International Tax Advisory – Lexor Global Tax Consulting LLC, UAE
The United Arab Emirates has evolved into a globally compliant and strategically competitive tax jurisdiction. With the introduction of Corporate Tax, Transfer Pricing rules, Economic Substance Regulations, and commitment to the OECD’s global tax standards, international tax planning in the UAE is now more technical than ever.
For multinational groups, regional holding companies, and cross-border investors, understanding UAE international tax law is essential to ensure compliance and optimize global tax efficiency.
At Lexor Global Tax Consulting LLC, we provide specialized international tax advisory services across the UAE and globally.
UAE Corporate Tax & International Tax Framework
The UAE Corporate Tax regime was introduced under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, effective for financial years starting on or after 1 June 2023.
The law is administered by the Federal Tax Authority (FTA).
Key International Tax Elements Embedded in the Law:
- Permanent Establishment (PE) concept aligned with the OECD Model Tax Convention
- Transfer pricing rules based on the arm’s length principle
- Related party disclosure requirements
- Alignment with international anti-avoidance standards
The UAE Corporate Tax rate remains competitive at 9%, but compliance requirements follow global best practices.
UAE Transfer Pricing – OECD Alignment
The UAE Corporate Tax Law incorporates transfer pricing provisions consistent with the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines.
Businesses must:
- Apply the arm’s length principle
- Use appropriate transfer pricing methods
- Maintain Master File and Local File (where thresholds apply)
- Disclose related-party transactions
Transfer pricing compliance is particularly important for:
- UAE holding companies
- Regional headquarters
- Free zone group structures
- Cross-border service arrangements
Improper documentation may result in tax adjustments and penalties.
Double Tax Treaties (DTT) – UAE’s Global Network
The UAE has signed over 100 Double Tax Treaties with countries across Europe, Asia, Africa, and the Americas.
These treaties:
- Prevent double taxation
- Reduce withholding tax on dividends, interest, and royalties
- Define Permanent Establishment thresholds
- Enable exchange of tax information
Most treaties are modeled on the OECD Model Tax Convention, enhancing global credibility.
For multinational groups, treaty analysis is critical to optimize cross-border tax efficiency.
Economic Substance Regulations (ESR)
The UAE implemented Economic Substance Regulations under Cabinet of Ministers Resolution No. 57 of 2020, aligning with OECD BEPS Action 5 requirements.
Entities engaged in relevant activities must demonstrate:
- Adequate employees in the UAE
- Physical office presence
- Core income-generating activities conducted locally
- Adequate expenditure
ESR applies to activities such as:
- Holding company business
- Intellectual property ownership
- Financing and leasing
- Distribution and service centres
- Headquarters activities
Non-compliance may lead to penalties and exchange of information with foreign tax authorities.
OECD BEPS & Pillar Two – Global Minimum Tax
The UAE is part of the global initiative led by the OECD to combat Base Erosion and Profit Shifting (BEPS).
Under OECD Pillar Two, multinational enterprises with consolidated revenue exceeding EUR 750 million may be subject to a 15% global minimum tax.
Implications for UAE Businesses:
- Potential top-up tax exposure
- Effective tax rate calculations under GloBE rules
- Financial statement adjustments
- Increased compliance complexity
Pillar Two readiness assessments are now essential for large groups operating in the UAE.
Permanent Establishment (PE) Risk in the UAE
The UAE Corporate Tax Law adopts PE definitions broadly aligned with OECD standards.
Foreign companies may create a PE in the UAE if they:
- Have a fixed place of business
- Operate through dependent agents
- Conduct substantial business activities locally
Proper structuring is required to manage cross-border PE exposure.
Cross-Border VAT & Indirect Tax Considerations
International tax planning in the UAE also involves indirect tax implications under:
- Federal Decree-Law No. 8 of 2017 on Value Added Tax
- Reverse charge mechanism
- Zero-rating of exports
- Place of supply rules
VAT compliance must align with cross-border contractual arrangements.
Why International Tax Planning in the UAE Is Strategic
The UAE offers:
✔ Competitive corporate tax rate
✔ Extensive treaty network
✔ No domestic withholding tax
✔ Business-friendly regulatory environment
✔ Strategic geographic location
However, global compliance obligations require:
- Proper structuring
- Documentation discipline
- OECD-aligned policies
- Ongoing monitoring
International tax is no longer optional — it is a governance necessity.
How Lexor Global Tax Consulting LLC Supports International Businesses
We provide:
✔ International tax structuring
✔ Double Tax Treaty analysis
✔ Transfer pricing documentation
✔ Economic Substance compliance
✔ OECD Pillar Two readiness
✔ Cross-border VAT advisory
✔ Corporate Tax impact assessments
Our expertise ensures alignment with UAE law and international OECD standards