The UAE Top-up Tax is no longer a future compliance item on the horizon — it is already in force. For fiscal years beginning on or after 1 January 2025, large multinational groups operating in the UAE must work out whether they fall within scope, which of their entities need to be mapped, and when they are required to register with the Federal Tax Authority (FTA). This article sets out the scope and registration rules in the FTA’s Top-up Tax Guide – Scope and Registration (TTGREG1) and FTA Decision No. 12 of 2026.
What Is the UAE Top-up Tax?
The UAE Top-up Tax is the UAE’s Qualified Domestic Minimum Top-up Tax (QDMTT) — its implementation of the OECD’s Pillar Two framework. It is designed to ensure that large multinational enterprise (MNE) groups pay an effective tax rate of at least 15% on the profits they generate in each jurisdiction where they operate, including the UAE. Where a UAE entity’s effective tax rate falls below that 15% target, a Top-up Tax applies to bring it up to the minimum.
The UAE was added to the OECD’s central record with “transitional qualified” status in August 2025, and the FTA has since issued a series of guides and decisions — including the Top-up Tax Guide (TTGREG1) and Decision No. 12 of 2026 — to explain exactly who is in scope and how registration works in practice.
Who Falls Within Scope of the UAE Top-up Tax
Whether a group is subject to the UAE Top-up Tax is worked out in stages, not through a single test.
Step 1 — The Multinational Test
At least one entity or permanent establishment of the group must sit outside the jurisdiction of the Ultimate Parent Entity (UPE). A group that operates exclusively within the UAE is not treated as a multinational enterprise group for these purposes, and domestic-only groups are excluded from the UAE Top-up Tax entirely, regardless of how large their revenue is.
Step 2 — The EUR 750 Million Revenue Test
The group’s consolidated revenue, as reported in the Ultimate Parent Entity’s Consolidated Financial Statements, must reach EUR 750 million or more in at least two of the four fiscal years immediately preceding the fiscal year being tested. If the threshold is not met in at least two of those four years, the group falls outside the scope of the UAE Top-up Tax for that fiscal year — the test is applied year by year, so a group’s position can change over time.
Revenue belonging to an Excluded Entity still counts toward the EUR 750 million threshold where it is included in the group’s consolidated figures, even though that same Excluded Entity will not itself be subject to Top-up Tax.
Step 3 — Checking Each UAE Entity Against the Charging Provisions
Passing the multinational and revenue tests does not automatically mean every UAE entity in the group pays Top-up Tax. Each entity still needs to be checked individually: Excluded Entities, Investment Entities, and certain Stateless Constituent Entities generally fall outside the charging provisions. Even where Top-up Tax works out to zero — because of a safe harbour, a de minimis exclusion, or the initial phase of international activity — registration can still be required.
Mapping the Entities That Matter
Because the UAE Top-up Tax looks beyond ordinary corporate structures, groups need to map more than just their UAE companies. The FTA’s guide identifies several categories that require specific attention:
- Permanent establishments — a UAE branch or fixed place of business of a foreign group member can itself be a Constituent Entity for Top-up Tax purposes.
- Joint ventures and JV subsidiaries — joint ventures and the entities they hold can fall within the registration population even though they sit outside the ordinary consolidation perimeter.
- Minority-owned constituent entities — entities in which the UPE holds an indirect ownership interest of 30% or less can still be caught.
- Flow-through entities — transparent entities whose income is taxed at the level of their owners need to be traced through to establish where the entity, and the tax liability, is treated as located.
- Hybrid and reverse hybrid entities — entities treated differently for tax purposes in different jurisdictions require careful analysis to determine their treatment and location under the GloBE rules.
Getting this mapping right at the outset avoids both under-registration, and the penalties that follow, and unnecessary registrations for entities that are genuinely outside scope.
Effective Date and the 15% Target Tax Rate
The UAE Top-up Tax applies to fiscal years beginning on or after 1 January 2025. For a calendar-year group, that means the first in-scope fiscal year is the one ending 31 December 2025. Under the GloBE Model Rules that the UAE has adopted, in-scope groups are expected to pay an effective tax rate of at least 15% in every jurisdiction in which they operate — including the UAE. Where the UAE effective rate falls short, the Top-up Tax collects the difference domestically, rather than leaving it to be collected by another jurisdiction under the wider Pillar Two rules.
