What is BEPS, and which parts of it has the UAE actually adopted?
I keep hearing 'BEPS' mentioned in tax conversations — what part of it actually applies to a company in the UAE?
BEPS stands for Base Erosion and Profit Shifting — a term coined by the OECD to describe practices some multinational companies use to move profits away from the countries where the real economic activity happens, into other jurisdictions with much lower tax, without any genuine business substance justifying that move. BEPS isn't a single law — it's a set of recommendations (15 'Actions') agreed by dozens of countries to close these gaps.
As a member of the OECD/G20 Inclusive Framework, the UAE has adopted specific parts of these recommendations rather than all of them at once. What's actually in force includes: transfer pricing rules and the arm's length principle, requiring documentation for transactions between related parties; Country-by-Country Reporting (CbCR) for large groups with operations in more than one country; and, more recently, the DMTT, which implements part of Pillar Two — a minimum 15% effective tax rate that applies only to giant multinational groups.
On the other hand, other BEPS-related measures haven't been enacted as a standalone regime in the UAE — Controlled Foreign Company (CFC) rules, which we cover in a separate article, being one example. This reflects a gradual, practical approach: adopting what serves transparency and international commitments, without imposing every single recommendation on every business regardless of its size.
The key takeaway for a small or mid-sized business owner: BEPS was never really aimed at local companies whose dealings are entirely within the UAE or with unrelated parties — these measures are designed for large groups and cross-border transactions between related parties. What you do need to make sure of is that any transaction with a related party — a sister company, an owner, or a branch abroad — is documented and priced fairly, and if you're not sure whether your dealings fall under any of these requirements, RASEEKH can review your transaction structure and tell you exactly what actually needs documenting and what doesn't concern you at all.