UAE Top-up Tax: Which MNE Groups Must Register, and by What Deadline?

What Is the UAE Top-up Tax and Which MNE Groups Does It Cover?

The UAE Top-up Tax is the country’s version of the OECD’s Pillar Two global minimum tax initiative, known internationally as the Qualified Domestic Minimum Top-up Tax, or QDMTT. It was introduced through Cabinet Decision No. 142 of 2024 on the Imposition of Top-up Tax on Multinational Enterprises, which amended Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The rules apply to Fiscal Years beginning on or after 1 January 2025.

The purpose of the Top-up Tax is straightforward. Under the OECD’s Pillar Two framework, large multinational groups are expected to pay an effective tax rate of at least 15% on the profits they generate in each jurisdiction where they operate. Where a group’s effective tax rate in a given country falls below that floor, a top-up amount becomes due. The UAE has chosen to collect that top-up amount itself, through its own domestic legislation, rather than allow another country to collect it under the Income Inclusion Rule or the Undertaxed Profits Rule. This is an important distinction: the UAE has only implemented the Domestic Minimum Top-up Tax mechanism. It has not adopted the Income Inclusion Rule or the Undertaxed Profits Rule locally, which means the UAE retains the taxing right over low-taxed profits generated within its own borders rather than ceding that revenue to a foreign tax authority.

The Top-up Tax is a separate charge from Corporate Tax. A UAE entity can be fully compliant with Federal Decree-Law No. 47 of 2022 and still fall within the Top-up Tax regime if it is part of a large enough multinational group. The two regimes are assessed independently, and a 0% Corporate Tax position, such as that enjoyed by a Qualifying Free Zone Person, does not exempt an entity from the Top-up Tax analysis.

The EUR 750 Million Consolidated Revenue Threshold for UAE Top-up Tax

Only large multinational groups are caught by the Top-up Tax. A Multinational Enterprise Group falls within the scope of the legislation where it satisfies the Consolidated Revenue Threshold Condition: annual consolidated revenue of EUR 750 million or more in the Consolidated Financial Statements of the Ultimate Parent Entity, in at least two of the four Fiscal Years immediately preceding the Fiscal Year being tested.

This “two out of four years” structure means a group does not fall out of scope simply because revenue dips below the threshold in a single year. It also means a group that has never previously met the threshold can move into scope once it has crossed EUR 750 million in two of the preceding four years, and should monitor its position annually rather than assuming its prior-year status still applies.

The threshold is tested at the level of the Ultimate Parent Entity’s Consolidated Financial Statements, not at the level of the individual UAE entity. A UAE subsidiary with modest local revenue can still be caught if the wider group it belongs to clears the EUR 750 million bar globally. Purely domestic UAE groups with no operations outside the UAE fall outside the definition of a Multinational Enterprise Group and are not affected by these rules, since the regime is specifically targeted at enterprises with a cross-border footprint.

Which UAE Entities Count as Constituent Entities Under the Top-up Tax Rules

Once an MNE Group is confirmed to be in scope, the next question is which UAE entities within that group are actually caught. The rules apply to UAE tax residents that qualify as Constituent Entities, to Joint Ventures, and to certain Reverse Hybrid Entities that form part of an in-scope MNE Group. A Permanent Establishment of a Constituent Entity is treated as a separate Constituent Entity in its own right and is assessed independently from its Main Entity, meaning a UAE branch of a foreign group company can carry its own Top-up Tax position distinct from the entity that owns it.

Not every entity within an in-scope group is automatically subject to the charge. Certain categories, including Excluded Entities such as government bodies, international organisations, non-profit organisations, pension funds, and specific investment vehicles, along with certain Investment Entities, fall outside the charging provision even where the wider group meets the revenue threshold. These categories carry their own detailed conditions and are assessed entity by entity rather than assumed from the group’s overall status.

UAE Top-up Tax Registration Deadlines Under FTA Decision No. 12 of 2026

The Federal Tax Authority activated Top-up Tax registration through the EmaraTax portal, and on 16 July 2026 it issued Federal Tax Authority Decision No. 12 of 2026, published 4 August 2026, which sets out the concrete registration, deregistration, and notification deadlines that had previously been missing from the framework.

Under this Decision, an entity that is subject to Top-up Tax must submit a Tax Registration application within seven months from the end of the first Fiscal Year in which it falls within scope. A transitional relief applies for groups whose first in-scope Fiscal Year ends before 30 April 2026: for those entities, the registration deadline is extended to 30 November 2026, giving early-scope groups extra time to complete the mapping and documentation work registration requires.

