Latest news with #PillarTwo
Wall Street Journal
2 days ago
- Business
- Wall Street Journal
‘Revenge' Tax? Section 899 Is More Like Repair
Much of the financial press has taken to labeling Section 899 of the reconciliation bill a 'revenge tax'—generally leaving out what exactly it's revenge for. The section would allow the Treasury secretary to tax certain income of residents and firms of a country that imposes unfair extraterritorial and double taxation of U.S. companies. Given that foreign corporations and other interests are lobbying against the provision, it's worth examining who the winners and losers might be and therefore why some think the tax represents 'revenge.' During the last administration, Treasury Secretary Janet Yellen led American participation in discussions among nations in the Group of 20 and the Organization for Economic Cooperation and Development to harmonize the global taxation of large multinational corporations. The goal was to prevent a 'race to the bottom,' in which countries slash tax rates to attract firms to incorporate in their jurisdictions. Neither the OECD nor the G-20 has any rule-writing authority, but those discussions led to an agreement—never submitted to Congress for approval—that allows foreign countries to change their tax rules regarding the taxation of multinationals with annual revenue over €750 million (about $860 million). Known as Pillar Two, this framework allows each country to tax the profits of foreign subsidiaries in their country at a minimum rate of 15%. The parent company is responsible for imputing that tax to lightly taxed countries. This conflicts with parts of U.S. tax law and can lead to double taxation and extraterritorial taxation in some cases. Unilateral digital-services taxes can be levied under the same rubric. The previous administration, led by the Treasury secretary, both encouraged and acquiesced to other nations changing their own tax laws in line with Pillar Two against the interests of many U.S.-owned multinationals. Many in Congress spoke out against this at the time and introduced Section 899 in the 2023 House reconciliation bill. Its inclusion in the 2025 reconciliation bill is a second attempt to pass it, given the outcome of the 2024 election.
Gulf Business
3 days ago
- Business
- Gulf Business
OECD Pillar Two: What it means for multinational businesses in the UAE
Image: Getty Images/ For illustrative purposes For years, the UAE has been a preferred base for multinational businesses, offering a tax-friendly environment that's attracted companies from around the world. Now, a new global tax framework is reshaping how large companies handle their tax obligations. From January, MNEs operating in the UAE need to comply with Pillar Two, a global minimum tax framework introduced by the OECD and G20. The idea is simple: if a company's effective tax rate in any country falls below 15 per cent, it will be required to pay a top-up tax to bring it up to that level. To stay ahead of this, the For businesses that have structured themselves around tax incentives, this raises serious questions. Will free zone benefits still hold up? What adjustments need to be made? And how will compliance and reporting obligations change? The reality is that business as usual is no longer an option. Companies need to reassess their structures, tax strategies, and reporting systems now. What is OECD Pillar Two? Pillar Two is the The principle is straightforward: if a multinational's effective tax rate (ETR) in a particular country falls below 15 per cent, it must pay a top-up tax to bring it to that level. How it works To enforce this, Pillar Two introduces three key rules: Income inclusion rule (IIR): If a subsidiary in a low-tax country pays less than 15 per cent, the parent company must cover the shortfall. Undertaxed profits rule (UTPR): If the parent company's home country doesn't enforce the IIR, other jurisdictions where the company operates can claim the tax. Qualified domestic minimum top-up tax (QDMTT): Countries can apply the tax themselves, ensuring they keep the revenue rather than losing it to foreign tax authorities. The UAE has confirmed it will apply a DMTT, meaning multinationals operating here will pay any shortfall in the UAE rather than elsewhere. Companies that have structured their operations around low or zero-tax incentives will need to reassess their tax strategies to stay compliant. How will this affect businesses? This is bigger than just paying more tax — it impacts business models, tax planning, and compliance processes. Free zone incentives will need a fresh look Many companies have chosen UAE free zones for their 0 per cent corporate tax rates, but under Pillar Two, a lower tax rate won't necessarily mean lower taxes. Even if a company qualifies for a lower rate in a free zone, if its ETR falls below 15 per cent, it will still need to pay the difference as a top-up