UAE DMTT 2026: The 15% Top-Up Tax for Large Multinational Enterprises

The Domestic Minimum Top-up Tax (DMTT) is a UAE tax topping up the effective tax rate to 15%, introduced by Cabinet Decision No. 142 of 2024 and applicable for financial years beginning on or after 1 January 2025. It applies only to multinational groups with consolidated annual revenue of €750 million or more in at least two of the preceding four financial years. This implements the OECD/G20 Pillar Two global standard (GloBE Model Rules). For the vast majority of small and medium-sized businesses, this tax does not apply — the €750m threshold filters out everything except the largest-scale groups.

⚠ IMPORTANT for free zone companies: QFZP status and the 0% Corporate Tax rate do NOT automatically exempt a company from DMTT. The Pillar Two effective tax rate calculation is separate from the Corporate Tax calculation.

1. The Legal Basis

On 11 February 2025, the UAE Ministry of Finance released Cabinet Decision No. 142 of 2024 on the Imposition of Top-up Tax on Multinational Enterprises. The Decision implements powers inserted into Federal Decree-Law No. 47 of 2022 (the Corporate Tax Law) earlier via Federal Decree-Law No. 60 of 2023. The official Ministry of Finance announcement came on 9 December 2024, preceded by public consultations in October 2023 and March 2024.

Ministerial Decision No. 88 of 2025 adopted the OECD’s GloBE commentary and administrative guidance into UAE law, along with the mandatory GloBE Information Return (GIR) filing format. In August 2025, the UAE achieved OECD Transitional Qualified Status — this secures QDMTT Safe Harbour protection: other jurisdictions (such as the home country of the ultimate parent entity under an IIR rule) will not separately re-tax UAE profits, provided the UAE filing is made on time and correctly.

⚠ IIR (Income Inclusion Rule) and UTPR (Undertaxed Profits Rule) are the other Pillar Two charging mechanisms. The UAE has chosen not to introduce either at this stage, since the UAE Corporate Tax system has no controlled foreign company (CFC) regime. This remains under ongoing review by the Ministry of Finance.

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2. Who Falls Within Scope

Group type	In scope of DMTT
Multinational group with revenue ≥ €750m in 2 of the last 4 fiscal years	Yes, regardless of where the parent company is located
Group with revenue < €750m	No, outside DMTT scope
QFZP, effectively paying 0% Corporate Tax	Not automatically excluded — the Pillar Two ETR calculation differs from Corporate Tax
Investment Entities	No, excluded
Government entities, international organisations, NPOs, pension funds, certain investment/real estate funds	No, excluded
UAE-headquartered group with no operations outside the UAE	No, DMTT does not apply to groups with a UAE parent and no foreign operations

The key threshold is consolidated group revenue of €750 million or more in any 2 of the preceding 4 financial years. It does not matter where the ultimate parent entity is incorporated — in the UAE or abroad — what matters is having at least one Constituent Entity located in the UAE. Importantly, the threshold can also be triggered by a merger, acquisition, or demerger affecting the group’s structure, not only by organic revenue growth — Cabinet Decision No. 142 of 2024 sets out separate testing rules for these scenarios.

✅ Initial Phase Exclusion for groups in the early stage of international expansion: no top-up tax for up to 5 years if the group operates in 6 or fewer jurisdictions, tangible assets outside the highest-value jurisdiction are below €50 million, and no group member applies an IIR. The return must still be filed — the tax is simply nil.

3. The Rate and Calculation Formula

Top-up Tax = (15% − UAE ETR) × Excess Profit, where Excess Profit = Pillar Two Income − Substance-based Income Exclusion (SBIE). An Additional Current Top-up Tax may be added for prior-period adjustments.

Worked example (from BDO’s official explainer): UAE Pillar Two Income of AED 100 million, actual ETR of 6%. The gap to 15% is 9 percentage points. Assuming Excess Profit after SBIE comes to AED 80 million: Top-up Tax = 9% × AED 80m = AED 7.2 million per year.

