UAE Top-Up Tax rules have been updated through the Ministerial Decision No. 96 of 2026, which officially adopts the latest OECD guidance under Pillar Two. This update concerns multinational groups operating in the UAE because it changes how the global minimum tax rules are interpreted, applied, and reported.
The Decision brings the UAE fully in line with the 2026 OECD Consolidated Commentary, the updated OECD Administrative Guidance, and the GloBE Information Return instructions.
Ministerial Decision No. 96 of 2026 applies to fiscal years starting on or after 1 January 2025 and repeals Ministerial Decision No. 88 of 2025. This means multinational enterprises must now use the updated OECD guidance when assessing their Pillar Two UAE exposure, calculating their effective tax rate, and preparing their reporting.
Also check: Corporate Tax Services in UAE
Quick Table: What the Decision Changes
| Area Updated | What It Means | Why It Matters |
|---|---|---|
| 2026 OECD Consolidated Commentary | UAE adopts updated GloBE interpretations | Ensures alignment with global Pillar Two rules |
| OECD Administrative Guidance | New clarifications | Helps MNEs apply complex rules correctly |
| GloBE Information Return | Updated reporting format | MNEs must follow new disclosure requirements |
| Repeal of MD 88/2025 | Old guidance removed | Only the 2026 framework applies now |
| Effective Date | Fiscal Years starting on or after 1 January 2025 | First compliance cycle already active |
What Ministerial Decision No. 96 of 2026 Does?
Ministerial Decision No. 96 of 2026 does more than simply adopt OECD guidance. It also clarifies how UAE entities should apply the updated rules in practice. The Decision confirms that the UAE will follow the latest OECD interpretations, even when they introduce new concepts or change earlier explanations. It also confirms that the UAE will use the updated GloBE Information Return format, which includes more detailed disclosures and clearer reconciliation requirements.
UAE tax authorities will rely on the updated OECD commentary when reviewing Pillar Two calculations, safe harbour claims, deferred tax adjustments, and transitional rules. This gives multinational groups more certainty because they know the UAE will follow the same standards used internationally.
Need Expert Advice?
Contact the team at Farahat & Co. for professional support and expert insights for businesses operating in the UAE.
Why the Updated OECD Guidance Matters?
The updated OECD guidance affects how multinational groups calculate their effective tax rate and determine whether a Top-Up Tax in UAE applies. The new commentary and administrative guidance include:
- Updated definitions of covered taxes
- Clarifications on deferred tax adjustments
- New rules for temporary differences
- Updated treatment of tax incentives
- Clearer guidance on safe harbours
- Expanded examples for complex structures
- Updated GloBE Information Return requirements
These updates help multinational groups apply the global minimum tax UAE rules correctly and avoid errors in their Pillar Two calculations.
How the UAE Top-Up Tax Works
The UAE Top-Up Tax is part of the global 15% minimum tax under OECD Pillar Two. It applies to multinational enterprise (MNE) groups with:
- EUR 750 million consolidated revenue
- Operations in more than one jurisdiction
- UAE entities with an effective tax rate below 15%
If the UAE effective tax rate is below 15%, the group must pay a Top-Up Tax to reach the global minimum. The updated OECD guidance helps MNEs calculate this correctly.
Key Updates Introduced by Ministerial Decision No. 96 of 2026
Updated GloBE Definitions
The Decision adopts updated definitions for covered taxes, GloBE income, excluded entities, and adjustments.
Updated Administrative Guidance
This includes new clarifications on tax credits, deferred tax, safe harbours, transitional rules, and complex ownership structures.
Updated GloBE Information Return
The reporting format now follows the January 2025 version, which includes more detailed disclosures, additional data fields, and updated reconciliation requirements.
Alignment with Global Standards
The UAE now follows the same interpretation used internationally, reducing uncertainty for multinational groups.
Practical Example: How the Updated Guidance Affects an MNE
A multinational group has:
- A UAE holding company
- Several UAE subsidiaries
- Operations in Europe and Asia
- Consolidated revenue above EUR 750 million
Under the old guidance, the group calculated its effective tax rate using the 2025 commentary. Under Ministerial Decision No. 96 of 2026, the group must:
- Recalculate deferred tax using updated OECD rules
- Apply new safe harbour criteria
- Use updated definitions for covered taxes
- Follow the new GloBE Information Return format
- Apply updated administrative guidance for incentives
After recalculation, the group discovers that one UAE entity now falls below the 15% minimum due to updated deferred tax treatment. This triggers a Top-Up Tax UAE obligation.
This example shows how the updated guidance can change a group’s Pillar Two exposure.
How Multinational Groups Should Prepare?
Multinational groups should take practical steps to ensure compliance with the updated guidance:
- Review the updated OECD commentary
- Reassess effective tax rate calculations
- Update internal Pillar Two models
- Update GloBE Information Return templates
- Review safe harbour eligibility
- Train tax and finance teams
- Document all changes
These steps help ensure compliance with the updated UAE Global Minimum Tax rules.
See also: Corporate Tax Consultant
Frequently Asked Questions (FAQs)
What does Ministerial Decision No. 96 of 2026 do?
When does the updated guidance apply?
Why is the updated OECD guidance important?
Who is affected by the UAE Top-Up Tax?
What should businesses do now?
Need Expert Advice?
Contact the team at Farahat & Co. for professional support and expert insights for businesses operating in the UAE.
How Farahat & Co Can Support Multinational Groups
Farahat & Co helps multinational enterprises understand and comply with the updated UAE Top-Up Tax rules. Our tax specialists support groups with Pillar Two impact assessments, updated effective tax rate calculations, GloBE Information Return preparation, safe harbour analysis, compliance with Ministerial Decision No. 96 of 2026, and advisory for UAE Corporate Tax and global minimum tax.
Contact Farahat & Co. today and ensure your group applies the updated OECD guidance correctly and stays fully compliant with UAE requirements.
