The Domestic Minimum Top-up Tax in the UAE, known as the DMTT, is the UAE’s domestic implementation of the OECD/G20 Pillar Two global minimum tax framework. It tests whether an in-scope multinational enterprise group’s effective tax rate on its UAE profits is below 15% and, where required, imposes a top-up tax under the GloBE calculation rules.
The DMTT applies to financial years starting on or after 1 January 2025. It does not impose a flat 15% tax on every multinational or automatically add six percentage points to the UAE’s 9% Corporate Tax rate. The calculation uses a separate Pillar Two tax base, adjusted covered taxes, safe harbours and a substance-based exclusion.
If that sounds technical, do not worry. This guide explains the DMTT in the UAE in plain language, defines the main terms, and shows who is affected, how the tax is calculated, and which deadlines matter in 2026 and 2027. Most UAE businesses will never fall within it, but a UAE entity can be in scope even when it is small if it belongs to a sufficiently large multinational group.
The rules come principally from Cabinet Decision No. 142 of 2024. They apply to Constituent Entities of MNE Groups whose consolidated global revenue was EUR 750 million or more in at least two of the four financial years immediately preceding the tested financial year.
The DMTT at a Glance
| Question | Short answer |
|---|---|
| What is it? | The UAE’s domestic Pillar Two top-up tax for in-scope MNE Groups |
| Minimum rate | A 15% jurisdictional effective tax rate tested under the GloBE rules |
| Who is in scope? | MNE Groups with consolidated global revenue of EUR 750 million or more in at least two of the preceding four financial years |
| Effective from | Financial years starting on or after 1 January 2025 |
| Governing law | Cabinet Decision No. 142 of 2024 and related implementing decisions |
| Does it replace Corporate Tax? | No. Corporate Tax and DMTT are separate calculations |
| Registration deadline | Generally within seven months after the end of the first in-scope financial year, subject to the transitional rule |
| First Top-up Tax Return | 30 June 2027 for a group with a 31 December 2025 year-end where 2025 is its first UAE Transition Year |
Not sure whether any of this touches your group? Send us your structure chart and latest consolidated accounts and we will confirm your position at no cost. Book a free consultation.
What Is the Domestic Minimum Top-up Tax (DMTT)?
The DMTT is intended to ensure that the UAE has the first right to collect Pillar Two top-up tax arising from low-taxed profits of in-scope UAE entities. It compares the MNE Group’s UAE jurisdictional effective tax rate with the 15% minimum rate.
If the UAE effective tax rate is below 15%, the percentage-point shortfall is generally applied to the group’s excess profit after the Substance-based Income Exclusion. Safe harbours, de minimis rules and other adjustments may reduce the amount to zero. It is therefore more accurate to describe DMTT as a minimum-tax calculation than as a flat 15% tax on all UAE profit.
A few plain definitions make the rest of this guide easier to follow.
- Multinational enterprise (MNE) group. A group containing at least one entity or permanent establishment outside the jurisdiction in which its Ultimate Parent Entity is located. A single entity with permanent establishments in other jurisdictions can also form an MNE Group.
- Constituent Entity. An entity belonging to an MNE Group, or a permanent establishment of a group entity, excluding an entity treated as an Excluded Entity under the rules.
- Ultimate Parent Entity. Generally, the entity at the top of the ownership chain that is required to consolidate the group and is not itself controlled by another entity. For a group consisting of one entity and foreign permanent establishments, it can be the Main Entity.
- Effective tax rate (ETR). The MNE Group’s Adjusted Covered Taxes in the UAE divided by its Net Pillar Two Income in the UAE, after the adjustments required by the DMTT rules. It is not simply cash tax paid divided by accounting profit.
- Top-up tax. The additional amount calculated under the DMTT rules where the UAE jurisdictional ETR is below the 15% minimum, subject to exclusions, safe harbours and other adjustments.
