The companies operating in the UAE and the GCC need to develop response strategies that assess the financial and non-financial impact of the Global Minimum Tax rules issued by the Organization for Economic Cooperation and Development (OECD) on Monday, said Shabana Begum, Partner, Head of Transfer Pricing of KPMG Lower Gulf.
The OECD released rules to help countries implement the global international tax reform, which will ensure that multinational corporations pay a minimum 15% tax rate from 2023.
“The Pillar Two model rules provide governments a precise template for taking forward the two-pillar solution to address the tax challenges arising from digitalisation and globalisation of the economy agreed in October 2021 by 137 countries and jurisdictions under the OECD/G20 Inclusive Framework on BEPS,” the OECD statement said.
Begum called on the GCC companies to adapt to the new rules. In a statement, Begum said that as local and regional businesses move toward this new taxation regime, global statutory responsibilities and compliance obligations should not be overlooked.
“From a compliance and restructuring perspective, companies need to conduct an impact assessment across their value chain and on different business functions and operations, as well as the existing ERP system from a technical compatibility standpoint, to be better prepared for the transition,” Banu said. “This may comprise the quantification of the impact on pricing, incentives, profitability, top-line and cash flows.”