UAE Domestic Minimum Top-up Tax (DMTT): The 15% Rule for Groups

UAE Domestic Minimum Top-up Tax: The Short Answer

The UAE Domestic Minimum Top-up Tax (DMTT) is a 15% minimum tax on the UAE profits of very large multinational groups. It applies only when the group’s consolidated revenue reaches EUR 750 million. If your group is smaller, it does not apply to you.

The headlines can still worry founders and finance leads of foreign-owned groups with a UAE subsidiary. You hear about the UAE Domestic Minimum Top-up Tax, and you wonder whether your 9% corporate tax or your 0% free zone position is at risk. For most readers, the answer is no.

This guide covers who is in scope, how the top-up works, what it does to free zone treatment, and when to register and file. I used the Cabinet Decision text, Ministry of Finance material and published professional-firm summaries, and I flag the points I could not verify at source.

Where the 15% Rule Comes From

The UAE Domestic Minimum Top-up Tax is the UAE’s version of the OECD global minimum tax, often called Pillar Two. Under that model, countries agree that large groups should pay at least 15% tax on profits in every country where they operate.

The UAE already taxed businesses at 9%, with 0% for qualifying free zone income. That is below 15%. Without a local top-up, another country could collect the difference from the group’s parent. A domestic minimum tax lets the UAE collect it first.

The legal basis is Cabinet Decision No. 142 of 2024 on the Imposition of Top-up Tax on Multinational Enterprises, issued on 31 December 2024. It applies to fiscal years beginning on or after 1 January 2025. The Ministry of Finance released the English text in February 2025. The decision itself is short. The detailed rules sit in its annexure, which, as I read the EY tax alert on the Cabinet Decision, is intended to align with the OECD model rules.

In practice, the UAE Domestic Minimum Top-up Tax works as a supplementary tax. It does not replace corporate tax. It collects only the shortfall between what the group’s UAE entities pay and the 15% floor.

Who Is in Scope of the UAE Domestic Minimum Top-up Tax

Scope for the UAE Domestic Minimum Top-up Tax is decided at group level, not company level. A UAE company is affected only if it is a member of a multinational group that meets the revenue test.

For the UAE Domestic Minimum Top-up Tax, the revenue figure is the consolidated revenue in the ultimate parent’s accounts, not the UAE subsidiary’s own turnover. A UAE company with AED 5 million of revenue can still be in scope if it belongs to a group that reports EUR 800 million worldwide.

The UAE Domestic Minimum Top-up Tax test looks back over four years, so a group that dips below the line for one year can stay in scope. Mergers, demergers and new acquisitions have special rules. Groups close to the threshold should model the figures each year rather than assume they are out.

Branches count too. If a foreign group runs the UAE business through a branch, that branch can be treated as a permanent establishment of the group in the UAE. Our branch versus subsidiary guide explains the legal difference. For this tax, the safer assumption is that the choice does not remove you from scope.

Why Most SMEs Are Out of Scope

The EUR 750 million line for the UAE Domestic Minimum Top-up Tax sits far above the size of nearly every owner-managed company. A founder who set up a UAE company for consulting, trading or e-commerce will almost certainly never meet it.

Three common situations are clearly outside the UAE Domestic Minimum Top-up Tax:

• A standalone UAE company with no foreign parent group, whatever its revenue.
• A UAE company in a small or mid-sized group with consolidated revenue below EUR 750 million.
• An individual or family with several small companies that do not form a group above the threshold.

Do not confuse this with Small Business Relief. That is a separate corporate tax relief with its own, much smaller, revenue limit. Being eligible for it, or not, tells you nothing about the DMTT, and the reverse is also true.

If you are out of scope, there is no registration and no return for the UAE Domestic Minimum Top-up Tax. The practical step is to record your reasoning: the group chart, the consolidated revenue for the relevant years and the date you tested it. A one-page note is enough for most files.

How the Top-up Is Calculated

The UAE Domestic Minimum Top-up Tax calculation follows the global minimum tax model. I describe it in simplified form here, because the full rules run to many pages of adjustments.

1. Work out the group’s qualifying profit in the UAE under the global minimum tax rules, starting from the accounting profit.
2. Work out the taxes counted against that profit, mainly UAE corporate tax.
3. Divide the taxes by the profit to get the UAE effective tax rate.
4. If the rate is below 15%, take the gap and apply it to the excess profit.

The UAE entities of a group are pooled into one calculation. A high-tax entity can therefore offset a low-tax one inside the same group. The excess profit is the profit left after a carve-out based on payroll and tangible assets, which rewards real activity in the country.

Here is a purely illustrative example, ignoring the carve-out and every adjustment. The figures are invented to show the mechanics, not to predict anyone’s bill.

The carve-out reduces the real figure in cases one and two. Even so, the table shows why the UAE Domestic Minimum Top-up Tax is a tax on low-taxed profit, not a second tax on every dirham.

What It Means for Free Zone 0% Treatment

The UAE Domestic Minimum Top-up Tax does not cancel the 0% rate in the free zone law. A qualifying free zone entity still applies the 0% rate to its qualifying income, as the corporate tax rules provide. The change is on the group side: the zero tax counts as a low effective rate, and the shortfall can be charged as top-up.

That is the reason sources say free zone entities are not excluded. A group with a free zone operating company, a mainland sales company and a holding structure has to look at the whole UAE position together. Our Qualifying Free Zone Person rules article explains how the 0% status is earned and lost, and that is the first layer you must get right.

For a free zone business that is not part of a large group, nothing changes. Standalone companies and small groups keep the 0% treatment they qualify for, subject to the usual conditions.

