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May 15, 2026

CHAPTER 7 - TAX NEUTRALITY AND DISTRIBUTION REGIMES

Article 55 - UPE That Is Considered a Flow-through Entity

The GloBE income for the Tax Period of the Entity that is a Flow-Through Entity and considered the UPE of the MNE Group shall be reduced by the amount of GloBE Income attributable to each Ownership Interest, in any of the following cases:

  1. If the holder of the Ownership Interest is subject to income tax on the full amount of such income for a Tax Period ending within twelve (12) months after the end of the Tax Period of the MNE group, and any of the following conditions is met:

    1. The holder of the Ownership Interest is subject to income tax on the full amount of such income at a nominal rate equal to or exceeding the Minimum Tax Rate; or

    2. It can be reasonably expected that the aggregate amount of adjusted covered taxes for the UPE and other Entities in the tax-transparent structure, together with the taxes of the owner of the ownership interest applied to this income, equals or exceeds the amount resulting from multiplying the full amount of this income by the minimum tax rate.

  2. If the holder is a natural person that fulfills the following conditions:

    1. is a tax resident in the UPE Jurisdiction or the State; and

    2. holds Ownership Interests that, in the aggregate, are a right to 5% or less of the profits and assets of the UPE.

  3. If the owner is a Governmental Entity, an International Organization, a Non-Profit Organization, or a Pension Fund that fulfills the following conditions:

    1. Is a resident in the UPE jurisdiction or the State; and

    2. Holds Ownership Interests that, in the aggregate, are a right to five percent (5%) or less of the profits and assets of the UPE.

The GloBE loss of a Flow-Through Entity considered the UPE of the MNE Group shall be reduced by the amount of the GloBE loss attributable to each Ownership Interest, except to the extent that the holders of Ownership Interests are not allowed to use the loss in their separate taxable income for tax purposes.

A Flow-Through Entity that reduces its GloBE Income pursuant to the above shall reduce its Covered Taxes proportionally in accordance with the first paragraph of this Article.

The provisions of this Article apply to any PE in any of the following cases: