In order to achieve ‘Qualified’ status for the UAE DMTT rules, the rules will undergo a common peer review process by the members of the Inclusive Framework. The peer review process starts with a transitional qualification mechanism, which is a short-term self-certification process developed for the swift recognition of the ‘Qualified’ status in the interim period prior to a full legislative review and the on-going monitoring process. Based on the process agreed by the Inclusive Framework members, the transitional qualified status is expected to be established within 12 months after the effective date of the legislation (i.e., before 1 January 2026) once the self-certification has been submitted within the agreed timelines. Once confirmed, the qualified status is expected to apply from the effective date of the legislation. The full legislative review is expected to start no later than two years after the effective date of the legislation and the transitional qualified status of an implementing jurisdiction’s legislation will end once the full legislative review is completed. The purpose of this process is to achieve consistency and co-ordination in the application of the GloBE Rules across different jurisdictions. Given that the UAE DMTT rules are very closely aligned to the Global Anti-Base Erosion (GloBE) Model Rules (Pillar Two), the UAE is expected to achieve the ‘Qualified’ status within the above-mentioned timeframe.

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 an IIR. The UAE DMTT rules ensure that the UAE’s domestic tax base is protected by preventing foreign jurisdictions from collecting top-up tax on UAE profits of UAE Constituent Entities that are in scope of the Pillar Two rules. The UAE will continue to monitor the implementation and effectiveness of the UAE DMTT and seek feedback from key stakeholders to assess whether an IIR should be introduced in the future.

Most of the DMTT related provisions contained in the Commentary are consistent with the GloBE rules, in some cases the guidance requires or provides the option to jurisdictions to deviate from the GloBE Rules. Whilst such deviations do not result in compromising the ‘Qualified’ status of the rules, some of these preclude the DMTT from benefiting from the QDMTT Safe Harbour in other jurisdictions. For example, a QDMTT that excludes non-wholly owned Constituent Entities will not comply with the QDMTT Safe Harbour requirements.   

Based on the feedback received during the public consultation, the Ministry of Finance noted the significance of the ‘Safe Harbour’ status to businesses operating in the country. Accordingly, the UAE DMTT rules have been designed to include only deviations / variations that do not compromise the Safe Harbour status of the rules.

Some of the variations that meet this criteria include:

• Constituent Entities that meet the requirements to be classified as an investment entity will not be subject to the UAE DMTT rules.
• MNE Groups in the initial phase of international activity are excluded from scope of the UAE DMTT where no Income Inclusion Rule is being applied to any Constituent Entity located in the UAE in the group structure.

These policy decisions ensure that the UAE QDMTT meets the safe harbour status while minimizing the administration compliance burden for businesses.

Article 9.1.5 sets out the provisions that must apply for the purposes of the formula mentioned in 9.1.4(c), which addresses cases where the tax rate applicable to the Constituent Entity changes in a subsequent Financial Year. Specifically, Article 9.1.5 requires the formula to be re-applied to the outstanding balance of tax credit in the financial accounts to determine the revised deferred tax asset for the purposes of the rules. In this case, given the re-application of the formula is stipulated by 9.1.5, the reference has been made to the same Article.

In accordance with the QDMTT definition of the GloBE Model Rules, the net income or loss may be computed using an Acceptable Financial Accounting Standard or an Authorized Financial Accounting Standard that is adjusted to prevent Material Competitive Distortions rather than the financial accounting standard used in the Consolidated Financial Statements.

Furthermore, the OECD Commentary for the QDMTT Safe Harbour requires a QDMTT to meet the QDMTT Accounting Standard, the Consistency Standard and the Administration Standard to comply with the QDMTT Safe Harbour requirements. In order to meet the QDMTT Accounting Standard, a QDMTT needs to be computed in accordance with the financial accounting standard of the Consolidated Financial Statements or comply with the Local Financial Accounting Standard Rule. The Local Financial Accounting Standard Rule allows a jurisdiction to require the computation of its QDMTT in accordance with its Local Financial Accounting Standard provided that the Constituent Entities located in that jurisdiction are already preparing financial accounts (e.g., standalone financial statements) based on that standard and other conditions are met. Where these conditions are not met, the QDMTT is required to follow the GloBE Model Rules for purposes of determining the financial net income or loss (e.g, the financial accounting standard of the Consolidated Financial Statements).

