Abu Dhabi:Federal Tax Authority: The Federal Tax Authority (FTA) has released a comprehensive Top-up Tax Guide on Scope and Registration. This guide aims to assist Multinational Enterprise (MNE) Groups in understanding the application of the Top-up Tax in the UAE and fulfilling their registration obligations under relevant legislation.
According to Emirates News Agency, the guide details how to determine if an MNE Group falls under the Qualified Domestic Minimum Top-up Tax (QDMTT) Legislation. It clarifies which entities are subject to the tax and outlines the registration process and timelines. The guide is directed towards individuals managing tax affairs of entities within MNE Groups and tax agents.
The guide also includes explanations and examples to aid understanding of various requirements, such as treatment of different entity types, including Permanent Establishments, Joint Ventures, Flow-through Entities, and Hybrid Entities. It covers the registration procedures, the filing of the Pillar Two Information Return, and the location of entities and permanent establishments.
The UAE's implementation of the Top-up Tax is part of the OECD/G20 Two-Pillar Solution addressing digital economy tax challenges. This includes the Global Anti-Base Erosion (GloBE) Model Rules under Pillar Two, aiming to ensure that MNE Groups are taxed at a minimum rate of 15% in each jurisdiction where they operate, through a Top-up Tax mechanism.
The UAE introduced the QDMTT legislation for fiscal years starting on or after January 1, 2025, as part of its commitment to the OECD/G20 Two-Pillar Solution. The legislation allows the UAE to maintain its primary taxing rights over profits from entities in the country. The UAE was listed with 'transitional qualified' status in the OECD central record on August 18, 2025, and the QDMTT Legislation follows the GloBE Model Rules closely.
The Top-up Tax applies to entities in the UAE that are part of an MNE Group with annual revenues of EUR 750 million or more, based on the Ultimate Parent Entity's Consolidated Financial Statements, in at least two of the four fiscal years before the current fiscal year. Groups operating solely within the UAE are exempt from the QDMTT Legislation regardless of their revenue.
The FTA's issuance of this guide underscores its commitment to providing businesses with practical guidance, supporting their understanding of the UAE's tax framework, and enabling them to meet their obligations confidently. The guide is accessible on the FTA's official website.