UAE Pillar Two DMTT — who is caught and how to prepare.
The UAE Domestic Minimum Top-up Tax (DMTT) — the UAE's implementation of the OECD's Pillar Two GloBE rules — took effect for financial years starting on or after 1 January 2025. The headline rate is 15%. Most UAE businesses are unaffected; the rules only apply to multinational enterprise groups with global revenue of EUR 750 million or more.
What the DMTT does
The DMTT is a top-up tax that ensures UAE-located constituent entities of in-scope multinational groups are taxed at an effective rate of at least 15%. Where the 9% UAE Corporate Tax (or the 0% QFZP rate) produces an effective tax rate below 15% on UAE GloBE income, a 15% top-up is collected domestically — keeping the revenue in the UAE rather than ceding it to other Pillar Two jurisdictions under their Income Inclusion Rule or Undertaxed Payments Rule.
Who is in scope
- UAE constituent entities (including Free Zone entities) of multinational enterprise groups with consolidated annual revenue of EUR 750 million or more in at least two of the four preceding fiscal years.
- Joint ventures and JV subsidiaries of such groups, on a stand-alone basis.
- Investment entities and insurance investment entities are subject to specific GloBE rules.
Out of scope: domestic-only UAE groups; smaller multinational groups below the EUR 750m threshold; government entities; international organisations; non-profits; pension funds; investment funds (at the ultimate-parent level); real-estate investment vehicles (at the ultimate-parent level).
QFZP entities and the DMTT
The interaction between the Qualifying Free Zone Person (QFZP) 0% regime and the DMTT is the most-asked-about issue in our practice. A QFZP entity is still in scope for the DMTT if its group is in scope, and the DMTT will collect the top-up that brings the UAE effective tax rate to 15% on the relevant GloBE income — irrespective of the QFZP relief from regular Corporate Tax. The QFZP regime is preserved for groups below the EUR 750m threshold and for non-MNE entities.
How to prepare
- Confirm group revenue. Pull the consolidated financial statements of your ultimate parent entity for the last four fiscal years. If consolidated revenue is below EUR 750m in three of the four years, you are out of scope. Document this assessment.
- Map UAE constituent entities. Identify every UAE entity in the group structure, the local jurisdiction (Free Zone vs Mainland), the regular CT rate (0% QFZP or 9%) and whether it has UAE PE risk.
- Compute the UAE GloBE ETR. Apply the GloBE income, covered taxes and adjustments to derive the UAE effective tax rate.
- Determine the top-up. If UAE ETR is below 15%, the top-up rate is 15% less the ETR, applied to GloBE income net of the substance-based income exclusion (carve-out for payroll and tangible assets).
- Register, file, pay. The DMTT is administered by the UAE Federal Tax Authority. Registration, return filing and payment timelines mirror the regular Corporate Tax cycle.
For founders and family offices
Single-family offices, founder-owned operating groups and venture-backed startups are almost never in scope. The EUR 750m threshold is high — even substantial Middle East family conglomerates are often below it. The DMTT is principally a concern for top-200 multinationals with a UAE presence. If you are unsure, the test is mechanical and we can run it in a 30-minute call.
Related
- UAE Corporate Tax explained — full guide
- QFZP — Qualifying Free Zone Person
- UAE Corporate Tax (glossary)
Prepared by ArxSetup's tax practice with affiliated FTA-registered tax-agent partners. General guidance only — DMTT scoping is fact-sensitive; obtain a written opinion before relying on a position.