tax. Multinationals relying on free zone benefits need to reassess whether these incentives still serve their purpose or if a structural change is needed. Transfer pricing will face more scrutiny Intercompany transactions — such as intellectual property fees, intra-group loans, and cost-sharing agreements — will get closer inspection. Tax authorities will be looking at whether pricing reflects real market value or is being used to lower tax obligations. Businesses that don't document these transactions properly could face audits, adjustments, or even financial penalties. Beyond documentation, companies will also need to ensure consistency in their approach across different jurisdictions. Any misalignment in reported figures across tax filings could raise flags and trigger investigations, adding compliance risks on a global scale. The reporting burden will increase Tax compliance is about to get a lot more complicated. Companies will have to provide more detailed tax filings, with new disclosures and stricter tracking requirements. One major addition is the GloBE information return, requiring over 240 data points per entity. On top of that, businesses will need to align their country-by-country reporting (CbCR) with the new rules, ensuring tax filings across jurisdictions match up without inconsistencies. This means upgrading financial systems, tightening internal controls, and ensuring tax filings are accurate across multiple jurisdictions. The move to more detailed disclosures will require careful planning, as errors or inconsistencies could lead to audits or financial penalties. What should businesses do now? With the UAE's DMTT taking effect earlier this year, businesses need to act now. Here's where to start: Determine if you're affected Start by confirming whether your company falls under Pillar Two. If your global revenue has reached EUR750m in at least two of the last four years, you need to start preparing immediately. If you're approaching this threshold, it's time to monitor revenue closely — crossing the line means major tax and compliance changes. Assess your effective tax rate (ETR) Work out your company's current ETR in every country where you operate. If your UAE operations — or any other jurisdictions you're in — have an ETR below 15 per cent, you'll need to determine where the top-up tax will apply. Free zone businesses, in particular, should review their structures to ensure they're not exposed to unexpected tax liabilities. Strengthen tax reporting and compliance Pillar Two brings stricter compliance requirements, so businesses need to get their systems in order. Key areas to focus on: Update financial reporting systems to track the necessary tax data. Ensure all tax filings align across different jurisdictions to avoid red flags. Review transfer pricing policies to ensure intercompany transactions meet compliance standards. Having clear documentation and well-organised financial records will be crucial in avoiding unnecessary scrutiny and ensuring compliance with the new regulations. Work with experts to develop a strategy With tax rules becoming increasingly complex, expert guidance is essential. Businesses need to rethink their tax structures, ensure compliance, and minimise unnecessary exposure. The right approach will depend on each company's setup, so planning early is far better than reacting under pressure later. The bottom line Pillar Two isn't just a tax update — it's a global change in how multinational businesses are taxed. The UAE's introduction of DMTT in 2025 means that companies need to reassess their tax planning, compliance, and reporting processes now. This isn't something to put off. Companies that prepare early will have a smoother transition, while those that wait risk compliance issues and unexpected tax liabilities. The time to act is now. The writer is the group CEO of Knightsbridge Group.
Mid East Info
4 days ago
- Business
- Mid East Info
TaxCom Middle East Returns on 18th June 2025 in Dubai - Middle East Business News and Information
Dubai, UAE – June 2025 — BConnect Global is ready to host the 2nd edition of TaxCom Middle East Summit & Awards, set to convene over 150+ tax, finance, and compliance leaders at Taj Dubai on 18th June. This year's summit aligns with the UAE's bold steps in digital tax transformation, as it prepares for mandatory e‑invoicing and introduces the Domestic Minimum Top‑Up Tax (DMTT) in line with OECD's Pillar Two framework. The event is honored to feature Zahra Al Dahmani, Director of Taxpayer Services at the Federal Tax Authority, who will provide key insights on the Future of Taxpayer Services: Digitalization, Compliance, and Innovation. Other notable industry experts who will be leading the conversation at the event include – Kalaiarasan Manoharan , Group Tax Director, noon , Group Tax Director, noon Parth Sharma , Group Tax Lead, Dubai Holding (Group Services) , Group Tax