UAE Domestic Minimum Top-up Tax (DMTT) 2026: Pillar Two & the 15% Rate

• 09 July, 2026
• By Safvan, Managing Partner
• Corporate Tax

Last reviewed 2 August 2026 by the Exiloz tax team against the UAE legislation in force on that date. Tax law moves, confirm any figure against tax.gov.ae before you act on it.

A 15% minimum tax, but only for the giants

From financial years starting on or after 1 January 2025, the UAE applies a Domestic Minimum Top-up Tax (DMTT) that lifts the effective tax rate of large multinational groups to a 15% floor. It is the UAE's implementation of the OECD's Pillar Two. The critical point for most readers: it only touches groups with consolidated revenue of at least EUR 750 million. If that is not you, your rate stays at 0% (as a QFZP) or 9%, nothing changes. If you would rather not handle this in house, this is what our UAE corporate tax rates covers.

The DMTT exists for a strategic reason. Under Pillar Two, if a big group is taxed below 15% in the UAE, another country could collect the shortfall. By charging its own top-up, the UAE keeps that revenue at home instead of surrendering it abroad.

Who Is Actually In Scope

How the Top-up Is Calculated

The top-up simply closes the gap to 15%. You compute a jurisdictional effective tax rate (ETR), covered taxes divided by GloBE income for all UAE entities combined. A substance-based income exclusion first strips out a routine return on payroll and tangible assets, so only "excess" profit is exposed. If the UAE ETR is below 15%, the top-up percentage applies to that excess.

Why a 9% Rate Can Still Trigger a Top-up

Here is the subtle part for in-scope groups: the headline 9% corporate tax rate does not guarantee a 15% ETR. Incentives, exempt income, or 0% qualifying free zone income can pull the effective rate below 15%, and that shortfall is exactly what the DMTT collects. The real work is not the arithmetic; it is assembling GloBE-standard data across the whole group in time to file.

What In-Scope Groups Should Do Now

1. Confirm scope by testing consolidated revenue against EUR 750 million.
2. Register the UAE constituent entities for the top-up tax.
3. Build the GloBE data process across every entity and jurisdiction.
4. Model the UAE ETR to see whether a top-up arises, before filing.
5. Prepare the GloBE information return and meet the DMTT deadlines.

A Worked Example of the Top-up Arithmetic

The mechanics are easier to see with numbers. Take an in-scope group whose UAE entities together earn GloBE income of AED 400 million in a period, with covered taxes of AED 24 million. The jurisdictional ETR is 24 ÷ 400 = 6%, nine percentage points short of the 15% floor. Suppose the substance-based income exclusion strips out AED 80 million as a routine return on payroll and tangible assets, leaving excess profit of AED 320 million. The top-up is then 9% of AED 320 million.

The figures are illustrative, a real computation starts from accounting profit with prescribed adjustments and depends on the group's actual payroll and asset base. But the shape of the calculation is always the same: measure the gap to 15%, remove the routine return, and apply the gap percentage to what is left. Notice how the substance carve-out rewards genuine UAE operations: the larger the group's real payroll and tangible assets here, the smaller the excess profit exposed to the top-up.

Four Misconceptions That Catch In-Scope Groups

Am I In Scope? Three Quick Scenarios

A standalone Dubai LLC with healthy but domestic revenue is not in scope, however profitable it is. The DMTT applies to multinational groups, and the revenue test sits at consolidated group level, a single UAE company with no foreign group above it keeps its 0% or 9% position and files nothing new.

A UAE-headquartered group with overseas subsidiaries is multinational, but it still escapes if consolidated revenue stays below EUR 750 million in at least two of the four preceding financial years. Groups growing towards that line should start tracking the test now, because it looks backwards over four years.

A UAE subsidiary of a large foreign multinational is the classic in-scope case, even where the UAE presence is a single small entity. Scope is decided by the global group's consolidated revenue, not by the size of the UAE operation, and it is usually the local finance team that is asked to produce GloBE-standard data at short notice.

Which safe harbours can spare you the full calculation?

For the first years, the transitional CbCR safe harbour lets an in-scope group skip the full GloBE computation for a jurisdiction if its qualified country-by-country report passes any one of three tests: the de minimis test (jurisdiction revenue below EUR 10 million and profit below EUR 1 million), the simplified ETR test, or the routine-profits test. Pass one, and the top-up for that jurisdiction is deemed zero for the period, a dramatically lighter compliance load.

Two catches make early planning essential. The safe harbour is assessed jurisdiction by jurisdiction, so the UAE can qualify while other group locations do not. And it follows a “once out, always out” principle: skip or fail the safe harbour for a jurisdiction in one year, and it is generally unavailable there in every later year. In-scope groups should therefore check their CbCR data quality now, the safe harbour is only as reliable as the report behind it.

Frequently Asked Questions

Where this comes from

Every figure above traces to a named instrument. Check them yourself before you act, and check the date, because UAE tax law has moved twice in the last year.