Registration itself is only the first visible milestone. Before an entity reaches that deadline, the group needs to have already mapped every UAE Constituent Entity, Permanent Establishment, and Joint Venture that falls in scope, confirmed how each one is owned, reconciled the UAE position against the group’s global Pillar Two analysis, and decided whether entities will register separately or through a single designated filer.

Related: Corporate Tax Registration Services

The Domestic Designated Filing Entity Option for UAE Groups

Where a UAE group has multiple Constituent Entities in scope, the rules allow a single Domestic Designated Filing Entity to be appointed to handle registration, deregistration, and notifications on behalf of the entire Domestic Group, whether that is a Domestic Main Group, a Domestic Minority-owned Subgroup, or a Domestic Joint Venture Group. This consolidates the administrative burden into one filing entity rather than requiring every UAE Constituent Entity to register and file separately, which is particularly relevant for groups with several UAE subsidiaries under a common structure.

In-Scope and Out-of-Scope Notifications

FTA Decision No. 12 of 2026 also introduces a notification mechanism for entities that move in and out of scope across consecutive Fiscal Years, recognising that a group’s position under the EUR 750 million test can change from one year to the next. An out-of-scope notification is due within six months of the end of the tested Fiscal Year, and once submitted it generally holds for that Fiscal Year plus the following four, reflecting the same “two out of four years” logic used to bring a group into scope in the first place. Where a group later re-enters scope, an in-scope notification is required within seven months, mirroring the standard registration deadline.

Deregistration Requirements and Timelines

An entity that ceases to exist, or that leaves an MNE Group and no longer meets the scope conditions, must submit a Tax Deregistration application within six months of the earlier of those two events. A transitional deadline applies to entities that ceased to exist before 30 June 2026: those entities have until 31 December 2026 to submit their deregistration application.

Deregistration is not automatic on request. The Federal Tax Authority will not approve deregistration until all Top-up Tax and associated penalties have been fully settled and all required Top-up Tax Returns and Pillar Two Information Returns have been filed. Where an eligible entity fails to apply for deregistration within the required window, the Authority may deregister it at its own discretion based on the information available to it, which can leave a group with less control over the timing and record than a voluntary application would.

Penalties for Late Registration Under the Top-up Tax Rules

Late registration for Top-up Tax carries a flat AED 10,000 administrative penalty under Cabinet Decision No. 75 of 2023, as amended, the same instrument that sets late-registration penalties across the UAE’s other federal taxes. Separately, the Federal Tax Authority has indicated that for Fiscal Years beginning on or before 31 December 2026, and excluding any Fiscal Year ending after 30 June 2028, no penalty will apply to a late Top-up Tax Return or Pillar Two Information Return where the Authority accepts that the group took reasonable measures to comply. This relief is narrow: it does not extend to late payment of the Top-up Tax itself or to the AED 10,000 late-registration penalty, both of which remain enforceable on their normal terms regardless of the group’s efforts elsewhere in the compliance process.

How the UAE Top-up Tax Interacts With Corporate Tax and Free Zone Status

A common misconception is that a Qualifying Free Zone Person’s 0% Corporate Tax rate provides some form of shelter from the Top-up Tax. It does not. If the free zone entity is a Constituent Entity of an in-scope MNE Group, it is assessed under the Top-up Tax rules independently of its Corporate Tax position. In practice, a 0% rate on a meaningful share of group profit tends to pull the UAE’s overall jurisdictional effective tax rate below the 15% floor, which increases rather than eliminates the Top-up Tax exposure for the group as a whole. Groups that structured entities around Qualifying Free Zone Person status purely for Corporate Tax purposes should model the position again under the Top-up Tax rules, since the two regimes can pull in opposite directions once a group crosses the EUR 750 million threshold.

See also: International Tax Advisor in Dubai, UAE

Preparing for UAE Top-up Tax Registration: Practical Steps

Registration under FTA Decision No. 12 of 2026 is a compliance deadline, but the substantive work sits behind it. Groups approaching an in-scope Fiscal Year should expect to work through the following before the registration window closes.

Further official guidance on how the FTA is administering these rules is available directly from the Authority and from the Ministry of Finance, including the underlying Cabinet Decision. The UAE Ministry of Finance’s official Top-up Tax page sets out background on the DMTT’s alignment with the OECD’s GloBE Model Rules and the transitional qualified status process, while the Federal Tax Authority’s official website provides EmaraTax registration access and published guides. Businesses can also review the OECD’s global minimum tax resource hub for the underlying international framework the UAE rules are built on.

Also check: Corporate Tax Services in UAE

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co. supports UAE entities of multinational groups with Top-up Tax scoping, entity mapping, and registration under the QDMTT framework, working alongside each client’s wider Pillar Two compliance process.

Contact Farahat & Co. today to discuss your UAE Top-up Tax registration requirements.