UAE Domestic Minimum Top-up Tax Services

The introduction of the Domestic Minimum Top-up Tax (DMTT) in the United Arab Emirates represents an important development in the international corporate taxation framework. The measure forms part of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Pillar Two initiative, which aims to establish a minimum effective tax rate for large multinational enterprise (MNE) groups operating across different jurisdictions.

The UAE introduced its Domestic Minimum Top-up Tax regime for financial years beginning on or after 1 January 2025. The regime generally applies to multinational enterprise groups with consolidated annual revenue of at least EUR 750 million in at least two of the four financial years immediately preceding the relevant financial year, subject to the applicable rules and exclusions.

At Gupta Accountants, we assist multinational groups and UAE-based entities in assessing their potential DMTT exposure, understanding group-level requirements, reviewing financial and tax information, and preparing for the relevant compliance obligations.

Our services focus on evaluating applicability, reviewing data readiness, identifying potential effective tax rate considerations and supporting businesses in understanding the UAE Pillar Two framework.

What Is the UAE Domestic Minimum Top-up Tax?

The Domestic Minimum Top-up Tax is the UAE's implementation of the minimum taxation framework under OECD Pillar Two.

The regime is designed to ensure that qualifying multinational groups are subject to a minimum effective tax rate of 15% on their profits in each relevant jurisdiction.

Where the effective tax rate of UAE constituent entities is below the minimum rate, a top-up tax calculation may result in an additional tax liability.

The UAE introduced its DMTT for financial years beginning on or after 1 January 2025. The framework is based on Cabinet Decision No. 142 of 2024 and subsequent implementing decisions and guidance.

Which Businesses Are Subject to UAE DMTT?

The UAE DMTT generally applies to constituent entities located in the UAE that are members of an in-scope multinational enterprise group.

The principal revenue threshold is:

• Consolidated annual group revenue of at least EUR 750 million.

• The threshold must be met in at least two of the four fiscal years immediately preceding the relevant fiscal year.

• Revenue is assessed by reference to the consolidated financial statements of the Ultimate Parent Entity.

• The rules apply to relevant UAE constituent entities, subject to applicable exclusions and special provisions.

Being part of a large multinational group does not automatically mean that every UAE entity will have a top-up tax liability. The effective tax rate, covered taxes, applicable exclusions and other Pillar Two adjustments must also be considered.

Key Areas of UAE Pillar Two Compliance

1. Multinational Group Scope Assessment

Determine whether the multinational group meets the consolidated revenue threshold and identify the UAE entities potentially covered by the DMTT regime.

2. Effective Tax Rate Assessment

Review the relevant financial accounting income, covered taxes and required adjustments to assess the jurisdictional effective tax rate against the 15% minimum rate.

3. Top-up Tax Calculation

Assess whether additional tax arises after considering the applicable GloBE adjustments, substance-based income exclusion, safe harbours and other relevant provisions.

4. Group Structure and Entity Identification

Identify the Ultimate Parent Entity, Intermediate Parent Entities, constituent entities, joint ventures and other relevant entities within the group structure.

5. Financial Data Readiness

Review whether accounting systems and reporting processes can provide the financial and tax information required for Pillar Two calculations.

6. Registration and Filing Requirements

Identify the relevant UAE registration, notification, information return and DMTT filing obligations, including the responsibilities of the designated filing entity where applicable.

Our UAE Domestic Minimum Top-up Tax Services

Gupta Accountants assists multinational groups and UAE constituent entities in understanding their potential Pillar Two exposure and preparing for the UAE DMTT compliance framework.

Our services include:

1. DMTT Applicability Assessment

We review the multinational group's consolidated revenue, financial reporting structure and UAE presence to assess whether the group falls within the scope of UAE Domestic Minimum Top-up Tax.

2. Group Structure Review

We examine the multinational group's ownership structure and identify relevant UAE constituent entities, permanent establishments, joint ventures and other entities requiring consideration under the Pillar Two rules.

3. Effective Tax Rate Review

We assist in reviewing financial accounting income, covered taxes and relevant adjustments to evaluate the effective tax rate for UAE constituent entities.

4. Top-up Tax Exposure Assessment

We assist in evaluating potential additional tax liabilities by considering the applicable minimum rate, substance-based income exclusion, available safe harbours and other relevant adjustments.

5. Financial Data Readiness Assessment

We review the availability and quality of accounting, tax and group reporting information required for Pillar Two calculations and identify potential data gaps.

6. Pillar Two Data Collection and Reconciliation

We assist in identifying relevant information from financial statements, tax records, consolidation reports and supporting schedules and reconciling the information required for DMTT calculations.

7. UAE DMTT Registration Assistance

We assist businesses in understanding applicable registration requirements, identifying the relevant filing entity and preparing supporting information for the registration process.

8. DMTT Calculation and Documentation

We assist in organising the information required for the DMTT calculation and documenting relevant tax adjustments, assumptions and supporting schedules.

