U.A.E Eyes Global Minimum Tax: Will Big Business Face a Bigger Bite in 2025?

 There have been a few recent developments concerning corporate tax in the UAE:

• UAE Pass for Tax Portal Access: Since late September 2023, the Federal Tax Authority has required the use of the UAE Pass to access the tax portal. This applies to corporate tax, VAT, excise tax, and even filing claims for refunds or appeals. [National News Article on UAE Corporate Tax Updates]
• New Giban for Corporate Tax: Companies registered for corporate tax now have unique Giban (Generated International Bank Account Numbers) specifically for this purpose. These differ from Gibans used for VAT purposes. This aims to streamline corporate tax payment processing. [National News Article on UAE Corporate Tax Updates]
• Implementation of Pillar Two Rules: The UAE is establishing the groundwork to implement the OECD's Pillar Two minimum tax rate of 15% expected to be rolled out in 2025. Public consultation is expected in early 2024. [Clyde & Co - Developments for UAE Family Businesses]

These updates focus on administrative aspects of corporate tax rather than any changes to tax rates or exemptions.

U.A.E -Implementation of Pillar Two Rules

Yes, the UAE is considering implementing the Global Minimum Tax, but with a potential delay. Here's a breakdown of the situation:

• The OECD's Global Minimum Tax, also known as Pillar Two, proposes a minimum corporate tax rate of 15%.
• The UAE currently does not levy a federal corporate income tax, although it introduced a 9% corporate income tax for businesses operating outside of free zones in June 2023.
• In March 2024, the UAE Ministry of Finance held a public consultation to gather feedback on implementing the Pillar Two rules. This suggests they are at least considering it.
• However, the consultation concluded in April 2024, and there haven't been any announcements about a definitive implementation date. Reports suggest the UAE might not implement Pillar Two in 2024 

In summary:

• The UAE is exploring the possibility of implementing the Global Minimum Tax under Pillar Two.
• They held a public consultation in March 2024, indicating serious consideration.
• Implementation seems unlikely for 2024, with 2025 as a potential target year.

It's important to stay updated on official announcements from the UAE Ministry of Finance for the latest developments. 

• Expected Timeline: The UAE is aiming to have Pillar Two in place by 2025.
• Public Consultation: Discussions and consultations with stakeholders regarding the specific implementation details of Pillar Two are anticipated for early 2024. This suggests the UAE government is finalizing the framework.
• Legal Updates: The Ministry of Finance has already amended the Corporate Tax Law to prepare for Pillar Two.

Resources for Further Reading:

• Update on UAE Pillar Two Implementation: [Orbitax Tax News on UAE Pillar Two] (you can search for this by title)
• Analysis of Pillar Two and UAE Free Zones: [Aurifer Tax - Pillar Two and UAE Free Zones]

U.A.E -Implementation of Pillar Two Rules

Pillar Two of the OECD's Global Minimum Tax framework aims to ensure multinational corporations (MNCs) pay a minimum tax rate of 15% globally. Here's a breakdown of the key details:

Core Concept:

• Effective Tax Rate (ETR): This is a calculated tax rate based on a company's profit divided by its tax bill.
• Top-up Tax: If an MNC's ETR in a particular country falls below the 15% minimum, the parent company (or another entity in the group) will be subject to a "top-up tax" to ensure the effective tax rate reaches 15%.

Implementation Mechanisms:

• Qualified Domestic Minimum Top-up Tax Rule: This gives priority to the country where the MNC operates with the low tax rate. This country can impose a top-up tax to ensure the minimum rate is met.
• Income Inclusion Rule (Subject to a Tax Treaty Override): If the top-up tax isn't applied in the low-tax country, the parent company (or another entity in the group) can be taxed on the difference between the subsidiary's profit and the minimum tax rate multiplied by its profit. This essentially forces the group to pay the top-up tax elsewhere.
• Undertaxed Profits Rule: This acts as a backstop. If neither of the above rules are applied, the parent company's country of residence can tax the difference between the minimum rate and the ETR in the low-tax country.

Who is Affected?

• The rules generally apply to large Multinational Enterprises (MNEs) with a consolidated group revenue exceeding EUR 750 million.

Implementation Timeline:

• A global implementation date of 2024 was initially proposed, but this has been pushed back.
• The UAE, like many countries, is targeting implementation by 2025.

Additional Points:

• There are mechanisms to avoid double taxation and ensure the system operates efficiently.
• Public consultations regarding specific implementation details are crucial, and the UAE is expected to hold these consultations in early 2024.

For further information, you can refer to resources like the OECD's documentation on Pillar Two or tax advisory firm publications on the topic. 

Important Challenges Faced by Employees Due to Job Loss in the U.A.E

 Losing a job in the UAE can be particularly difficult due to the unique structure of the employment market. Here are some of the most significant challenges employees face:

Financial Strain:

• Limited Safety Net: Unlike some countries, the UAE lacks a universal minimum wage, leaving many vulnerable to financial hardship after job loss.
• Temporary Support: The Involuntary Loss of Employment (ILOE) scheme offers some financial assistance, but it's only a portion of the salary for a limited duration.
• Debt Management: Job loss can make managing existing financial obligations like rent, loans, and credit card payments difficult.