The Ministry of Finance describes the DMTT as part of the UAE’s implementation of the OECD Two-Pillar Solution, a project developed through the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting.
How the DMTT Connects to Pillar Two in the UAE
Pillar Two is the international minimum-tax framework developed through the OECD/G20 Inclusive Framework. The UAE DMTT is the UAE’s domestic implementation of the minimum-tax component of the GloBE rules; Pillar Two is not a local UAE name for the DMTT.
The UAE is not an OECD member, but it participates in the OECD/G20 Inclusive Framework. As of January 2026, the Inclusive Framework comprised 147 countries and jurisdictions working on the global minimum-tax package.
The principal GloBE collection mechanisms are:
- A Domestic Minimum Top-up Tax or Qualified Domestic Minimum Top-up Tax. This allows the jurisdiction where low-taxed profits arise to collect the top-up tax first.
- The Income Inclusion Rule (IIR). This generally allows a parent entity’s jurisdiction to collect top-up tax relating to low-taxed foreign Constituent Entities.
- The Undertaxed Profits Rule (UTPR). This is a backstop that can allocate remaining top-up tax to implementing jurisdictions when it has not been collected under a Qualified IIR.
Pillar Two also includes the treaty-based Subject to Tax Rule, which applies separately to certain intragroup payments taxed below the applicable nominal minimum rate.
At this stage, the UAE has implemented its DMTT but has not introduced an IIR or UTPR. The Ministry of Finance specifically explains that the decision not to introduce an IIR at this stage reflects the absence of a controlled foreign company regime in the UAE Corporate Tax system. The Ministry will continue monitoring whether an IIR should be introduced in the future.
By collecting qualifying domestic top-up tax itself, the UAE protects its first taxing right over in-scope UAE profits rather than leaving that top-up tax to be collected under another jurisdiction’s GloBE rules.
What Are the GloBE Rules?
GloBE stands for Global Anti-Base Erosion. The GloBE Model Rules provide the detailed framework used to identify in-scope groups, calculate Pillar Two income, determine Adjusted Covered Taxes, calculate a jurisdictional ETR and work out any top-up tax.
The rules form part of a coordinated minimum-tax system. They are broader than rules that merely prevent profit shifting and can produce a top-up-tax outcome even without a finding that a group shifted profit improperly.
The Ministry of Finance confirms that the UAE DMTT is closely aligned with the GloBE Model Rules, Commentary and Agreed Administrative Guidance issued by the OECD.
That alignment has already received international recognition. On 25 August 2025, the Ministry of Finance announced that the UAE DMTT had been included in the OECD’s Central Record with Transitional Qualified Status and had also qualified for the OECD Pillar Two safe harbour. This means other implementing jurisdictions generally recognise the UAE’s qualified domestic top-up-tax outcome in accordance with the safe-harbour rules, reducing duplicate calculations and the risk of competing top-up-tax claims.
Is There a 15% Corporate Tax in the UAE?
Not for most businesses. For ordinary taxable persons, the UAE Corporate Tax rates are 0% on taxable income up to and including AED 375,000 and 9% on taxable income above AED 375,000. A Qualifying Free Zone Person can benefit from 0% on Qualifying Income, while taxable income that is not Qualifying Income is generally subject to 9%.
The 15% figure is different. It is the minimum rate used in the DMTT calculation for MNE Groups meeting the Pillar Two revenue threshold. It is not a general increase in the UAE Corporate Tax rate.
Corporate Tax is calculated first under the UAE Corporate Tax rules. DMTT then performs a separate GloBE calculation using Pillar Two Income or Loss and Adjusted Covered Taxes. If the jurisdictional ETR is below 15%, a top-up tax may arise on excess profit after the Substance-based Income Exclusion. Because the Corporate Tax and Pillar Two tax bases differ, the DMTT is not simply a fixed surcharge on the Corporate Tax liability.
Which Multinational Enterprises Pay This Tax in the UAE?
