UAE Introduces Domestic Minimum Top-Up Tax for MNEs

The UAE Ministry of Finance has issued Cabinet Decision No. 142 of 2024, introducing a Domestic Minimum Top-Up Tax (DMTT) aligned with OECD Pillar Two rules. 

Who is affected? 

– Multinational Enterprises (MNEs) with annual revenues ≥ €750M (in 2 of the last 4 years). 

– Low-taxed UAE entities ensuring a minimum 15% effective tax rate (ETR). 

Key Provisions: 

– Effective from: Fiscal years starting on or after 1 Jan 2025. 

– Filing & Compliance: DMTT return due within 15 months (18 months for the first year). 

– Exemptions & Relief: Investment entities & sovereign wealth funds excluded; Safe harbors available. 

– Penalties: Grace period until 31 Dec 2026 for reasonable compliance efforts. 

Why it matters? The UAE aligns with BEPS 2.0 Pillar Two, ensuring fair taxation while remaining globally competitive. 

MNEs should review their tax structures, assess exposure, and prepare for compliance. 

How do you see this impacting MNEs operating in the UAE? Let’s discuss!