UAE to impose a 15% minimum corporate tax rate on large multinationals

The UAE will impose a 15% minimum corporate income tax rate on large multinational enterprises from the 1^st of January 2025. Firms will be subject to the domestic top-up tax provided they have declared global revenues of more than €750mn in at least two of the previous four financial years. The move is consistent with the UAE’s adoption of the OECD Base Erosion and Profit Shifting (BEPS) Pillar Two framework in 2021. The Pillar Two rules are designed to ensure that large multinationals pay a minimum effective tax rate of 15% in every country they operate in.

The Chinese Politburo concluded their December meeting on Monday. Key takeaways from the meeting include Chinese monetary policy now being characterized as “moderately loose” from “prudent”, the first major change in stance in 14 years. The meeting also highlighted the need for significantly higher domestic consumption, suggesting that there may well be some further stimulus measures in the pipeline.

Today’s Economic Data and Events

• 13:00 TU Industrial production (Oct). Forecast: -0.1% m/m
• Chinese trade balance (Nov). Forecast: USD 93.5bn

Fixed Income

• US treasury yields rose on Monday. The 2yr yield gained 2bps on the day, to reach a value of 4.1245%, while the 10yr yield rose 5bps to 4.2012%.
• Moves in major European bond yields were mixed on Monday. The 10yr Gilt yield fell by 0.5bps to 4.2692%, while the 10yr Bund yield rose 1bps to 2.120%.

FX

• The dollar ended the day marginally stronger against a basket of peer currencies on Monday, with the spot index 0.1% higher, although moves against individual peers were mixed. EURUSD fell by 0.13% to 1.0554, GBPUSD gained 0.05% to 1.275, and USDJPY rose 0.81% to 151.21.
• Commodity currencies were also mixed against the dollar. AUDUSD rose 0.77% to 0.644, NZDUSD gained 0.57% to 0.5864, and USDCAD gained 0.1% to 1.4171.

Equities

• US equity markets fell on Monday, with investors looking ahead to US inflation data due on Wednesday. The Dow Jones fell 0.54%, while the S&P 500 and NASDAQ both declined by 0.6%.
• In general, European markets fared better on the day, buoyed by luxury stocks, with news from the Chinese Politburo meeting pointing to prospects of further stimulus. The Euro Stoxx 50 index gained 0.15%, the CAC 40 rose 0.72% and the FTSE 100 gained 0.52%. The DAX, in contrast, fell 0.13%.
• Local markets moved lower on Monday, with the DFM declining by 0.13% and the ADX closing 0.43% lower. The Tadawul gained 1.19%.

Commodities

• Monday’s decline in oil prices was broadly reversed in trading yesterday, with markets boosted by hopes of fresh Chinese stimulus measures. Brent futures rose 1.43% to USD 72.14/b while WTI gained 1.74% to USD 68.37/b.