The DMTT reaches a narrow category of large multinational groups rather than the general UAE business population. It applies to relevant UAE Constituent Entities, Joint Ventures and JV Subsidiaries of MNE Groups that meet the consolidated revenue test. It can apply to entities in UAE free zones, including Qualifying Free Zone Persons.
The following are generally within scope when the group meets the revenue test:
- UAE companies and permanent establishments belonging to an in-scope MNE Group.
- Free zone entities and Qualifying Free Zone Persons belonging to such a group. The 0% rate on Qualifying Income does not by itself remove an entity from the DMTT calculation.
- A relatively small UAE subsidiary or branch where the wider multinational group crosses the EUR 750 million threshold.
The following are generally outside scope:
- Standalone UAE companies that operate only in the UAE and do not have foreign permanent establishments.
- Purely domestic groups whose entities and permanent establishments are all located in the UAE.
- Businesses that are not members of an MNE Group meeting the EUR 750 million revenue threshold.
- Excluded Entities, including qualifying governmental entities, international organisations, non-profit organisations, pension funds, and certain investment funds or real-estate investment vehicles that are Ultimate Parent Entities, together with certain entities they own.
An Investment Entity located in the UAE is not itself subject to DMTT, although specialised rules can still affect its owners and the wider group.
The rules also contain transitional relief for an MNE Group in the initial phase of its international activity. This relief reduces the calculated UAE top-up tax to zero rather than removing the group from scope. Conditions include operating in no more than six jurisdictions, holding no more than EUR 50 million of tangible assets outside the reference jurisdiction, satisfying the Qualified-IIR ownership condition and remaining within the applicable time limit.
If your UAE entities belong to a larger international group, our transfer pricing team can help you map which entities are in scope and how their profits are taxed.
The EUR 750 Million Threshold Explained
The consolidated revenue threshold determines whether the DMTT can apply to the MNE Group. It is measured at group level rather than separately for each UAE entity.
Look at the Consolidated Financial Statements of the Ultimate Parent Entity. If the MNE Group recorded annual revenue of EUR 750 million or more in at least two of the four financial years immediately preceding the tested financial year, the group meets the threshold. Where a relevant financial year is shorter or longer than 12 months, the threshold is adjusted proportionately.
A few practical points help here:
- The threshold looks at consolidated group revenue worldwide, not UAE revenue alone.
- It uses a two-out-of-four-year test, so one high-revenue year does not ordinarily bring a group into scope by itself.
- A small UAE company can still be in scope if it belongs to a sufficiently large international group.
- Special rules apply to mergers, acquisitions, demergers and groups that have not existed for the full four-year testing period.
Because the test sits at group level, the UAE DMTT can apply to a modest local subsidiary of a very large overseas parent. This is exactly the kind of situation that can surprise local finance teams, so early checking pays off.
How the DMTT Is Calculated, Step by Step
The detailed calculation contains numerous adjustments and elections, but its basic order can be explained clearly.
- Determine Pillar Two Income or Loss. Start with the relevant financial accounting result of each UAE Constituent Entity and make the adjustments required by the DMTT rules.
- Calculate Adjusted Covered Taxes. Identify current and deferred Covered Taxes and apply the prescribed additions, reductions and allocation rules.
- Measure the UAE jurisdictional ETR. Divide the group’s aggregate Adjusted Covered Taxes in the UAE by its Net Pillar Two Income in the UAE. UAE entities are generally blended for this purpose, but separate-calculation rules apply to categories including Investment Entities, Stateless Constituent Entities, Joint Venture Groups and certain Minority-owned Entities or Subgroups.
- Calculate the top-up-tax percentage. If the ETR is below 15%, the positive percentage-point difference between 15% and the ETR is the top-up-tax percentage.
- Calculate excess profit. Subtract the Substance-based Income Exclusion from Net Pillar Two Income.
- Calculate the top-up tax. Multiply the top-up-tax percentage by excess profit and add any Additional Current Top-up Tax. Safe harbours, de minimis rules and other provisions can reduce the amount payable.