9. Pillar Two Information Return Support

We assist in understanding the applicable Pillar Two Information Return requirements and identifying relevant group-level information required for reporting.

10. DMTT Return Filing and Compliance Assistance

We provide assistance with understanding applicable return preparation, filing and payment requirements under the UAE DMTT framework.

UAE DMTT Registration and Compliance Requirements

The UAE Pillar Two framework includes specific administrative requirements for entities falling within its scope.

In October 2026, the FTA issued a Scope and Registration Guide providing further guidance on determining whether multinational groups fall within the regime, identifying covered entities and understanding registration obligations.

Businesses should consider the following areas:

• Registration: Determine which UAE entities are required to register for DMTT purposes.

• Filing Entity: Identify the entity responsible for coordinating relevant group-level filing obligations.

• Entity Information: Maintain accurate information regarding UAE constituent entities and their group relationships.

• Financial Data: Maintain relevant financial accounting and tax information for DMTT calculations.

• Pillar Two Reporting: Assess the requirement to submit a Pillar Two Information Return.

• Tax Return and Payment: Understand applicable DMTT return submission and tax payment deadlines.

• Record Keeping: Retain supporting information and calculations in accordance with applicable requirements.

Important: Registration and reporting obligations should be assessed separately from whether a particular UAE entity ultimately has additional DMTT payable.

UAE DMTT Calculation and Effective Tax Rate

Calculating the Domestic Minimum Top-up Tax involves more than comparing the standard UAE Corporate Tax rate with the 15% minimum rate.

The Pillar Two calculation follows specific accounting and tax adjustments under the GloBE rules.

Important calculation areas include:

1. Financial Accounting Income

Determine the relevant financial accounting income or loss of each constituent entity using the applicable accounting standards and consolidation information.

2. Adjusted Covered Taxes

Review taxes included within the Pillar Two covered tax calculation and identify relevant adjustments.

3. Effective Tax Rate Calculation

Calculate the jurisdictional effective tax rate by comparing adjusted covered taxes with the relevant net GloBE income.

4. Substance-Based Income Exclusion

Consider the applicable payroll and tangible asset carve-outs when determining the income subject to potential top-up tax.

5. Top-up Tax Percentage

Determine the difference between the applicable effective tax rate and the 15% minimum rate, subject to the relevant GloBE calculation rules.

6. Final Top-up Tax Liability

Consider the applicable exclusions, adjustments, additional current top-up tax and other relevant provisions when determining the final amount payable.

UAE Pillar Two Safe Harbours and Exclusions

The UAE DMTT framework incorporates certain exclusions and relief mechanisms that may affect the calculation of additional tax.

Businesses should consider the following:

• De Minimis Exclusion: May apply where the relevant revenue and income conditions are satisfied.

• Substance-Based Income Exclusion: Provides an exclusion based on qualifying payroll costs and tangible assets.

• Transitional Country-by-Country Reporting Safe Harbour: May simplify calculations for qualifying groups during the applicable transitional period.

• Transitional Relief: Certain transitional provisions may apply to qualifying multinational groups.

• Excluded Entities: Certain entities, including qualifying government entities, international organisations and investment funds, may fall within specific exclusions, subject to the applicable conditions.

Eligibility for these provisions should be assessed against the relevant UAE legislation and OECD guidance.

Documents and Information Required for UAE DMTT Assessment

An effective Pillar Two assessment requires financial and tax information from both the UAE entities and the wider multinational group.

Depending on the circumstances, the following information may be required:

• Consolidated financial statements of the Ultimate Parent Entity.

• Group organisational and ownership structure.

• Details of UAE constituent entities.

• Financial statements of UAE group companies.

• Trial balances and general ledger information.

• Details of current and deferred tax expenses.

• Corporate Tax returns and tax payment information.

• Details of permanent differences and temporary differences.

• Related-party transaction information.

• Payroll and employee cost information.

• Tangible fixed asset schedules.

• Country-by-Country Reporting information, where available.

• Previous Pillar Two calculations and supporting schedules.

• Information relating to applicable safe harbour elections and exclusions.

The information required will depend on the group's structure, reporting framework and applicable Pillar Two requirements.

UAE Domestic Minimum Top-up Tax Compliance Process

Gupta Accountants follows a structured approach to assisting businesses with their UAE DMTT requirements.

Step 1 – Initial Group Assessment

Review the multinational group's consolidated revenue and determine whether the relevant threshold is met.

Step 2 – UAE Entity Identification

Identify the UAE constituent entities, permanent establishments and other relevant group entities.

Step 3 – Financial Data Review

Examine available financial statements, accounting records, tax information and group reporting data.

Step 4 – Effective Tax Rate Assessment

Review the relevant income and covered taxes to assess the UAE jurisdictional effective tax rate.

Step 5 – Relief and Safe Harbour Review

Consider applicable exclusions, substance-based income exclusion and transitional safe harbour provisions.