Lead, Dubai Holding (Group Services) Manish Arora , Director of Tax, Adidas , Director of Tax, Adidas Mohamed Ghazala , Head of Tax, Coca-Cola Al Ahlia beverage | GCC Region , Head of Tax, Coca-Cola Al Ahlia beverage | GCC Region Asiya Zargar , Group Head of Tax, Mantrac Group , Group Head of Tax, Mantrac Group Armia Fakhry , Head of Tax, MENA region, Fertiglobe , Head of Tax, MENA region, Fertiglobe Tiago Albuquerque Dias , Head of Tax, Emirates Water and Electricity Company (EWEC) , Head of Tax, Emirates Water and Electricity Company (EWEC) Seema Sharma , Global Head of Tax and ESG, Network International , Global Head of Tax and ESG, Network International Asif Khan , Senior Manager – Tax and Compliance, Danube Group , Senior Manager – Tax and Compliance, Danube Group Joao Vitor Cabral , Group Head of Tax & Treasury, Dutco Group , Group Head of Tax & Treasury, Dutco Group Wanieska Torri , Regional Head of Tax and Trade – IMEA, Henkel , Regional Head of Tax and Trade – IMEA, Henkel Laurent Bertin , AME Head of Tax, Airbus , AME Head of Tax, Airbus Ramkumar Balasubramaniam , Chief Financial Officer, Middle East & Africa, Barclays , Chief Financial Officer, Middle East & Africa, Barclays Saurabh Taparia , Group Finance Director, Dubai Holding Group , Group Finance Director, Dubai Holding Group Aparna Lakshminarasimhan , MENA Tax and Group Transfer Pricing Director, GFG Alliance , MENA Tax and Group Transfer Pricing Director, GFG Alliance Aatish Pravinkumar Shah , Head of Tax, DP World , Head of Tax, DP World Prateek Bothra , Vice President – Taxation | Finance, Gulf Islamic Investments , Vice President – Taxation | Finance, Gulf Islamic Investments Umamaheswaran Panneer Selvan , Indirect Tax Solutions Consultant, Thomson Reuters , Indirect Tax Solutions Consultant, Thomson Reuters Luis Ortega , Director – Product Management | CTC & E-invoicing Compliance, Pagero, a part of Thomson Reuters , Director – Product Management | CTC & E-invoicing Compliance, Pagero, a part of Thomson Reuters Srivatsan Chari , Co-Founder, ClearTax Middle East , Co-Founder, ClearTax Middle East Niraj Hutheesing , Founder & MD, , Founder & MD, Rutika Hardikar , Consultant, Alchemy Search , Consultant, Alchemy Search Maher Aoun , VP of Sales and Business Development, Wafeq , VP of Sales and Business Development, Wafeq CA Riddhesh Minesh Shah , Senior Manager – Corporate Tax, Suntech , Senior Manager – Corporate Tax, Suntech Aneta Grzyb , Partner, Tax Advisor Advocate, Alto Advisory , Partner, Tax Advisor Advocate, Alto Advisory Kamila Kania , Business Solution Manager, Comarch , Business Solution Manager, Comarch Ajit Jain , Partner and Head of Transfer Pricing, AJMS Global , Partner and Head of Transfer Pricing, AJMS Global Gururajan Krishnamurthy , Business Head – Finance Suite, MEA, Zoho Corp , Business Head – Finance Suite, MEA, Zoho Corp Alok Chugh, CEO and Managing Partner, Helios Consulting The agenda features critical discussions on Tax Risk, E-Invoicing & Compliance UAE's E-Invoicing Transformation Journey Digitalization of Taxpayer Services Future Tax Policies Shaping Dubai AI-Driven Compliance Preparing for UAE's E-Invoicing Mandate Evolving Landscape of International Taxation in the UAE Bridging Finance, Tax & Business Growth Rethinking Transfer Pricing Realities and more. Parvez Shariff, Managing Director of BConnect Global, shared: 'TaxCom Middle East is more than just a conference – it's a platform where tax and finance leaders come together to shape the future of compliance in the UAE and beyond. As regulations tighten and technology advances, the need for knowledge-sharing, collaboration, and innovation becomes critical. This year's edition is designed to spark those essential conversations.' Explore Cutting-Edge Tax & Compliance Innovation Join industry leaders like ClearTax, Wafeq, Pagero, Suntech, Comarch, ALTO, Amereller, Helios Consulting, Andersen, Zoho Corp, AJMS Global, Alchemy Search, and BDO UAE as they showcase game-changing solutions transforming the future of tax, finance, and business compliance. About Organizer BConnect Global is a global firm with a novel approach in organizing conferences, events, exhibitions, round-tables and awards. A platform that brings together industry game changers, seasoned entrepreneurs, new entrants and keen learners. Media Contact – ari@
The Sun
5 days ago
- Business
- The Sun
Australia's Albanese says he will press AUKUS, Indo Pacific security in Trump meeting