Visa and Residency:

• Visa Dependence: Many UAE visas are tied to employment. Losing a job can lead to visa cancellation and a short timeframe to leave the country, creating stress for employees with families in the UAE.
• End-of-Service Benefits: Employees are entitled to gratuity payments upon job termination after a specific period. However, disputes or delays in receiving these benefits can worsen financial difficulties.

Legal Issues:

• Labor Disputes: Disagreements with employers regarding termination, unpaid wages, or benefits can arise. Understanding and navigating UAE labor laws is crucial in such situations.
• Notice Period: Employment contracts typically have a notice period for termination by either party. Leaving abruptly without proper notice could lead to legal repercussions.

Additional Challenges:

• Competitive Job Market: Finding a new job quickly can be difficult, especially in some sectors.
• Emotional Impact: Job loss can be emotionally draining, adding to the overall stress of the situation.

Seeking Support:

Here are some resources that can help employees facing job loss in the UAE:

• Ministry of Human Resources and Emiratisation (MOHRE): https://www.mohre.gov.ae/

 Job Loss Insurance in the UAE

Traditionally, there hasn't been standalone "job loss insurance" available in the UAE. However, a recent development offers some financial protection in case of involuntary job loss:

• Involuntary Loss of Employment (ILOE) Scheme: This government-introduced program provides partial financial support to employees who lose their jobs involuntarily (through termination, not resignation or disciplinary action).

Key Points about ILOE:

• Eligibility: Applies to most private and public sector employees (exceptions include investors, domestic workers, temporary workers, and those under 18).
• Benefits: Offers up to 60% of the average monthly salary over the past 6 months, capped at specific amounts (Category A: maximum 10,000 AED/month, Category B: maximum 20,000 AED/month).
• Duration: Pays for a maximum of 3 consecutive months per claim.
• Requirements: Requires contributions from the employee for at least 12 consecutive months before a claim can be made.

Limitations of ILOE:

• Temporary Support: It's not a long-term solution and only provides limited financial assistance for a maximum of 3 months.
• Contribution Requirement: Employees need to have been contributing for at least a year to be eligible.

Alternatives to Consider:

• Emergency Savings: Having a well-funded emergency savings account can act as a buffer during a job loss.
• Debt Management Plans: If facing debt issues due to job loss, consider consulting a financial advisor or exploring debt relief options.

Resources:

• ILOE Scheme: https://www.iloe.ae/ 

Important news: You can easily verify the Validity of your U.A.E Visa Online

 Here is a guide on how to check the validity of your visa in the U.A.E

There are two main way

Verify your Visa Validity In the UAE

s to verify your UAE visa validity depending on where your visa was issued:

Federal Authority for Identity and Citizenship (ICP): If your visa applies to Abu Dhabi, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah, you can check its validity online through the ICP website.

Amer service: This applies to Dubai visas. You can check the validity online or contact Amer service by phone.

Using the GDRFA Website

Here's a breakdown of the methods:

Online(ICP):

Visit the UAE government website: [UAE government website]

Navigate to "Track visa application and validity" under "Visa and Emirates ID".

Select "Check visa validity (issuance and expiry dates)".

Enter your passport information and nationality.

Click "Search" to view your visa details.

Track Your Dubai Visa Application Online with Ease

Applying for a Dubai residency visa? You can conveniently check its status online using either the GDRFA website or their mobile app. Here's how:

Using the GDRFA Website:

1.    Visit the GDRFA website (you can find it by searching for "GDRFA Dubai").

2.    Click on the option labeled "Residence Validity."

3.    Enter the required information, which typically includes your residence visa file number. You can find this number on your visa page in your passport.

4.    Complete the captcha code to verify you're not a robot.

5.    Click "Submit" to view your visa application status.

Using the GDRFA Mobile App:

1.    Download and install the GDRFA Dubai app on your smartphone.

2.    Open the app and navigate to the "Services" tab.

3.    Choose "File Status Inquiry" from the list of services.

Depending on your visa type, select one of the following options:

• Entry Permit Inquiry: This applies if you have a labor contract but haven't received your visa yet.
• Residency Inquiry: Choose this option if your entry permit has been approved and you're now applying for residency.

4.    Enter all the required information in the app.

5.    Double-check the details you entered and then tap "Inquire."

If everything is correct, you should see a green checkmark on the screen along with some details about your visa application.

Remember:

·       You can find contact information for GDRFA on their website in case you encounter any issues or have further questions.

·       Online (Amer - Dubai only):

·       Amer service doesn't currently offer online visa validity checks.

