Key Tax Developments in the UAE in 2025
1. Global Minimum Tax (Pillar Two – OECD BEPS 2.0)
From 2025, the UAE officially implements the Global Minimum Tax at 15%, applicable to multinational groups with consolidated revenues over €750 million, in line with OECD’s BEPS 2.0 initiative.
This is aimed at preventing profit shifting and ensuring that major corporations pay fair tax wherever they operate.

*This change primarily affects large multinationals registered in the UAE or operating regional headquarters from its Free Zones.

2. UBO Disclosure and Financial Reporting Requirements
As part of the government’s enhanced anti-avoidance efforts, all companies in the UAE — including Free Zone entities — must:
-Update and declare Ultimate Beneficial Owners (UBOs) regularly.
-Maintain proper accounting records for at least 5 years.
-Submit audited financial reports in line with IFRS standards where required.

*Free Zones such as DMCC, DIFC, and ADGM now require mandatory yearly audits, even for companies with minimal revenue.

3. Reinforced CRS/FATCA Controls
Though the UAE joined the CRS (Common Reporting Standard) framework in 2018, in 2025 the system has been further strengthened:
-A revised CRS/FATCA manual was published in February 2025, clarifying deregistration, verification, and reporting processes for financial institutions.
-Banks are now required to conduct enhanced due diligence on source of funds and business activity, especially for foreign-owned entities.
-Tighter regulations were introduced to verify beneficial ownership structures, making it harder to hide behind layered offshore entities.

What International Businesses Must Do in 2025
The UAE's evolving tax landscape requires proactive restructuring and compliance readiness. Here’s what companies need to consider to remain efficient — and compliant. For international companies, this means that the old schemes no longer work, and any mistake or oversight can lead to fines, loss of tax benefits, or even the blocking of corporate bank accounts. This may happen, for example, in cases such as: the absence or incompleteness of documents proving actual business activity; discrepancies between the business license and real operations; failure to submit tax returns on time; mismatches in KYC or UBO data; suspicious or inconsistent transactional activity; or the use of nominee directors without a transparent ownership structure.

Key Steps to Take Today to Maintain Tax Efficiency, Ensure Compliance with UAE Legislation, and Avoid Regulatory Sanctions

1. Conduct a comprehensive audit of your company structure and operations.
Starting in 2025, the UAE Federal Tax Authority (FTA) has tightened controls over companies’ compliance with the new regulations. This is particularly relevant to maintaining Qualified Free Zone Person status and meeting Economic Substance Regulations (ESR) requirements.

2. Upgrade your accounting and financial reporting systems.
As of 2025, submitting financial reports has become mandatory not only for Mainland companies, but also for most Free Zone entities. Moreover, in several Free Zones (such as DMCC, DIFC, and ADGM), annual audits are now required, even if the company shows no profit.

What to check:
-Whether accounting is maintained in compliance with IFRS (mandatory for all entities subject to corporate tax);
-Readiness to submit the corporate tax return for the first financial year;
-Proper storage of all documentation (contracts, invoices, delivery notes, bank statements) for at least 5 years.

Recommendation:
Switch to a certified accounting partner instead of relying on “on-demand” bookkeepers.

3. Reassess your ownership structure and UBO (Ultimate Beneficial Owner) information.
Since 2024, failure to submit or update UBO information in a timely manner can result in penalties of up to AED 100,000.

Recommendation:
Ensure that your UBO data is correctly filed in the official registry, and that your bank and registration authorities hold matching information.

4. Restructure your international holding structure.
The Pillar Two global minimum tax (15%) is now in effect in the UAE. If your corporate group has a global turnover of more than €750 million, you are automatically under increased scrutiny. Additionally, requirements for IP-holdings, royalty flows, and transfer pricing have become stricter.

What to do:
-Check where your IP rights (intellectual property) are registered;
-Evaluate the feasibility of relocating your IP to a Free Zone that supports IP box regimes;
-Reassess holding structures involving Cyprus, Luxembourg, or Malta for double taxation risks and BEPS compliance.

Recommendation:
Develop a new ownership chain that aligns with GloBE rules, Pillar Two, and applicable Double Taxation Agreements (DTAs).

Final Thoughts
The tax reform in the UAE is not a restriction, but an opportunity.
An opportunity to step out of the grey zone, strengthen the trust of partners and investors, and still maintain global tax efficiency. In an environment of increasing global oversight and data exchange, such a transparent yet flexible model is becoming the new norm.

For businesses using the UAE as a regional headquarters, hub, or holding jurisdiction, the rules of the game are changing.
At the same time, the UAE remains one of the most competitive tax systems in the world — with low rates, flexibility, no taxes on dividends or capital gains, and over 130 double tax treaties.

If your business uses the UAE as a regional hub, holding jurisdiction, or operational base — it’s time to adapt to the new rules. But done right, this transition can preserve your tax advantages and enhance your global credibility.

Need help?
The team at Garant Business Consultancy is ready to assist with tailored structuring, audit, and compliance strategies under UAE’s updated tax regime.
📞 +971 4 421 4335
📧 info@garant.ae