Registration Under FTA Decision No. 12 of 2026
FTA Decision No. 12 of 2026, issued on 16 July 2026, sets out the registration, deregistration, and scope-notification deadlines that apply once an entity is within scope of the UAE Top-up Tax. Registration is a one-time initial obligation — it is not renewed annually — and later changes in an entity’s position are instead handled through notification and deregistration.
Registration Deadlines
- As a general rule, an in-scope entity must register within seven months of the end of the first fiscal year in which it falls within scope.
- Where that first in-scope fiscal year ended before 30 April 2026, a transitional deadline applies instead: registration is due by 30 November 2026.
- For most calendar-year groups, the first in-scope fiscal year ends 31 December 2025 — exactly the case the transitional rule was written for, pushing the deadline out to 30 November 2026.
Entity-by-Entity Registration or a Domestic Designated Filing Entity
Groups can register in one of two ways. Under entity-by-entity registration, each in-scope UAE entity registers separately through EmaraTax and receives its own Pillar Two Top-up Tax Registration Number (TRN). Alternatively, the group can appoint a Domestic Designated Filing Entity (DDFE) — a UAE group member that registers on behalf of the entities it represents. Each underlying entity still receives its own TRN, while the DDFE receives an additional group-level TRN and takes on responsibility for filing and payment. Where a group has both a Domestic Main Group and a Domestic JV Group, a separate DDFE is required for each.
Penalties for Missing the Deadline
Late registration can trigger an administrative penalty of AED 10,000 per affected entity, and the FTA retains the ability to register a late applicant retroactively from the original effective date. With multiple entities, permanent establishments, and joint ventures potentially in scope within a single group, the exposure from a missed deadline can add up quickly.
What This Means in Practice
For groups with a UAE presence, the practical starting point is the same regardless of sector: confirm whether the EUR 750 million threshold has been met in two of the last four fiscal years using the Ultimate Parent Entity’s consolidated figures, then work through every UAE entity, permanent establishment, joint venture, and flow-through or hybrid structure to see where it sits against the charging provisions. Groups that are in scope should decide early whether to register entity-by-entity or through a Domestic Designated Filing Entity, and should calendar the relevant deadline — generally seven months after the first in-scope fiscal year ends, or 30 November 2026 under the transitional rule — well before it arrives. Our corporate tax advisory team can help map a group’s structure against these tests and prepare the registration file.
Frequently Asked Questions
Does the UAE Top-up Tax apply to UAE-only businesses?
No. Groups that operate exclusively within the UAE, with no entity or permanent establishment outside the jurisdiction of the Ultimate Parent Entity, are not multinational enterprise groups for these purposes and are excluded from the UAE Top-up Tax regardless of their revenue.
How is the EUR 750 million threshold tested?
It is tested against the Ultimate Parent Entity’s Consolidated Financial Statements, and the threshold must be met in at least two of the four fiscal years immediately preceding the fiscal year under review.
Is registration still required if Top-up Tax works out to zero?
It can be. A safe harbour, de minimis exclusion, or the initial phase of international activity can reduce the Top-up Tax liability to zero without removing the registration obligation, so each entity’s position needs to be checked on its own facts.
When is the UAE Top-up Tax registration deadline?
As a general rule, within seven months of the end of the first in-scope fiscal year. A transitional rule brings that forward to 30 November 2026 for entities whose first in-scope fiscal year ended before 30 April 2026 — which covers most calendar-year groups with a fiscal year ending 31 December 2025. Group-specific facts can affect this timeline, so it should be confirmed against the current FTA guidance for each entity.
This article is based on the FTA’s Top-up Tax Guide – Scope and Registration (TTGREG1), issued 26 August 2026, and FTA Decision No. 12 of 2026 on Top-up Tax registration and deregistration requirements, issued 16 July 2026. It is provided for general information only and does not constitute legal or tax advice. Groups should assess their own position against the full text of the FTA’s guidance, or seek advice from Mohamed Abo Khatwa’s office, before taking any registration or filing decisions.