Substance-based Income Exclusion (SBIE)

SBIE removes from the tax base the portion of income tied to genuine economic substance in the UAE: a payroll carve-out and a tangible asset carve-out. Enhanced transitional rates apply through 2032 (starting at 9.6% of payroll and 7.6% of assets, stepping down annually to the permanent 5%/5% rates). Companies with real headcount and office space in the UAE benefit from SBIE far more than holding structures with no genuine activity.

4. Safe Harbours: Who Can Skip the Full Calculation

•       Transitional CbCR Safe Harbour. Tax is deemed nil where qualifying UAE revenue is under €10 million or average income is under €1 million. Applies to fiscal years starting before 1 January 2027 and ending before 1 July 2028. Requires qualified CbCR.

•       Permanent Simplified Calculations Safe Harbour. Applies on a permanent basis if the Routine Profits Test (income ≤ SBIE) or the ETR Test (simplified effective rate ≥ 15%) is met.

•       Permanent De-Minimis Exclusion. Nil by annual election where average UAE Pillar Two revenue is below €10 million and average income is below €1 million.

⚠ Safe harbours do not exempt a group from registration and filing — they only zero out the liability itself. Eligibility must be assessed and elected each year.

5. Filing Deadlines

Event / document	Deadline (fiscal year ending 31 Dec 2025)
Corporate Tax return (9 months)	30 September 2026
DMTT return + GIR, first (transitional) year, 18 months	30 June 2027
DMTT return, subsequent years, 15 months	31 March of the year following year-end

⚠ The DMTT filing deadline is NOT synchronised with Corporate Tax. The transitional (first) year carries an extended 18-month window instead of the standard 15. For a group with a fiscal year ending 31 December 2025, this gives a deadline of 30 June 2027 — 9 months after the Corporate Tax deadline for the same year. This is the single most common first-cycle error observed by practitioners: assuming the DMTT deadline mirrors the Corporate Tax 9-month deadline simply because both run through EmaraTax. They are separate forms on separate calendars.

Two documents are filed: the Top-up Tax return itself and the GloBE Information Return (GIR) — the OECD’s standardised template, published in January 2025 and adopted into UAE law via Ministerial Decision No. 88 of 2025. Registration with the FTA runs through EmaraTax — it is recommended not to delay registration past the end of the financial year giving rise to the obligation. Update: as of May 2026, the FTA has already opened the Pillar Two registration function within EmaraTax, though specific registration deadlines and detailed penalty guidance have not yet been published. Registration is required separately for each Constituent Entity in the UAE; where a group has more than one, it must designate a Filing Constituent Entity to coordinate a single submission.

6. The Link to Corporate Tax: Two Separate Calculations

Corporate Tax and DMTT are not mutually exclusive — they are two parallel tracks. The Corporate Tax return produces the tax payable at the 9% rate (or 0% for a QFZP). The DMTT return produces a top-up amount to 15% if the actual Pillar Two rate comes out lower. Corporate Tax already paid is one of the Covered Taxes inputs to the DMTT ETR calculation — the tax is not duplicated; it is topped up to 15% only where the rate falls short.

ℹ For a group with a 6% UAE ETR and Pillar Two Income of AED 100 million: the Corporate Tax return already shows tax paid; the DMTT return adds the gap to 15%, calculated under GloBE rules that differ from the Corporate Tax profit calculation.

7. Penalties for Non-Compliance

The penalty regime for DMTT sits on the same foundation as Corporate Tax: Cabinet Decision No. 75 of 2023, as amended by Cabinet Decision No. 129 of 2025 (effective 14 April 2026). A dedicated DMTT-specific penalty schedule is expected to be published by the FTA as the regime matures.

✅ Relief window: no penalties apply for filing the DMTT return or the Pillar Two information return for periods beginning on or before 31 December 2026 and ending before 30 June 2028, provided the group has taken reasonable measures to comply correctly with the UAE DMTT rules.

8. Step-by-Step Action Plan for Groups

1.     Check group revenue over the preceding 4 financial years — did it reach €750m in at least two of them.

2.     List all Constituent Entities in the UAE and designate a Filing Constituent Entity to coordinate the submission.

3.     Calculate the UAE effective tax rate (ETR) under GloBE methodology — separately from the Corporate Tax calculation.

