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UAE Publishes Domestic Minimum Top-up Tax Guidance
published: 24.12.2025
The UAE Ministry of Finance published guidance and FAQs on the domestic minimum top-up tax regime, which applies from January 1, 2025.
Domestic minimum top-up tax in the UAE is applied to constituent entities that are members of multinational enterprises operating in the UAE with annual global revenues of €750 million or more in the consolidated financial statements of the ultimate parent entity in at least two out of the four financial years immediately preceding the financial year in which this type of tax applies.
The UAE is currently undergoing the peer review process, which starts with a transitional qualification mechanism, in order to fully comply with the OECD’s Pillar Two requirements and attain its “qualified” status. The transitional period is expected to take 12 months and is aimed at achieving consistency in the application of the GloBE rules.
As the UAE corporate tax regime does not include a controlled foreign company regime, at this stage, the decision has been made to not implement the Income Inclusion Rule. The UAE’s domestic minimum top-up tax stipulates for the prevention of foreign jurisdictions from collecting top-up tax on UAE profits of UAE Constituent Entities that are in scope of the Pillar Two rules. However, the UAE’s tax authorities will continue to collect feedback from stakeholders to form the best solution on whether to introduce the Income Inclusion Rule in the future.
The jurisdiction at the moment fulfills two requirements instilled by the GloBE Rules, which allow it to be classified as a safe harbor:
• Constituent entities that meet the requirements to be classified as an investment entity will not be subject to the UAE domestic minimum top-up tax rules.
• MNE groups in the initial phase of international activity are excluded from scope of the UAE domestic minimum top-up tax where no Income Inclusion Rule is being applied to any Constituent Entity located in the UAE in the group structure.
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