In simplified form:
ETR = Adjusted Covered Taxes ÷ Net Pillar Two Income
Top-up-tax percentage = 15% − ETR
Excess profit = Net Pillar Two Income − Substance-based Income Exclusion
Top-up tax = (Top-up-tax percentage × Excess profit) + Additional Current Top-up Tax
What Is the Substance-based Income Exclusion?
The Substance-based Income Exclusion reduces the profit to which the top-up-tax percentage is applied. It is based on eligible payroll costs and the carrying value of eligible tangible assets in the UAE.
For fiscal years beginning in 2026, the transitional percentages are 9.4% of eligible payroll costs and 7.4% of the carrying value of eligible tangible assets. These percentages decline gradually until both reach 5% for fiscal years beginning in 2033.
The exclusion recognises substantive economic activity, but it does not change the jurisdictional ETR itself. Instead, it reduces excess profit after the ETR and top-up-tax percentage have been calculated.
A Simple Worked Example
Imagine an in-scope MNE Group with Net Pillar Two Income of 100 in the UAE, a UAE jurisdictional ETR of 10%, and a Substance-based Income Exclusion of 20.
- The top-up-tax percentage is 5%, being the difference between 15% and 10%.
- Excess profit is 80, being 100 minus the Substance-based Income Exclusion of 20.
- The preliminary top-up tax is therefore 4, being 5% of 80, before any Additional Current Top-up Tax, safe harbour, de minimis rule or other adjustment.
This is why modelling your numbers early is so valuable, and it is work our corporate tax advisers do alongside your group tax team.
Top-up Tax Return Filing: Registration and Deadlines
Top-up-tax registration and filing are separate from the normal UAE Corporate Tax return. The relevant UAE entities must determine their registration, return, information-reporting and payment obligations under the DMTT rules.
Registration
Top-up-tax registration is administered through the FTA’s EmaraTax platform. Under Federal Tax Authority Decision No. 12 of 2026, an entity subject to DMTT must apply to register within seven months after the end of the first financial year in which it comes into scope.
A transitional rule applies where the first in-scope financial year ended before 30 April 2026. Those entities have until 30 November 2026 to register. This means that an entity with a first in-scope financial year ending on 31 December 2025 has a registration deadline of 30 November 2026.
Where the conditions are satisfied, the relevant UAE members can appoint a Domestic Designated Filing Entity to undertake specified registration, filing and payment actions on their behalf.
Filing the Returns
The Top-up Tax Return is generally due no later than 15 months after the last day of the Reporting Fiscal Year. Where the Reporting Fiscal Year is the first Transition Year of any Constituent Entity in the MNE Group, the Top-up Tax Return deadline is extended to 18 months.
The Pillar Two Information Return is a separate information-reporting obligation under Article 15 of Cabinet Decision No. 142 of 2024. The published Cabinet Decision gives it a 15-month deadline and states that the entities required to file it will be specified by ministerial decision. Groups should therefore monitor subsequent Ministry and FTA decisions rather than assuming that the 18-month Top-up Tax Return extension automatically applies to the separate information return.
For a group with a 31 December 2025 year-end, where 2025 is its first UAE Transition Year:
- Top-up Tax Return: 30 June 2027.
- Pillar Two Information Return: under the currently published 15-month rule, 31 March 2027 where a UAE filing obligation applies, subject to any subsequent implementing decision or FTA instruction.
These filings require extensive entity, accounting, tax and election data. Groups should begin data collection and modelling well before the deadlines.
Penalty Relief for the Early Years
The UAE rules contain conditional transitional penalty relief. For fiscal years beginning on or before 31 December 2026, but not including a fiscal year ending after 30 June 2028, no penalties or sanctions apply in connection with filing the Top-up Tax Return or Pillar Two Information Return where the FTA considers that the MNE Group took reasonable measures to apply the rules correctly.