·       Phone (Amer - Dubai only):

·       Call Amer service within the UAE: 800 5111

·       Call Amer service from outside the UAE: +9714-313-9999 

Are you Hiring Domestic Help in the U.A.E? Don't Miss These Important Laws

 There haven't been sweeping changes to UAE law regarding domestic workers in the past decade, but there have been some important developments that provide greater protections:

House maid in work

• Ministry of Labour (MoL) Resolution No. 788 of 2017: This resolution mandated standard employment contracts for domestic workers. These contracts outline working hours, rest days, minimum salary, and other key terms [Source: MoHRE UAE website].
• Federal Law No. 6 of 2017 بشأن العمل (Law on Work): This broader law, enacted in 2017, applies to most workers in the UAE, including domestic workers to a certain extent. It offers protections like limitations on working hours, overtime pay, and annual leave,

• Working Hours: The contract should specify the daily and weekly working hours for your domestic worker. This ensures they have designated rest periods outside of their scheduled duties.
• Days Off: The contract should also outline the number of guaranteed rest days per week. This is typically one day, but it can be negotiated.

Here's what these points mean for appointments:

• Scheduling Appointments: Since working hours are defined, you should schedule non-urgent appointments for your domestic worker outside of their work hours or on their designated rest day.
• Accompanying Appointments: If the appointment requires your domestic worker's presence during their work hours or rest day, it's best to discuss it beforehand and potentially offer them compensation for their time.

Here are some additional UAE labor laws to be aware of:

• Annual Leave: Domestic workers are entitled to annual leave, which should be stipulated in the contract. If an appointment falls within their leave period, there wouldn't be any legal issues.
• Sick Leave: The contract should also outline sick leave provisions. If your domestic worker has a doctor's appointment due to illness and it falls within their working hours, you should be flexible and understanding.

Resources for further information:

• Ministry of Human Resources and Emiratization (MoHRE): https://mohap.gov.ae/ provides information on domestic worker regulations.
• MoHRE Resolution No. 788 of 2017: You can find details about the standard employment contract on the MoHRE website or through legal resources.

Breaches of contracts and fines are legal issues that can arise when dealing with domestic workers in the UAE. Here's a breakdown:

Breach of Contract:

• This occurs when a party in a contract fails to fulfill their obligations as outlined in the agreement.
• In the context of domestic workers, a breach could happen from either side:
• Employer: Not paying the agreed-upon salary, exceeding working hours without proper compensation, or failing to provide proper accommodation and meals as stipulated in the contract.
• Domestic Worker: Abandoning the job without notice, neglecting duties, or working for another employer without permission.

Fines for Breach:

• Fines for breaches of contract aren't explicitly mentioned in UAE law for domestic workers.
• However, the Ministry of Labour (MoL) plays a role in resolving disputes.
• Here are some potential consequences of a breach:
• Financial Compensation: The non-breaching party may be entitled to claim compensation for damages caused by the breach.
• Contract Termination: A material breach (serious violation) could lead to termination of the contract by either party.
• MoL Intervention: The MoL can mediate disputes and potentially impose administrative penalties on the breaching party.

Important Note:

• Specific consequences will depend on the severity of the breach and the terms outlined in the contract.

"How can I sponsor Homemade in the United Arab Emirates?"

There are a few things to consider before sponsoring a housemaid in the UAE, including eligibility requirements and the application process. Here's a breakdown:

Eligibility (Sponsor):

• Hold a valid UAE residency visa.
• Minimum monthly income requirements vary by emirate (Dubai requires AED 6,000 or AED 5,000 with accommodation provided).
• Not a bachelor (applies in some emirates).
• Have suitable accommodation (minimum two bedrooms in some emirates).

Documents (Typical):

• Visa application form.
• Affidavit of non-relationship (if maid is from your country).
• Passports and visas (yours and the maid's).
• Passport photos (yours and the maid's).
• Proof of income (salary certificate, bank statements).
• Labor contract copy.
• Health insurance card (yours).
• Tenancy contract (minimum two bedrooms in some emirates).
• Maid's medical fitness certificate (from their home country).

Process (General):

1. Understand Eligibility: Research the specific requirements for your emirate.
2. Gather Documents: Compile all necessary documents for yourself and the maid.
3. Apply for Employment Permit: Submit the application and documents to the relevant government department (e.g., Tadbeer service centers).
4. Pay Fees: There will be associated fees for processing the visa and other documents.
5. Medical Test: The maid will likely require a medical test in the UAE.
6. Visa Issuance: Once approved, the maid will receive a visa and work permit.

Additional Tips:

• Consider using a PRO (PRO stands for Public Relations Officer) service company to help navigate the process.
• Be sure to establish a clear employment contract outlining work duties, salary, benefits, and expectations.
• Familiarize yourself with UAE labor laws regarding domestic workers.

Remember, these are general guidelines. It's advisable to check with the relevant government department in your emirate for the most current information and any specific requirements.

Here are some resources for further exploration:

• MoHRE UAE website: https://mohap.gov.ae/ offers information on domestic worker regulations and dispute resolution processes.
• Legal Consultation: If you face a potential breach of contract situation, consider consulting a lawyer specializing in UAE labor law. They can advise you on your rights and potential courses of action.