SYDNEY: Increasing the number of nuclear powered submarines operated by Australia, Britain and the United States will make the Indo Pacific more secure and was in the United States' interests, Australian Prime Minister Anthony Albanese said on Monday. Albanese will meet U.S. President Donald Trump for the first time on Tuesday in Calgary on the sidelines of the G7 meeting, with tariffs and Washington's snap review of the AUKUS treaty to transfer nuclear submarines to Australia weighing on the talks. 'Having Australia, the United Kingdom and the United States all having increased nuclear-powered submarines, in our case conventionally armed, is something that will make the Indo Pacific area more secure,' Albanese told reporters in Calgary. 'That is in the interests of the United States,' he added. Albanese said he will highlight to Trump the financial support Australia is providing to the U.S. industrial capacity to build new submarines under AUKUS, the access the U.S. submarine fleet will gain to maintenance yards in Australia, and the existing U.S. military presence in Australia's northern city of Darwin. Australia was a trusted U.S. partner in the Pacific region to promote peace and security, he said. Albanese has rebuffed a U.S. request to commit to lifting defence spending from 2% to 3.5% of gross domestic product, saying instead Australia would spend what was needed for its defence capability. Around 10% of Australia's steel and aluminium is exported to the United States, and Albanese said he would also raise the issue of Trump's tariffs on the sector, which Australia views as 'acts of economic self harm'. 'Exports are still going in there, they are just paying more for them,' he told reporters. Albanese met with Canada's Prime Minister Mark Carney on Monday, and said they had discussed Canada's interest in joining AUKUS's so-called Pillar Two to develop advanced defence technology. Australia wants to increase its defence relationships, including with Canada which was a long-term ally with shared values, Albanese said. 'In an uncertain world what people are looking for is certainty, relationships, trusted relationships, Australia and Canada are just such partners,' he said. Albanese will also hold talks with the EU on a proposed defence pact, and seek progress on EU free trade talks. An annual poll by the Lowy Institute think-tank released on Monday showed falling public sentiment in Australia towards the United States, with 36 per cent of people surveyed saying they trust the United States to act responsibly, a 20-point drop since last year. The poll showed two-thirds of respondents supported AUKUS.
The Sun
5 days ago
- Business
- The Sun
Albanese Backs AUKUS Subs, Urges Trump to End Tariffs
SYDNEY: Increasing the number of nuclear powered submarines operated by Australia, Britain and the United States will make the Indo Pacific more secure and was in the United States' interests, Australian Prime Minister Anthony Albanese said on Monday. Albanese will meet U.S. President Donald Trump for the first time on Tuesday in Calgary on the sidelines of the G7 meeting, with tariffs and Washington's snap review of the AUKUS treaty to transfer nuclear submarines to Australia weighing on the talks. 'Having Australia, the United Kingdom and the United States all having increased nuclear-powered submarines, in our case conventionally armed, is something that will make the Indo Pacific area more secure,' Albanese told reporters in Calgary. 'That is in the interests of the United States,' he added. Albanese said he will highlight to Trump the financial support Australia is providing to the U.S. industrial capacity to build new submarines under AUKUS, the access the U.S. submarine fleet will gain to maintenance yards in Australia, and the existing U.S. military presence in Australia's northern city of Darwin. Australia was a trusted U.S. partner in the Pacific region to promote peace and security, he said. Albanese has rebuffed a U.S. request to commit to lifting defence spending from 2% to 3.5% of gross domestic product, saying instead Australia would spend what was needed for its defence capability. Around 10% of Australia's steel and aluminium is exported to the United States, and Albanese said he would also raise the issue of Trump's tariffs on the sector, which Australia views as 'acts of economic self harm'. 'Exports are still going in there, they are just paying more for them,' he told reporters. Albanese met with Canada's Prime Minister Mark Carney on Monday, and said they had discussed Canada's interest in joining AUKUS's so-called Pillar Two to develop advanced defence technology. Australia wants to increase its defence relationships, including with Canada which was a long-term ally with shared values, Albanese said. 'In an uncertain world what people are looking for is certainty, relationships, trusted relationships, Australia and Canada are just such partners,' he said. Albanese will also hold talks with the EU on a proposed defence pact, and seek progress on EU free trade talks. An annual poll by the Lowy Institute think-tank released on Monday showed falling public sentiment in Australia towards the United States, with 36 per cent of people surveyed saying they trust the United States to act responsibly, a 20-point drop since last year. The poll showed two-thirds of respondents supported AUKUS.
