crafted a phased approach that includes:

Conduct high-level initial impact assessments of how the new rules could affect the MNE’s operations.

Review the shareholding structure, identify jurisdictions with the greatest and least impact, and plan accordingly.

Critically assess existing and alternative supply chains, analyzing how the new rules could impact tax costs, cash flow, profitability, and financial statements.

Provide training to in-house teams on these changes and address any required adjustments to IT systems for effective data collection.

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August 3, 2026

On December 20th, we had the distinct honor of celebrating FAME Advisory, on our anniversary, marking a milestone in a decade long journey of taxcellence. This momentous event honored 10 long and fulfilling years of success and commitment. We also reflected on the irreplaceable partnerships and unwavering support that have been pivotal in shaping the company’s foundation and success.

FAME Advisory’s story began in 2014 under the name FAME (Financial and Accounting Management Education) Training Institute. After initially concentrating on teaching thousands of professionals in the United Arab Emirates the fundamental accounting and financial practices, FAME quickly established a reputation for providing top-notch training and consulting services. Led by the visionary leadership and expertise of our Director, Nirav Shah, we expanded our horizons, becoming a soaring Tax Consultancy in the UAE– FAME Advisory FZCO.

From a humble training center to a dynamic advisory firm, we have expanded over the past ten years and gained the trust of businesses and individuals across a wide range of industries. This unparalleled evolution has been driven by a commitment to excellence, continual learning, and innovation—values that remain central to our mission even today, have propelled our journey from the beginning.

The 10-year anniversary celebration was the perfect opportunity to reflect on our journey, achievements, and the relationships we have built along the way. Surrounded by key individuals who have played significant roles in our success, it was a true privilege to share our story. The event allowed us to reminisce about the challenges we overcame and the triumphs we celebrated together. Being surrounded by these people, who have significant contribution in our success made it an absolute honor to tell our story.

The night was enriched with touching tributes and inspiring words from guests who attended. Hearing from the team, clients, and partners about their experiences with FAME Advisory was incredibly rewarding. The stories shared spoke to the trust, integrity, and collaborative spirit that have always defined our approach.

A special mention of Nirav Shah’s leadership, as well as the support of his family, without whom this journey would not have been possible. As we look back on the past decade, We are incredibly appreciative of the steadfast support we have received from each and every individual present here. The journey of FAME Advisory has been shaped by your trust, guidance, and encouragement, and we are deeply thankful for the role you have played in our success.

We are inspired and driven as we start the next chapter of our journey by the amazing community that is all around us. The dedication of Team FAME Advisory to serve with innovation and excellence is stronger than ever. With the same commitment and zeal that have characterized our work for the previous ten years we look forward to our firm’s continued expansion and the chance to continue serving our clients, partners and the community.

Here’s to many more years of success, growth, and collaboration. Thank you for being a part of our story.