[World Tax News] UAE Sets Penalty of AED 10,000 for Late Corporate Tax Registration and More

Editorial Team – [2024] 160 taxmann.com 33 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. UAE sets penalty of AED 10,000 for late corporate tax registration

On February 27 2024, the Ministry of Finance, UAE issued Cabinet Decision No. 10 of 2024, amending the schedule of violations and administrative penalties of Cabinet Decision No. 75 of 2023 on the administrative penalties for violations related to the application of Federal Decree-Law No. 47 of 2022 on the taxation of corporations and businesses.

The Ministry stated that an administrative penalty of AED 10,000 for late registration of UAE Corporate Tax will be imposed on businesses that do not submit their Corporate Tax registration applications within the timelines specified by the Federal Tax Authority.

The penalty was introduced to encourage taxpayers’ compliance with tax regulations by registering for corporate tax within the prescribed time limit. The penalty amount for late tax registration is aligned with the penalty associated with late registration for excise tax and value-added tax.

Source: Release

2. New Zealand issues framework on two-pillar solution; opts out of Amount B of Pillar One

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (IF) has agreed to develop a two-pillar solution to address the tax challenges arising from the digitalisation of the economy. New Zealand is a member of the OECD and IF.

Pillar Two comprises the Global Anti-Base Erosion Rules (GloBE Rules), designed to ensure large multinational enterprises pay a minimum tax on the income arising in each jurisdiction where they operate. New Zealand has not yet implemented GloBE Rules.

Amount A of Pillar One coordinates a reallocation of taxing rights to market jurisdictions with respect to a share of the profits of the largest and most profitable multinational enterprises (MNEs) operating in their markets, regardless of their physical presence. Amount A has not yet been finalised.

Amount B of Pillar One provides an optional simplified and streamlined transfer pricing approach that jurisdictions may apply to in-country baseline marketing and distribution activities for fiscal years commencing on or after January 1 2025.

New Zealand has not opted to apply this approach, as such its introduction does not change current rules or practice. Its existing simplification measure for small foreign-owned wholesale distributors remains available, and existing transfer pricing rules apply in all other cases.

Source: Announcement

3. Malta releases public notice partially implementing Pillar 2 Global Minimum Tax

Malta released a notice encompassing the European Union Global Minimum Level of Taxation for Multinational Enterprise Groups and Large-Scale Domestic Groups Regulations 2024. These regulations align with Council Directive (EU) 2022/2523, dated December 14, 2022, which establishes guidelines for maintaining a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups within the Union.

Malta, however, has chosen to postpone the implementation of key global minimum tax rules, namely the income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR). Consequently, the Regulations only partially adopt the Directive, focusing on Chapters I, VIII, IX, and X provisions that cover general provisions, administrative details, transitional arrangements, and final stipulations.

Key points of the provisions entail the necessity for a local constituent entity, or a specified local filing entity, to submit supplementary tax information returns unless these are filed by the ultimate parent or a designated filing entity in another jurisdiction with which Malta maintains a qualifying competent authority agreement for the exchange of such returns. If these returns are filed in another eligible jurisdiction, notification to the Commissioner is obligatory.

Additionally, protocols are outlined for ultimate parent entities in Malta to appoint a designated filing entity in any Member State that hasn’t opted to defer the implementation of the income inclusion rule (IIR) and undertaxed payment/profit rule (UTPR).

The Regulations are considered to have taken effect as of December 31, 2023, and apply to fiscal years commencing from that date. The deferral is valid for up to six consecutive fiscal years starting December 31, 2023.

Source: Legal Notice No. 32 of 2024

4. Greece releases consultation for implementation of Global Minimum Tax

The Greek Ministry of Finance has initiated a public consultation concerning the draft legislation to implement the Pillar 2 global minimum tax, aligning with Council Directive (EU) 2022/2523, dated December 14, 2022. This legislation encompasses the incorporation of the Pillar 2 income inclusion rule (IIR) and undertaxed payment/profit rule (UTPR) to ensure a minimum tax threshold of 15% for multinational enterprise (MNE) groups with annual consolidated revenue surpassing EUR 750 million in at least two of the preceding four fiscal years. Additionally, the draft law proposes implementing a qualified domestic minimum top-up tax (QDMTT) alongside specific safe harbours.

Pending approval and publication in the Official Gazette, the Income Inclusion Rule (IIR) and Qualified Domestic Minimum Top-up Tax (QDMTT) will take effect for fiscal years starting on or after December 31, 2023, while the Undertaxed Payment/Profit Rule (UTPR) will generally come into effect for fiscal years starting on or after December 31, 2024.

However, the UTPR will be applicable for fiscal years starting on or after December 31, 2023, if the ultimate parent entity of a group is based in an EU Member State that has chosen to defer the implementation of the global minimum tax rules. The deadline for submitting comments is March 6, 2024.

Source: Public Consultation by Ministry of National Economy and Finance