Analysis Tax GCC weighs impact of Trump’s global corporate tax moves By Valentina Pasquali January 30, 2025, 7:51 AM Alamy via Reuters Connect Tax specialists in the GCC are curious as to how Trump's stance will affect their compliance Trump rejects OECD rules GCC implementing corporate tax Uncertainty about consensus Tax professionals in the Gulf are assessing how President Donald Trump’s pull-back of US support for an international corporate tax framework might affect GCC states’ implementation of it. In a day-one executive order last week, the returning US president repudiated “any commitment” made by the previous Biden administration toward the Organisation for Economic Co-operation and Development’s global minimum tax. The so-called “Pillar Two” of the OECD regime has about 140 participating jurisdictions around the world. It aims to ensure that large multinationals – those with a consolidated revenue of more than €750 million ($780 million) – pay at least a 15 percent rate regardless of where they operate. In the January 20 directive, Trump further threatened to retaliate against the imposition of any “discriminatory,” “extraterritorial” taxes on US multinationals under certain “top-up” mechanisms that enable countries to extract additional levies from companies that do not pay the minimum effective tax elsewhere. “In GCC countries that are newly implementing corporate taxes, there’s curiosity about whether this move will slow the OECD’s momentum and impact their own compliance timelines,” says Hamdy Yahia, a tax partner at Andersen in Egypt. “Questions like, ‘Will this decision push global tax reform further into uncertainty?’ are common.” UAE to impose penalty for unpaid corporate tax Trade policy will be central to Trump’s second term Oman imposes 15% tax on multinationals The OECD’s framework is the complex outcome of years of international negotiations. In essence, it seeks to combat tax avoidance by large firms, for example by shifting profits from high-levy jurisdictions to those with lower levies. The US was not party to the deal and Congress has never taken steps to align the US corporate tax regime with the OECD’s, although there are overlaps. Nevertheless, former President Joe Biden favoured the broader push. Trump’s new executive order does not in and of itself directly upend adoption of the framework by other countries. But, by withdrawing US support and threatening retaliation, some experts fear it risks weakening international consensus around it. “There’s apprehension that the lack of US participation could undermine the broader Pillar Two framework, weakening confidence in its global application,” Yahia tells AGBI. In addition, industry professionals are wondering whether GCC states themselves might revisit “the pace” of their domestic reforms. “For example, questions arise on whether they should delay their implementation timelines or adjust frameworks to avoid creating a competitive disadvantage,” Yahiya says. As of the beginning of the year, the UAE ramped up its 9 percent corporate rate to 15 percent to meet the terms of the global minimum tax. Kuwait and Bahrain also introduced new 15-percent regimes. Qatar and Oman have taken steps in the same direction. If fully enforced, the new taxes would help GCC states consolidate their public finances as they diversify their economies away from oil, according to MR Raghu, CEO of Marmore Mena Intelligence, a Kuwait Financial Centre (Markaz) research subsidiary. “For example, Kuwait is expected to raise KD250 million (USD 825 million) from the move,” he says. “However, given Trump’s possible retaliation, the stance of GCC on the tax implementation remains to be seen.” There have been no formal reactions yet from regional authorities to Trump’s executive order and sources do not expect any immediate renouncement of domestic corporate tax efforts. In fact, according to Pierre Arman, managing director of Alvarez & Marsal Middle East, at the moment there are growing indications “of additional mandates” in support of Pillar Two implementation, in particular as the rest of the world comes under pressure from European Union member states that have already enacted relevant legislation. “While we believe the rollout of Pillar Two rules will continue globally, the Trump administration’s decision cannot be ignored, and companies, including advisers like A&M, need to understand the impacts and realign if required,” Arman says.