The Ministry of Finance has issued Cabinet Decision No. 142 of 2024, introducing the Top-up Tax for Multinational Enterprises. This decision outlines the UAE Domestic Minimum Top-up Tax (UAE DMTT) and follows the Ministry’s announcement on 9 December 2024.
Aligned with the OECD’s GloBE Model Rules, the UAE DMTT applies to multinational enterprise (MNE) entities operating in the UAE with annual global revenues of at least €750 million in the consolidated financial statements of the Ultimate Parent Entity in at least two of the four financial years preceding the applicable year.
The UAE DMTT incorporates a Substance-based Income Exclusion, reducing the net Pillar Two income subject to tax based on payroll and the carrying value of tangible assets. It also allows a de minimis exclusion, setting the UAE DMTT at zero for entities meeting specific criteria. To maintain the UAE’s competitiveness, Investment Entities are exempt from the tax.
As a transitional measure, the UAE will not impose DMTT during the initial phase of an MNE Group’s international activity, provided a parent entity subject to a Qualified Income Inclusion Rule in another jurisdiction does not own any UAE-based entity.