Step 6 – DMTT Calculation

Assist in evaluating the potential top-up tax exposure based on the applicable rules and available information.

Step 7 – Registration and Reporting

Identify the relevant registration, filing and information reporting requirements.

Step 8 – Ongoing Compliance Support

Assist with maintaining relevant records and addressing DMTT compliance requirements for subsequent financial years.

Why Choose Gupta Accountants for UAE Pillar Two Services?

The UAE Domestic Minimum Top-up Tax framework requires coordination between group financial reporting, tax calculations and entity-level compliance.

Gupta Accountants assists businesses in understanding their potential exposure and preparing for the relevant compliance requirements.

Our approach focuses on:

• Applicability Assessment: Reviewing multinational group revenue and identifying potentially covered UAE entities.

• Technical Tax Review: Considering applicable UAE DMTT legislation and OECD Pillar Two guidance.

• Financial Data Analysis: Reviewing accounting and tax information required for effective tax rate calculations.

• Tax Exposure Assessment: Identifying potential top-up tax liabilities and applicable relief provisions.

• Compliance Preparation: Supporting registration, reporting and documentation requirements.

• Practical Guidance: Helping businesses understand their responsibilities under the UAE minimum tax framework.

Frequently Asked Questions – UAE Domestic Minimum Top-up Tax

1. What is the UAE Domestic Minimum Top-up Tax?

The UAE Domestic Minimum Top-up Tax is a tax introduced under the OECD Pillar Two framework to ensure that qualifying multinational enterprise groups are subject to a minimum effective tax rate of 15% on relevant profits in the UAE.

2. When did the UAE Domestic Minimum Top-up Tax become effective?

The UAE DMTT applies to financial years beginning on or after 1 January 2025.

3. Which multinational groups are subject to UAE DMTT?

The regime generally applies to multinational enterprise groups with consolidated annual revenue of at least EUR 750 million in at least two of the four financial years immediately preceding the relevant financial year, subject to applicable conditions and exclusions.

4. Does the UAE DMTT apply to all companies in the UAE?

No. The regime is primarily relevant to UAE constituent entities belonging to multinational groups meeting the applicable revenue threshold. Ordinary domestic businesses that are not members of qualifying multinational groups are generally outside its scope.

5. What is the minimum effective tax rate under Pillar Two?

The minimum effective tax rate under the OECD Pillar Two framework is 15%. Where the calculated effective tax rate is below this threshold, a top-up tax may arise after considering applicable adjustments and exclusions.

6. Is the UAE Corporate Tax rate of 9% sufficient to meet the Pillar Two minimum tax rate?

Not necessarily. The standard UAE Corporate Tax rate and the Pillar Two effective tax rate are calculated differently. The Pillar Two calculation considers adjusted financial accounting income, covered taxes and other prescribed adjustments. Therefore, a UAE entity paying Corporate Tax at 9% may still require a DMTT assessment.

7. What is the difference between DMTT and Pillar Two?

Pillar Two is the broader OECD global minimum taxation framework. DMTT is a domestic mechanism through which a jurisdiction collects additional tax on qualifying low-taxed profits within its territory. The UAE introduced its DMTT as part of this framework.

8. What is the revenue threshold for UAE DMTT?

The threshold is EUR 750 million in consolidated annual revenue in at least two of the four fiscal years immediately preceding the relevant fiscal year, based on the Ultimate Parent Entity's consolidated financial statements.

9. Does a UAE business need to register if no additional top-up tax is payable?

The registration requirement is not determined solely by whether additional tax is payable. An entity may have registration obligations even where its final DMTT liability is nil. The applicable requirements should be assessed under the FTA registration rules.

10. What is a Pillar Two Information Return?

The Pillar Two Information Return is a reporting document containing information relevant to the multinational group's application of the GloBE rules, including group structure, calculations and other prescribed tax information.

11. Can a multinational group benefit from transitional safe harbours?

Yes. Qualifying multinational groups may benefit from transitional safe harbour provisions, including the Country-by-Country Reporting safe harbour, where the applicable conditions are satisfied.

12. Can Gupta Accountants assist with UAE DMTT compliance?

Yes. Gupta Accountants can assist with assessing DMTT applicability, reviewing multinational group structures, identifying financial data requirements, evaluating potential tax exposure and supporting relevant registration and compliance processes.

Contact Gupta Accountants for UAE Domestic Minimum Top-up Tax Assistance

The UAE Domestic Minimum Top-up Tax introduces additional considerations for multinational groups with operations in the country.

Understanding the applicable revenue threshold, group structure, effective tax rate and reporting requirements is important for identifying potential tax exposure and preparing for compliance.

Gupta Accountants assists businesses with UAE DMTT applicability assessments, Pillar Two data readiness, tax calculations and related compliance requirements.

Contact Gupta Accountants to discuss your multinational group's UAE Domestic Minimum Top-up Tax requirements and obtain professional assistance.

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