Federal Tax Authority issues new guide on scope and registration for Top-Up Tax on multinational enterprises

 The Federal Tax Authority (FTA) has issued a new Top-up Tax Guide on Scope and Registration, providing detailed guidance to support Multinational Enterprise (MNE) Groups in understanding the application of the Top-up Tax on Multinational Enterprises in the UAE and their registration obligations under the relevant legislation.

The Guide provides guidance on determining whether an MNE Group falls within the scope of the Qualified Domestic Minimum Top-up Tax (QDMTT) Legislation. It outlines the conditions for MNE Groups to be in scope, the types of Entities that are subject to Top-up Tax and those that are not, as well as the registration process and applicable timelines for Entities subject to the legislation. It is intended for those responsible for the tax affairs of Entities that may be members of an MNE Group, as well as Tax Agents.

Additionally, the Guide provides practical explanations and examples to support understanding of the relevant requirements, including the treatment of different types of Entities, Permanent Establishments, Joint Ventures, Flow-through Entities, and Hybrid Entities. It further addresses the location of Entities and Permanent Establishments, registration requirements and procedures, and the filing of the Pillar Two Information Return.

The United Arab Emirates’ implementation of the Top-up Tax forms part of the OECD/G20 Two-Pillar Solution, which aims to address the tax challenges arising from the digitalisation of the economy. This includes the Global Anti-Base Erosion (GloBE) Model Rules under Pillar Two, which seek to ensure that in-scope MNE Groups are subject to an effective tax rate of at least 15% in each jurisdiction in which they operate, through a Top-up Tax mechanism.

As part of its commitment to implementing the OECD/G20 Two-Pillar Solution and maintaining a fair and transparent tax system aligned with global standards, the UAE introduced legislation for the QDMTT for Fiscal Years beginning on or after 1 January 2025.

The UAE’s Qualified Domestic Minimum Top-up Tax enables the United Arab Emirates to preserve its primary taxing right over profits derived by Entities located in the country. The United Arab Emirates was listed in the OECD central record on 18 August 2025 with “transitional qualified” status. In addition, the QDMTT Legislation closely follows the GloBE Model Rules under Pillar Two issued by the Organisation for Economic Co-operation and Development.

Under the QDMTT Legislation, the Top-up Tax applies to Constituent Entities located in the United Arab Emirates that are members of an MNE Group with annual revenue of EUR 750 million or more, as reflected in the Consolidated Financial Statements of the Ultimate Parent Entity, in at least two of the four Fiscal Years immediately preceding the Fiscal Year under consideration. Groups that conduct their activities exclusively within the United Arab Emirates do not fall within the scope of the QDMTT Legislation, irrespective of the amount of their revenue.

The issuance of this Guide reflects the Federal Tax Authority’s commitment to providing businesses with clear and practical guidance that supports their understanding of the UAE’s evolving tax framework and enables them to meet their obligations with confidence.

The UAE’s implementation of Pillar Two reflects the vision of our wise leadership to maintain a competitive, transparent, and sustainable economic environment, while ensuring that the national tax system continues to develop in line with international best practices. Through comprehensive guidance and continued engagement with the business community, the Authority remains committed to supporting taxpayers and facilitating voluntary compliance.

The FTA emphasised that the Guide should be read in its entirety to gain a comprehensive understanding of the definitions, requirements, and interaction between the different rules. Entities that may form part of an MNE Group are encouraged to review their circumstances against the relevant requirements of the QDMTT Legislation and consult the Guide to understand the applicable scope and registration requirements. The Guide is available through the FTA’s official website at https://www.tax.gov.ae/en/default.aspx.