Pillar Two: First UAE DMTT Filings Land in 2026. What Multinationals Need to Get Right

The UAE Domestic Minimum Top-up Tax (DMTT) is in force. Cabinet Decision No. 142 of 2024 set the framework, the OECD placed the regime on its Central Record of Legislation with Transitional Qualified Status, and the Federal Tax Authority opened the registration window for in-scope groups. First filings are due 15 months after the relevant fiscal year-end (18 months for the first transition year).

Who is in scope

The DMTT applies to UAE constituent entities of multinational enterprise (MNE) groups whose consolidated revenue exceeded EUR 750 million in at least two of the four immediately preceding fiscal years. The threshold sits at the Ultimate Parent Entity's consolidated financial statements; group composition tests are run annually.

Notably, the UAE has not implemented the Income Inclusion Rule (IIR) at this stage. The decision reflects the fact that the UAE Corporate Tax regime does not include a controlled foreign company regime. The Undertaxed Profits Rule (UTPR) is similarly not in force domestically.

The 15% effective tax rate test

For each UAE constituent entity, the effective tax rate (ETR) is calculated as covered taxes divided by GloBE income. Where the resulting ETR falls below 15%, the difference is the top-up tax. For most UAE-based operating entities paying 9% Corporate Tax under the standard regime, there is a structural 6-percentage-point top-up exposure.

Several factors can affect the calculation. Substance-based income exclusion (payroll and tangible-asset carve-outs), deferred tax recognition under the GloBE rules, and the Qualifying Free Zone Person rate of 0% on Qualifying Income all interact with the ETR calculation. Free-zone entities with material qualifying income face the largest top-up exposure under the unmitigated rules.

Transitional safe harbours

For fiscal years starting before 1 January 2027, the Transitional Country-by-Country Reporting Safe Harbour can reduce the top-up tax in a jurisdiction to zero where one of three tests is met: the de minimis test (revenue under EUR 10 million and profit under EUR 1 million), the simplified ETR test (15% or higher in 2024, 16% in 2025, 17% in 2026), or the routine profits test.

The safe harbour requires use of "qualified" country-by-country reporting data, and the data quality is now the gating item. Many groups have CbCR data that was assembled to a lower bar; remediation projects through 2026 are common.

Filing mechanics

The Top-up Tax Return is filed with the Federal Tax Authority within 15 months of the fiscal year-end, extended to 18 months for the first transition year (so the first return for a 31 December 2025 year-end is due 30 June 2027). Payment follows the return. Registration with the FTA must be completed before the first return is due.

What MNE groups should be doing now

Three streams of work for the 2026 calendar:

• Confirm in-scope status for the current and likely future fiscal years. Group composition can move the answer.
• Run the safe-harbour eligibility analysis for each jurisdiction including the UAE. Where the safe harbour applies, the compliance burden drops significantly.
• Build the GloBE income computation capability inside the finance function or with a tax advisor. The data lift is non-trivial and the deadline is fixed.

Our Corporate Tax practice supports DMTT compliance from registration through to filing, including safe-harbour analysis and the GloBE income computation. Reach out for a scoped diagnostic.