The UAE introduced its Domestic Minimum Top-up Tax (DMTT) through Cabinet Decision No. 142 of 2024. This is the country’s implementation of the OECD’s Pillar Two global minimum tax rules. The regime applies to financial years beginning on or after 1 January 2025 and ensures that large multinational enterprise (MNE) groups pay a minimum effective tax rate of 15% on their UAE profits.
Who falls within scope
DMTT only affects constituent entities of multinational groups that meet a clear size test. The group’s consolidated global revenue must reach at least EUR 750 million (approximately AED 3.15 billion) in at least two of the four fiscal years immediately preceding the tested year. Purely domestic UAE groups and smaller multinationals sit outside the rules entirely.
If the group is in scope, the DMTT looks at the effective tax rate (ETR) calculated under the GloBE rules on the group’s UAE income. Where that ETR falls below 15%, a top-up tax is charged to bring the rate up to the minimum. Where the ETR already meets or exceeds 15%, no additional top-up tax is due.
How DMTT interacts with ordinary Corporate Tax
Standard UAE Corporate Tax (0% or 9%) continues to apply in the normal way. The DMTT sits on top of it. For Qualifying Free Zone Persons that currently enjoy a 0% rate on qualifying income, the DMTT can still create a top-up liability if the overall effective rate on UAE profits is below 15%. Substance-based income exclusion and certain safe harbours may reduce or eliminate the top-up in qualifying cases.
The UAE has chosen to implement only the Domestic Minimum Top-up Tax. It has not adopted the Income Inclusion Rule or the Undertaxed Profits Rule. Because the UAE DMTT has received OECD Transitional Qualified Status, other jurisdictions generally respect the UAE’s collection of the top-up tax on local profits.
Registration and filing obligations
In-scope groups must register for the Top-up Tax with the Federal Tax Authority. Registration is generally required within seven months of the end of the first in-scope fiscal year. For groups whose first in-scope year ended before 30 April 2026, a transitional deadline of 30 November 2026 applies.
The first Top-up Tax return is normally due 18 months after the end of the transitional year and 15 months thereafter. Groups may appoint a Domestic Designated Filing Entity to handle registration, filing and payment for multiple UAE entities. Registration remains necessary even if the calculated top-up tax for a period is zero.
Practical takeaway
Most UAE businesses will never encounter the DMTT. The rules are aimed squarely at large multinational groups. For those that are in scope, early assessment of the group’s global revenue test, careful tracking of UAE covered taxes, and timely registration are essential. The regime is still relatively new, and further administrative guidance continues to be issued to align with the latest OECD Commentary.