Groups should also check how intra-group charges affect UAE profit. The price of services, royalties and loans between members changes where profit lands, so the same data feeds both UAE transfer pricing files and DMTT work. A consistent set of numbers saves time later.

Reliefs and Safe Harbours

The Cabinet Decision includes UAE Domestic Minimum Top-up Tax reliefs that can reduce the top-up to zero in defined cases. EY lists three:

• Transitional country-by-country reporting safe harbour: on election, and if conditions are met, the UAE top-up can be deemed zero for fiscal years starting before 1 January 2027, within an end-date limit in mid-2028. It relies on qualified country-by-country reporting.
• Simplified calculation safe harbours: permanent options that avoid the full calculation when their tests are met.
• Initial phase of international activity: the UAE top-up is nil if the group has entities in no more than six jurisdictions and its tangible assets outside the largest jurisdiction do not exceed EUR 50 million. It lasts up to five years.

EY also reports a penalty relief. No penalty applies for filing the DMTT return or the information return for periods beginning on or before 31 December 2026, provided the group took reasonable measures to apply the rules correctly. That relief has an end date too, so read the exact wording.

Registration and Filing Timeline

Registration is separate from corporate tax registration. Even a company that already has a corporate tax number must register for the UAE Domestic Minimum Top-up Tax on the FTA’s EmaraTax portal if its group is in scope.

For most in-scope groups with a 31 December year end, the transitional date of 30 November 2026 is the one that matters. At the time of writing in November 2026, that date is close. The KPMG summary of FTA Decision No. 12 of 2026 also describes in-scope and out-of-scope notifications. An out-of-scope notice can cover up to five consecutive fiscal years while the position does not change.

One entity can act for the group. A domestic designated filing entity can register, file and pay for the UAE members. The payment is due with the return, so the cash planning starts well before the filing date. A separate Pillar Two information return also applies, and groups should confirm who files it and when.

5 Steps for a UAE Subsidiary of a Large Group

If you are the finance lead of a UAE subsidiary, a short checklist keeps UAE Domestic Minimum Top-up Tax work moving.

1. Confirm scope with head office. Ask for the consolidated revenue for the last four years and whether the group has already tested for the UAE Domestic Minimum Top-up Tax.
2. Map your UAE entities. List mainland companies, free zone companies and branches, with the tax status of each.
3. Check the registration date. Work out your first in-scope fiscal year and the matching deadline, including 30 November 2026 if it applies.
4. Agree the filing entity. Decide who registers, files and pays, and who holds the data.
5. Model the exposure. Ask whether a safe harbour can apply, and estimate the top-up before the return, not after.

Parent companies usually lead UAE Domestic Minimum Top-up Tax work, because the numbers come from group consolidation. The UAE subsidiary’s job is to make sure the local data is accurate and the local registration is not missed.

If your structure includes several entities and you are unsure which ones count, a structure review is worth doing before the deadline. Our business setup service covers how the UAE entities of a group are set up and documented.

Limits of This Article

I read the text of the Cabinet Decision on the Ministry of Finance site and relied on published summaries from EY and KPMG for the annexure rules, the filing deadlines and FTA Decision No. 12 of 2026. I did not open the decision itself or the FTA’s own scope and registration guides, so treat the deadlines as reported, not confirmed at source.

I did not verify the exact penalty relief end dates, the safe harbour conditions or how the FTA treats branches in every case. This is general information, not legal or tax advice. Rules for the UAE Domestic Minimum Top-up Tax are still being developed, so confirm your position with a licensed adviser before you register or file.

FAQ

What is the UAE Domestic Minimum Top-up Tax?

UAE Domestic Minimum Top-up Tax is an extra tax on large multinational groups. It makes sure the profits of their UAE entities bear an effective tax rate of at least 15%. It applies to fiscal years starting on or after 1 January 2025 and sits on top of the normal 9% corporate tax.

Does the UAE Domestic Minimum Top-up Tax (DMTT) apply if my group earns less than EUR 750 million?

Generally no. The rules apply to multinational groups with consolidated revenue of at least EUR 750 million in two of the four fiscal years before the tested year. A group below that line is outside the regime, although it should still document why in case a lender or auditor asks.

Do free zone companies pay the UAE Domestic Minimum Top-up Tax?

They can. A free zone entity is not excluded just because it holds Qualifying Free Zone Person status. If it belongs to an in-scope group, its 0% income pulls the UAE effective rate below 15%, and the gap may be collected as top-up tax. Standalone free zone companies are not affected.

How is the top-up tax calculated?

The group works out the UAE effective tax rate by dividing taxes paid by UAE profit under the global minimum tax rules. If the rate is under 15%, the gap is applied to the excess profit after a substance-based carve-out. A 0% free zone result leaves the largest gap.

When must an in-scope UAE entity register for the UAE Domestic Minimum Top-up Tax?

Under FTA Decision No. 12 of 2026, as summarised by KPMG, registration is due within seven months of the end of the first in-scope fiscal year. Entities with a fiscal year ending before 30 April 2026 have until 30 November 2026. Registration is done on EmaraTax.

When is the DMTT return due?

EY reports that the return is due within 15 months after the fiscal year end, or 18 months for the first year. The tax is paid with the return. A separate Pillar Two information return also exists. Confirm both dates against the current FTA guidance before you plan a calendar.

Can one UAE entity file for the whole group?

Yes. The framework allows a domestic designated filing entity to register, file and pay for the group’s UAE entities. Groups can also file entity by entity. Choose one filing entity early, because it needs the data and the authority to act for every UAE member.

Your Next Step

Not sure which of your UAE entities fall under the UAE Domestic Minimum Top-up Tax? Ask us to review your UAE structure with our business setup team. We can map your entities, check how they sit in the group and help you prepare the registration details before the deadline.