The UAE Domestic Minimum Top-up Tax (DMTT) applies to relevant UAE
entities in multinational groups meeting the EUR 750 million
consolidated revenue test. It targets a minimum 15% effective tax rate
under Pillar Two. Scope, registration and reporting must be assessed
even where relief means no top-up tax is payable.
This guide is for UAE finance teams and owners of businesses
connected to multinational groups. A small UAE subsidiary can be
affected because the revenue test concerns its group. Most independent
SMEs are outside scope.
Who falls within the UAE
DMTT rules?
The core test considers consolidated group revenue of at least EUR
750 million in two of the preceding four fiscal years. Purely domestic
groups are outside the multinational-group requirement. UAE-parented
groups with foreign operations can be within scope, as can
foreign-parented groups with UAE operations.
Entity classification matters. Excluded entities, investment
entities, permanent establishments, joint ventures and reverse hybrids
have specific rules. Assess the legal structure and location of each
entity rather than relying only on its UAE Corporate Tax registration.
The FTA explains these distinctions in its Top-up
Tax scope and registration announcement.
Key facts
| Item | Position |
|---|---|
| Effective date | Fiscal years beginning on or after 1 January 2025 |
| Group threshold | EUR 750 million; two-of-four-year test |
| Minimum rate | 15% under the prescribed effective-tax-rate calculation |
| Relevant registration deadline | 30 November 2026 for a first in-scope fiscal year ending before 30 April 2026 |
| Other registration cases | Generally seven months after the first in-scope fiscal year-end |
| Domestic tax return | Generally 15 months; 18 months for the relevant first transition year |
| Information reporting | A separate Pillar Two Information Return obligation |
Registration deadlines and procedures are explained in FTA
Guide TTGREG1, sections 8–9. A zero liability or safe harbour does
not necessarily remove the registration requirement.
How the
effective tax rate and top-up are calculated
The calculation generally uses the relevant UAE jurisdictional pool,
subject to special grouping rules:
Effective tax rate = adjusted covered taxes ÷ net Pillar Two
income.
Adjusted covered taxes start from tax expense and include prescribed
adjustments, including deferred-tax treatment. They are not simply the
cash tax paid during the year.
The positive shortfall below 15% is applied to excess profit
after the substance-based income exclusion (SBIE), with
additional adjustments where required. SBIE does not reduce the
denominator used to calculate the effective tax rate.
| Fiscal year beginning in | Eligible payroll percentage | Eligible tangible-asset percentage |
|---|---|---|
| 2025 | 9.6% | 7.6% |
| 2026 | 9.4% | 7.4% |
Eligible right-of-use assets may qualify. Leasing does not
automatically exclude assets from the calculation. These rules are in Cabinet
Decision 142/2024, Articles 4, 5 and 9.2.
Simplified illustration
Assume a hypothetical UAE pool has AED 10 million of net Pillar Two
income and AED 900,000 of adjusted covered taxes. The ETR is 9%, so the
top-up percentage is 6%. If its calculated SBIE is AED 1 million, the
simplified top-up is 6% of AED 9 million: AED 540,000.
This illustration assumes no other adjustments, safe harbour or
exclusion. It is not a calculation of any particular business’s
liability.
Does free zone status
prevent DMTT?
No automatic protection arises from Qualifying Free Zone Person
status. Equally, a 0% Corporate Tax rate does not mean that 15% must be
charged on all accounting profit. Model the relevant UAE tax pool,
exclusions, substance and elections before reaching a conclusion. Read
this alongside our UAE Corporate Tax
guide.
Separate
the domestic return from the Information Return
Maintain distinct calendar entries for:
- Top-up Tax registration;
- the domestic Top-up Tax Return and payment;
- the Pillar Two Information Return and related notifications;
- the ordinary UAE Corporate Tax return.
For a December 2025 year-end qualifying for the domestic return’s
18-month transition window, the domestic return and payment date is
30 June 2027. The ordinary 15-month window would put a
December 2026 domestic return at 31 March 2028.
Do not automatically extend Information Return reporting to the
domestic return’s transition date. Article 15.4 states a separate
15-month rule; establish the applicable reporting route and any
expressly available relief. The domestic return and payment provisions
are in Articles
8.1 and 11 of Cabinet Decision 142/2024.
Ministerial Decision 133/2026 addresses who files the Information
Return, including designated local filing. Qualifying foreign-filing and
exchange arrangements also require assessment. MoF
explains the 2026 reporting decision.
What finance teams should do
now
- Document scope. Obtain the group chart,
ultimate-parent accounts, four-year revenue analysis and UAE entity
list. - Allocate responsibility. Agree who handles
registration, domestic compliance and Information Return reporting.
Different roles may be assigned to different entities. - Register on time. Use the existing taxable-person
profile where appropriate. Obtain required group authorisations and
retain the registration evidence. - Build the data file. Include trial balances, tax
and deferred-tax workpapers, payroll, fixed/right-of-use asset records,
ownership changes and relevant group reporting. - Assess relief before final modelling. Document
safe-harbour eligibility, exclusions and elections with the group’s
Pillar Two advisers. - Reconcile and approve. Reconcile local accounting
data to group reporting, approve the calculation and diary each filing
separately.
The current
FTA scope and registration guide should be read with the applicable
decisions, including the 2026 commentary and reporting updates.
Frequently asked questions
Can a UAE SME subsidiary
be affected?
Yes. A subsidiary’s own turnover can be small while its multinational
group meets the threshold. An independent SME outside such a group will
generally be outside scope.
Is the DMTT
always another 6% above Corporate Tax?
No. A nominal 9% rate does not establish the Pillar Two ETR or the
amount subject to top-up. Accounting adjustments, substance and reliefs
affect the result.
Is
registration unnecessary if no top-up tax is due?
Not necessarily. Assess registration independently of the final
liability and any safe harbour.
Is one
return sufficient for all UAE tax obligations?
No. Ordinary Corporate Tax, the domestic Top-up Tax Return and Pillar
Two information reporting are separate obligations, even where an
authorised group entity handles some filings centrally.
How BPOAS can help
BPOAS supports UAE accounting records, reconciliations and Corporate
Tax workpapers that finance teams need for group reporting. We can help
organise local data and coordinate with your group’s Pillar Two
specialists, with the scope agreed before work begins.
Arrange a UAE
accounting and Pillar Two data-readiness consultation, or explore
the BPOAS
Accounting and Tax Compliance Hub.
General guidance based on sources checked on 15 October 2026.
Apply the legislation, filing requirements and any subsequent official
extensions to the group’s specific circumstances before acting.