This relief depends on the FTA’s assessment of the group’s efforts. It is not a general exemption from compliance or from every possible penalty.
If you would like a registered tax agent to manage registration and returns for your UAE entities, our registered tax agents can act on your behalf before the FTA.
The Latest DMTT Updates in 2026
The UAE has continued updating its DMTT framework. These are the developments that matter as of 11 August 2026.
- Registration deadlines have been issued. FTA Decision No. 12 of 2026 establishes the seven-month registration deadline, the 30 November 2026 transitional deadline, deregistration deadlines and related procedures. Registration is administered through EmaraTax.
- The UAE DMTT has qualified status and safe-harbour recognition. The Ministry of Finance announced in August 2025 that the UAE DMTT had obtained OECD Transitional Qualified Status and qualified for the Pillar Two safe harbour.
- The UAE has adopted the latest OECD materials. Ministerial Decision No. 96 of 2026, issued on 22 June 2026, adopts the 2026 Consolidated Commentary, the relevant 2026 Administrative Guidance and Central Record, and the January 2025 GloBE Information Return. It applies to fiscal years starting on or after 1 January 2025 and repeals Ministerial Decision No. 88 of 2025.
- The UAE has launched Phase 1 of its R&D Tax Incentives Programme. For tax periods or fiscal years beginning on or after 1 January 2026, eligible businesses can claim a non-refundable Research and Development tax credit of up to 50% on qualifying expenditure of up to AED 5 million, subject to detailed expenditure, staffing, approval and compliance conditions. The credit may be used against Corporate Tax and/or Top-up Tax and may be carried forward or transferred where the statutory conditions are met.
- Small Business Relief has been extended separately. On 7 August 2026, the Ministry of Finance announced that Ministerial Decision No. 131 of 2026 had extended Small Business Relief to qualifying tax periods ending on or before 31 December 2029. Eligible Resident Persons must have revenue of no more than AED 3 million in the current and every previous tax period. Qualifying Free Zone Persons and members of MNE Groups with consolidated revenue exceeding AED 3.15 billion cannot elect for this relief.
The DMTT began applying to relevant fiscal years in 2025. For many calendar-year groups, 2026 is the first major registration, data-gathering and compliance-preparation year before the first Top-up Tax Returns become due in 2027.
What the DMTT Means for Your Business
For most UAE businesses, the headline is reassuring. A standalone business operating only in the UAE, or a purely domestic group with no foreign permanent establishments, does not meet the definition of an MNE Group. However, a business is not outside DMTT merely because its UAE operations are small: a modest UAE subsidiary can be in scope when its wider international group meets the EUR 750 million threshold.
For the UAE arm of a large international group, the work is real and time-sensitive. You need to confirm whether the group crosses the threshold, identify every UAE entity and permanent establishment, calculate the UAE jurisdictional ETR, check whether a safe harbour or exclusion applies, and meet the registration and filing deadlines.
This is where Bestax helps. As an FTA-registered tax agency in Business Bay, Dubai (Tax Agency Approval Number 30008692, Tax Agent Number 20052643), we support the UAE entities of multinational groups from initial scoping through compliance.
- Scope assessment. We confirm whether your group and its UAE entities fall within the DMTT.
- Effective tax rate modelling. We calculate your UAE jurisdictional ETR and model any likely top-up alongside your global tax team.
- Registration and filing. We support EmaraTax registration and the applicable filings for your UAE members.
- Free zone and transfer pricing alignment. We review how your free zone position and related-party pricing interact with the new rules, drawing on our transfer pricing services and our guide to advance pricing agreements.
Every engagement is handled by a named specialist, priced as a fixed fee agreed in writing before work starts, and reviewed at senior level. With more than 10 years in the UAE, over 35 professionals, more than 10,000 clients, and a 4.8 out of 5 rating across more than 200 Google reviews as reported in August 2026, we help groups pay exactly what the law requires and not a dirham more.