4.     Check eligibility for safe harbours: Transitional CbCR, Simplified Calculations, De-Minimis, Initial Phase Exclusion.

5.     Prepare qualified CbCR data in advance — a precondition for the Transitional CbCR Safe Harbour.

6.     Register with the FTA via EmaraTax before the end of the relevant financial year.

7.     File the DMTT return and the GIR on time (18 months for the first year, 15 months thereafter).

9. Risks of Getting This Wrong

•       Assuming QFZP status automatically shields a group from DMTT. 0% Corporate Tax and a Pillar Two ETR ≥ 15% are different calculations entirely. A QFZP can still fall under top-up tax.

•       Assuming the DMTT deadline matches the Corporate Tax deadline. For FY2025, the gap is 9 months — September 2026 versus June 2027.

•       Leaving data preparation until the deadline. The GIR requires data drawn from finance, legal, and tax functions well in advance.

•       Ignoring interaction with the ultimate parent’s jurisdiction. A late or incomplete UAE filing can put the Safe Harbour at risk, allowing the IIR jurisdiction to collect the tax itself.

FAQ

Does DMTT apply to small and medium-sized businesses?

No. The tax applies only to groups with consolidated revenue of €750 million or more in at least 2 of the preceding 4 financial years.

Can a QFZP fall within DMTT scope?

Yes. The 0% Corporate Tax rate does not guarantee a Pillar Two ETR of 15% or higher — the two calculations differ.

What happens if a group fails to register in time?

The general UAE administrative penalty framework applies (Cabinet Decision No. 75 of 2023, as amended by No. 129 of 2025); a DMTT-specific penalty schedule is expected from the FTA as the regime matures.

Does DMTT affect a business with no foreign operations?

No. If the group is headquartered in the UAE and has no operations outside the country, DMTT does not apply to it.

Key Takeaways

•       DMTT: Cabinet Decision No. 142 of 2024, effective 1 January 2025, effective rate of 15%.

•       Threshold: group revenue ≥ €750m in 2 of the preceding 4 financial years.

•       QFZP and other preferential regimes do not automatically exempt a group.

•       FY2025 deadline: 30 June 2027 (18-month transitional window).

•       SBIE and three safe harbours can reduce tax to nil, but filing remains mandatory.

•       The UAE applies only QDMTT — no IIR or UTPR at this stage.

Summary

The Domestic Minimum Top-up Tax (DMTT) is a UAE tax with an effective rate of 15%, introduced by Cabinet Decision No. 142 of 2024 and applicable for financial years beginning on or after 1 January 2025. It applies only to multinational groups with consolidated revenue of €750 million or more in any 2 of the preceding 4 financial years, implementing the OECD Pillar Two global standard (GloBE Model Rules). Formula: Top-up Tax = (15% − UAE ETR) × (Pillar Two Income − Substance-based Income Exclusion). For a group with a fiscal year ending 31 December 2025: FTA registration and the first DMTT return plus GloBE Information Return are due by 30 June 2027 (an extended 18-month window for the transitional year). QFZPs and other preferential tax regimes do not automatically exempt a group from DMTT.

Sources

• Cabinet Decision No. 142 of 2024 on the Imposition of Top-up Tax on Multinational Enterprises, full text (tax.gov.ae)

• Ministry of Finance UAE — UAE Domestic Minimum Top-up Tax, official page (mof.gov.ae)

• EY — UAE issues domestic minimum top-up tax legislation (February 2025) (ey.com)

• DLA Piper — UAE announces Domestic Minimum Top-up Tax effective 1 January 2025 (December 2024) (dlapiper.com)

• PwC — UAE implements Pillar Two (2025) (pwc.com)

• KPMG — The UAE unpacks its Pillar Two rules (August 2025) (kpmg.com)

Disclaimer

This material is for informational purposes only and does not constitute legal, tax, financial, investment, or consulting advice. Before making any decisions, obtain individual professional advice tailored to your group's specific structure, jurisdiction, and current regulatory requirements. Information is accurate as of June 2026.