UAE to Introduce 15% Minimum Tax for Large Multinationals — What It Means for Your Group

Clearly, The United Arab Emirates has confirmed it will apply a 15% Domestic Minimum Top-Up Tax (DMTT) to certain multinational enterprise (MNE) groups for financial years beginning on or after 1 January 2025. On top of that , In plain terms, if your consolidated group is above the €750 million revenue threshold, the UAE will ensure your effective tax rate (ETR) on UAE profits does not fall below 15%—and if it does, a top-up tax will bring it up to that level. Over and beyond that , this protects the UAE tax base from other countries applying their own top-up taxes to UAE profits and aligns the UAE with the OECD/G20 Pillar Two rules .

Therefore, Below, we unpack the essentials—practical readiness steps,, interaction with Pillar Two, timing, scope, and what finance teams should prioritise before the first reporting cycle bites.

The headline changes at a glance

Start date: Apparently, after 1 January 2025 or Financial years beginning on .

• Who’s in scope: Normally, Constituent Entities of MNE groups with global revenue ≥ €750m in at least two of the four preceding financial years. Consequently, Purely domestic UAE groups are out of scope because Pillar Two targets multinationals.
• Rule chosen: Apparently,The UAE is enforcing a Qualified Domestic Minimum Top-Up Tax (its DMTT) closely aligned to the GloBE Model Rules. On top of that ,at this stage, the UAE has not implemented the Income Inclusion Rule (IIR); instead, it focuses on the domestic top-up so other countries do not collect tax on UAE profits first.
• Policy context: consequently ,Cabinet Decision No. 142 of 2024 implements the DMTT; the Ministry of Finance followed with guidance through 2025 and detailed FAQs. Get details on Freezone Accounting Ajman.

Why this matters now

Because the DMTT applies by jurisdiction, groups will be assessed on their UAE GloBE ETR using Pillar Two mechanics. If the computed ETR falls below 15%, a UAE top-up will be due in the UAE. Crucially, that minimises exposure to foreign top-up taxes under other countries’ IIR or UTPR rules. In practice, the DMTT keeps the taxing right at home and simplifies dispute risk across multiple tax authorities.

Interaction with existing UAE corporate tax and Free Zones

The UAE’s general corporate tax rate remains 9% for many taxpayers; however, Pillar Two works differently. It looks at a GloBE ETR after specific adjustments—so some groups can still end up below 15% once incentives, timing differences, and covered taxes are recalculated under the GloBE rules. Where that happens, the DMTT bridges the gap to 15%.
What about Free Zone entities? Qualifying Free Zone regimes may deliver 0% or reduced corporate tax outcomes under domestic rules, but the Pillar Two calculation can still impose a top-up if the GloBE ETR drops below 15%. Groups should not assume Free Zone incentives will automatically carry through under Pillar Two without consequence. (The Ministry of Finance materials make clear the DMTT is aligned to GloBE and is intended to protect the UAE tax base where ETRs fall short.)

Thresholds & Scope:- do we meet the €750m test?

Pillar Two applies where the Ultimate Parent Entity reports €750m+ in consolidated revenue in at least two of the four financial years prior to the tested year. If your group meets this test, each UAE Constituent Entity—even a small service entity—must be included in the UAE jurisdictional computation. That includes JVs and certain reverse hybrids in the UAE if they meet the definitional tests. Conversely, purely domestic UAE groups with no foreign presence are out of scope.

Effective date and compliance timeline

For groups with calendar year ends, the first in-scope year is FY2025. That means:

• Data collection must begin 1 January 2025 .
• Provisioning: consider Q4 2025 estimates for top-up tax in consolidated financials.
• First filings/payments: expect 2026 compliance deadlines—leave time for GloBE information returns, DMTT filings and inter-company settlement mechanics.

Professional firms expect detailed return formats to follow the Cabinet Decision and MoF FAQs.

What counts toward the 15%?

Under GloBE, “covered taxes” are counted against GloBE income to compute a jurisdictional ETR. Adjustments can be significant:

• Deferred tax is included (with caps and recapture rules).
• Exclusions such as the Substance-based Income Exclusion (SBIE) reduce the tax base for routine returns on payroll and tangible assets.
• Consolidation and blending occur by jurisdiction, not entity-by-entity.

Because the UAE has chosen a DMTT, the top-up will be collected domestically when the UAE ETR is below 15%, limiting foreign claims via IIR/UTPR. Looking for a Accounting for SHCC Companies?

Implications for finance leaders

• Map your Pillar Two footprint. Identify UAE Constituent Entities, permanent establishments, and JV stakes that fall into the Pillar Two net. (Some structures you assumed were “minor” can move the ETR needle.)
• Dry-run the GloBE ETR. Don’t rely on the statutory 9% headline rate. Model FY2025 using GloBE rules and estimate any top-up exposure under the DMTT. Advisory alerts and the MoF FAQs give the technical scaffolding to do this credibly.
• Data, systems, controls. GloBE needs granular data: deferred taxes, covered taxes, entity classifications, and substance-based calculations. Map your sources (ERP, tax packs, local ledgers) and set controls now.
• Cash-flow planning. Top-ups may change intercompany pricing for tax sharing, and they can influence dividend or capital planning. Build cash-flow buffers for 2026 payment dates.
• Narrative & governance. Disclose Pillar Two risks and assumptions in management reports and audit committee packs. The global minimum tax standard is fast becoming an investor and lender question—not just a tax footnote.

How this aligns with the global picture

More than 140 jurisdictions backed the OECD Two-Pillar Solution; a critical mass has now legislated Pillar Two. The UAE’s DMTT places it among adopters using a domestic top-up to anchor tax rights locally. That move both aligns with international standards and supports non-oil revenue goals while maintaining the UAE’s competitiveness narrative. Consequently,Recent alerts and trackers from major firms confirm the 1 January 2025 start and the use of Cabinet Decision No. 142 of 2024 to implement the rules. Looking for a Accounting for Ajman Media City Companies?

Practical actions for CFOs before year-end

• Confirm scope against the €750m test and document the conclusion.
• Run a shadow GloBE computation for UAE 2025 using best-available data, then sanity-check with external advisors.
• Stress-test Free Zone impacts: where triggers a UAE top-up,check whether GloBE ETR slips below 15% and incentives lower the statutory bill,.
• Review tax provisioning policies;also align your group tax sharing agreement to allocate any DMTT fairly.
• Moreover, Prepare a filing calendar for 2026, including payments, DMTT returns, and information returns; also assign owners across legal, finance, and tax,.
• Engage the Board: Generally ,brief directors on reputational angles, compliance risk,focusing on cash, and Pillar Two posture, .

Related Articles:

» Different Parts of Tax Returns Under UAE Corporate Tax

» Accounting for SAIF Free Zone Companies

» Accounting for SRTIP Free Zone Companies

» Al Zorah Free Zone Accounting

» Accounting for SRTIP Free Zone Companies

What Sharp Accounting can do

Sharp Accounting, help multinational groups prepare GloBE/DMTT filings, model ETRs, and design data pipelines. More than that , we pressure-test craft Board-ready narratives,align tax-sharing and transfer-pricing mechanics, and Free Zone structures, . Therefore, If you need a rapid FY2025 dry-run, we can deploy a standardised workbook backed by current MoF guidance and globally consistent assumptions.

Final word

The UAE’s 15% minimum tax marks a decisive shift from rate competition to rules-based outcomes. Because the DMTT keeps top-up tax onshore, in-scope groups should quantify exposure early, tune data processes, and prepare for a fresh compliance cycle in 2026. Do the groundwork now, and you’ll approach Pillar Two with clarity rather than scramble.