Insights · UAE Tax
UAE Domestic Minimum Top-up Tax 2026: The 15% Rule, Registration and First Returns
The UAE Domestic Minimum Top-up Tax applies to UAE entities of multinational groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding financial years, for financial years starting on or after 1 January 2025. It raises the group’s UAE effective tax rate to 15%, including income taxed at 0% in free zones. Under FTA Decision No. 12 of 2026, calendar-year groups must register by 30 November 2026. The first Top-up Tax Return is due by 30 June 2027.
This guide is for finance and tax leads of UAE subsidiaries, branches and free zone entities in large multinational groups. It covers who is in scope, how the 15% calculation treats free zone income and Small Business Relief, and the registration and filing deadlines now set.
| Rule | Position at 2 October 2026 |
|---|---|
| Legal basis | Federal Decree-Law No. 60 of 2023 and Cabinet Decision No. 142 of 2024 |
| Start date | Financial years starting on or after 1 January 2025 |
| Who is in scope | Multinational groups with consolidated revenue of EUR 750 million or more in 2 of the 4 preceding years |
| Minimum rate | 15% effective tax rate on the group’s UAE profits, worked out for all UAE entities together |
| Registration | Within 7 months of the first in-scope year end; 30 November 2026 where that year ended before 30 April 2026 |
| Top-up Tax Return | 15 months after the year end; 18 months for the first year (30 June 2027 for calendar 2025) |
| Pillar Two Information Return | Filed in the UAE unless the parent or a designated entity files in a country with a qualifying agreement |
| OECD status | Transitional qualified status, announced by the Ministry of Finance on 25 August 2025 |
Who Is in Scope and How the 15% Is Calculated
Federal Decree-Law No. 60 of 2023, issued on 2 October 2023, amended the Corporate Tax Law so that the Cabinet could impose a top-up tax on multinational enterprises under the OECD’s Pillar Two rules, bringing their effective tax rate to 15%. Cabinet Decision No. 142 of 2024 then brought the Domestic Minimum Top-up Tax into force for financial years starting on or after 1 January 2025. According to the Ministry of Finance, the rules closely follow the OECD GloBE Model Rules, commentary and administrative guidance, which the Ministry has adopted by ministerial decision.
A group is in scope if its ultimate parent’s consolidated financial statements show revenue of EUR 750 million or more in at least two of the four financial years immediately before the year tested. The group must be multinational: a purely domestic UAE group, with no entity or permanent establishment abroad, is outside. In an in-scope group, the tax reaches UAE constituent entities, permanent establishments and joint ventures. Government entities, international organisations, non-profit bodies, pension funds and investment entities are excluded, although their revenue still counts towards the EUR 750 million test.
The UAE effective tax rate is calculated for all of the group’s UAE entities together, using GloBE income and covered taxes rather than corporate tax figures. Where it falls below 15%, top-up tax is charged on the excess profit, which is GloBE income after a substance-based exclusion linked to payroll and tangible assets. The Ministry of Finance has confirmed that the UAE has not introduced an income inclusion rule, so it does not tax low-taxed profits of foreign subsidiaries of UAE-headed groups. The top-up tax reaches only profits earned in the UAE.
Free Zones, Small Business Relief and Incentives
The top-up tax does not change a Qualifying Free Zone Person’s 0% corporate tax rate. But its qualifying income enters the UAE effective tax rate calculation with little or no tax attached. In a group whose UAE profit sits mainly in free zone entities, the combined rate can fall well below 15%, and the top-up tax makes up the difference. Free zone entities must still meet the corporate tax conditions, including substance and transfer pricing compliance, to keep the 0% rate. In-scope groups therefore run both tests each year.
Small Business Relief rarely overlaps. The Federal Tax Authority confirms that it cannot be elected by a Qualifying Free Zone Person or by a member of a multinational group with consolidated revenue above AED 3.15 billion. Groups near the EUR 750 million line should retest scope every year, because the two-of-four rule can bring a group in or take it out. Under FTA Decision No. 12 of 2026, an entity whose group leaves scope files an out-of-scope notification within six months of the end of the year tested.
When it announced the top-up tax in December 2024, the Ministry of Finance also announced plans for an expenditure-based research and development tax credit and a refundable tax credit for high-value employment costs. Reports since then differ on how far these have been implemented and on their final terms. Under Pillar Two rules, the design of a credit, including whether it is refundable, decides how far it reduces top-up tax. Confirm the published position with the FTA before counting either credit in a forecast.
Practical Steps Before 30 November 2026
- Test consolidated revenue for the four years before each tested year (2021 to 2024 for a 2025 year) against EUR 750 million, and keep the working.
- List every UAE constituent entity, permanent establishment and joint venture, including free zone and dormant entities.
- Decide whether to register entity by entity or through one designated filing entity, and register on EmaraTax by 30 November 2026 for a calendar 2025 year.
- Register even if no top-up tax is expected, for example because a safe harbour applies.
- Confirm whether the ultimate parent will file the Pillar Two Information Return in a country with a qualifying competent authority agreement with the UAE, and notify the FTA of the filer.
- Build the UAE calculation from reporting packages: GloBE income, covered taxes, payroll and tangible assets.
- Diarise 30 June 2027 for the first Top-up Tax Return.
Frequently asked questions
When does a UAE entity have to register for Domestic Minimum Top-up Tax?
Under FTA Decision No. 12 of 2026, an in-scope entity must register within seven months of the end of its first financial year in scope. Where that year ended before 30 April 2026, the deadline is 30 November 2026, which covers groups with a 31 December 2025 year end. Registration is made on EmaraTax, entity by entity or through one designated filing entity, and is needed even when no top-up tax is due.
When is the first UAE Top-up Tax Return due?
The Top-up Tax Return is due 15 months after the end of the financial year, extended to 18 months for the first year a group is in scope. For a group with a calendar 2025 financial year, that means 30 June 2027. UAE entities must also file a Pillar Two Information Return, unless the parent or a designated filing entity files one in a country that has a qualifying competent authority agreement with the UAE.
Does the 15% top-up tax apply to Qualifying Free Zone Persons?
It can. A Qualifying Free Zone Person in an in-scope group keeps its 0% corporate tax rate on qualifying income, but that income is included when the group’s UAE effective tax rate is calculated. If the combined UAE rate falls below 15%, top-up tax is charged on the excess profit. Free zone companies in purely domestic groups, or in groups below the EUR 750 million revenue threshold, are outside the top-up tax.
Which groups are outside the UAE Domestic Minimum Top-up Tax?
Groups that did not reach EUR 750 million of consolidated revenue in at least two of the four preceding financial years are outside, as are purely domestic UAE groups with no entity or permanent establishment abroad. Within an in-scope group, government entities, international organisations, non-profit bodies, pension funds and investment entities are excluded. The UAE has not adopted the income inclusion rule, so the tax covers only profits earned in the UAE.
Sources
Figures in this article were checked against these sources on 2 October 2026. Rates, fees and deadlines change, so confirm the current position with the authority before acting.
- UAE Ministry of Finance, Top-up tax
- UAE Ministry of Finance, Federal Decree-Law No. 60 of 2023 amending the corporate tax law
- Federal Tax Authority (UAE), Corporate tax legislation
- Federal Tax Authority (UAE), Corporate tax guides and references
- UAE Ministry of Finance, Ministerial Decision No. 133 of 2026 on the Pillar Two return
- UAE Ministry of Finance, OECD transitional qualified status for the UAE DMTT