Therefore, Articles 3.1.2. to 3.1.4 of Cabinet Decision No. 142 of 2024 have been drafted with the intention that the DMTT meets the Local Financial Accounting Standard Rule for the purposes of complying with the requirements of the QDMTT Safe Harbour.

The UAE DMTT has a mechanism to adopt the OECD Administrative Guidance and Commentary so it can achieve Qualified and Safe Harbour status. Under Articles 16 and 17 of Cabinet Decision No. 142 of 2024, a Ministerial Decision will be issued to adopt the relevant provisions of the current OECD GloBE Model Rules (Pillar Two) Administrative Guidance and Commentary for the purposes of implementing a QDMTT. Any future changes to such Administrative Guidance and Commentary will be considered by the Ministry of Finance in due course.

All UAE taxpayers, whether they are Exempt Persons or Qualifying Free Zone Persons under the UAE Corporate Tax Law, will need to assess whether they are within scope of Cabinet Decision No. 142 of 2024. If they are in scope, they must comply with Cabinet Decision No. 142 of 2024. This includes calculating and paying any top-up tax due and making the associated filings and notifications, where required.

Legislation is dated based on its date of issuance, which, in the case of Cabinet Decision No. 142 of 2024, was the date it was formally signed and approved by the issuing authority. While the Cabinet Decision was officially published in the Gazette in 2025, it was issued and approved by the Cabinet in 2024, which is why it bears that date.

This is not a mistake but rather a reflection of standard legislative drafting conventions in the UAE. Cabinet Decision No. 142 of 2024 follows the established practice where the issuing articles of legislation are drafted in Arabic. The substantive rules, conditions, and mechanisms for imposing the top-up tax were included as an annexure to the decision, which was published in both English and Arabic in the Official Gazette.

The Ministry of Finance would like to remind the public to only rely on official publications from the Ministry of Finance and the Federal Tax Authority regarding Federal Decree Law No. (47) of 2022 on the Taxation of Corporations and Businesses, its amendments (“Corporate Tax Law”), and the associated Cabinet and Ministerial Decisions. This includes Cabinet Decision No. 142 of 2024 on the Imposition of Top-up Tax on Multinational Enterprises. The Ministry has spotted a number of posts circulating on social media and other platforms that are issued by third parties and contain inaccurate interpretations and analyses. These posts have not been authorized by the Ministry. The Ministry strongly advises the public that publishing or re-publishing misleading and unfounded analysis of the Corporate Tax Law and the associated Cabinet and Ministerial Decisions may constitute a violation under Federal Decree Law No. 34 of 2021 on Combatting Rumours and Cybercrime. The official sources of information on Federal Taxes in the UAE are the Ministry of Finance and the Federal Tax Authority.

The Ministry of Finance also recommends that the public refer to the OECD website for clarity regarding the interpretation and application of the GloBE Model Rules, found here https://www.oecd.org/en/topics/sub-issues/global-minimum-tax/global-anti-base-erosion-model-rules-pillar-two.html 

Finally, taxpayers are free to submit a clarification request in relation to any matters concerning the Corporate Tax Law to the Federal Tax Authority, where preferred.

The OECD website contains guidance on the interpretation and application of the GloBE Model Rules, found here https://www.oecd.org/en/topics/sub-issues/global-minimum-tax/global-anti-base-erosion-model-rules-pillar-two.html

Additionally, the Federal Tax Authority will publish further guidance on Cabinet Decision No. 142 of 2024 on the Imposition of Top-up Tax on Multinational Enterprises in due course.