Quick FAQs
What is the Domestic Minimum Top-up Tax in the UAE?
It is the UAE’s domestic Pillar Two top-up tax for in-scope MNE Groups. It tests the UAE jurisdictional ETR against the 15% minimum and can impose top-up tax on excess profit after the Substance-based Income Exclusion. It applies to financial years starting on or after 1 January 2025 under Cabinet Decision No. 142 of 2024.
Who has to pay the DMTT in the UAE?
Relevant UAE entities of an MNE Group can be subject to DMTT where the group’s consolidated global revenue was EUR 750 million or more in at least two of the four immediately preceding financial years. A Domestic Designated Filing Entity may undertake specified filing and payment obligations on behalf of eligible UAE group members.
Is there a 15% Corporate Tax in the UAE?
Not for most businesses. Ordinary UAE Corporate Tax rates remain 0% on taxable income up to and including AED 375,000 and 9% on taxable income above that threshold. The 15% rate is the minimum rate used in the separate DMTT calculation for in-scope MNE Groups.
What is the EUR 750 million threshold for the top-up tax?
It is the consolidated revenue test used to determine whether an MNE Group is within scope. The group generally qualifies where worldwide consolidated revenue reached EUR 750 million or more in at least two of the four financial years immediately preceding the tested year, subject to special rules for short years and group restructurings.
Does the DMTT apply to UAE free zone companies?
Yes, where the free zone company belongs to an in-scope MNE Group and is not otherwise excluded. The 0% Corporate Tax rate on Qualifying Income does not itself remove a Qualifying Free Zone Person from the DMTT rules.
Is the DMTT the same as Pillar Two?
No. Pillar Two is the wider international framework. The UAE DMTT is the UAE’s domestic implementation of its GloBE minimum-tax component. The principal GloBE mechanisms include a DMTT or QDMTT, the IIR and the UTPR, while Pillar Two also contains the treaty-based Subject to Tax Rule.
What are the GloBE rules?
GloBE stands for Global Anti-Base Erosion. The rules explain how to identify in-scope groups, calculate Pillar Two Income or Loss and Adjusted Covered Taxes, determine jurisdictional effective tax rates, and calculate top-up tax. The UAE DMTT is closely aligned with them.
When do I need to register for the top-up tax?
An entity subject to DMTT generally must apply to register through EmaraTax within seven months after the end of its first in-scope financial year. Entities whose first in-scope year ended before 30 April 2026 have until 30 November 2026 under the transitional rule.
When is the first Top-up Tax Return due?
The Top-up Tax Return is generally due within 15 months after the Reporting Fiscal Year, extended to 18 months where that year is the first Transition Year of any Constituent Entity in the MNE Group. For a group with a 31 December 2025 year-end whose first UAE Transition Year is 2025, the Top-up Tax Return is due on 30 June 2027. The separate Pillar Two Information Return is subject to its own rules and currently has a 15-month statutory deadline.
What happens if my group’s UAE ETR is 15% or higher?
Under the basic jurisdictional calculation, no percentage-based top-up tax ordinarily arises where the ETR is at least 15%. Filing obligations can still apply, and specialised rules, including Additional Current Top-up Tax adjustments, must still be considered.
Does the DMTT replace the 9% UAE Corporate Tax?
No. Corporate Tax and DMTT are separate regimes. Corporate Tax is calculated under the UAE Corporate Tax Law, after which the DMTT performs a separate GloBE calculation for an in-scope MNE Group.
Do small businesses in the UAE pay the DMTT?
A standalone small business operating only in the UAE will ordinarily be outside DMTT because it is not part of an in-scope MNE Group. However, the size of the UAE entity alone is not decisive: a small local subsidiary can be in scope where its wider MNE Group meets the EUR 750 million threshold. Small Business Relief is a separate Corporate Tax relief and is not available to members of large MNE Groups.
Disclaimer: The information provided in this blog is for general informational purposes only. For professional assistance and advice, please contact experts.
