On 7 October 2026, the UAE Federal Tax Authority (FTA) issued the Top-up Tax Guide on Scope and Registration — a detailed guide for Multinational Enterprise (MNE) Groups on how the Qualified Domestic Minimum Top-up Tax (QDMTT) applies in the UAE. It is the FTA's first formal methodology on scope and registration under Pillar Two: who falls under the law, who stays out, which Entities and structures register, and how the Pillar Two Information Return is filed.
What happened
The FTA issued, through its press service, a notice announcing the release of the Guide, which supports businesses in applying the Top-up Tax in the UAE and in understanding registration obligations under the QDMTT Legislation. The document is explicitly addressed to persons responsible for the tax affairs of Entities that may be members of an MNE Group, and to Tax Agents. The FTA emphasised that the Guide should be read in its entirety to gain a comprehensive understanding of the definitions, requirements and the interaction between the different rules. The Guide is available through the FTA's official website.
Context: the UAE within the OECD/G20 Two-Pillar Solution
The UAE's Top-up Tax forms part of the OECD/G20 Two-Pillar Solution, which addresses the tax challenges arising from the digitalisation of the economy. Pillar Two — through the GloBE Model Rules (Global Anti-Base Erosion) — seeks to ensure that in-scope MNE Groups are subject to an effective tax rate of at least 15% in each jurisdiction in which they operate. Where the actual rate falls below that minimum, a Top-up Tax mechanism makes up the difference.
The UAE has introduced a domestic variant — the Qualified Domestic Minimum Top-up Tax (QDMTT). The logic is straightforward: it is better for the shortfall to be collected in the UAE under local rules than captured by a foreign tax authority through international Pillar Two mechanisms. The QDMTT applies to fiscal years beginning on or after 1 January 2025. On 18 August 2025, the UAE was listed on the OECD central record with «transitional qualified» status — a technical confirmation that the national QDMTT is recognised as consistent with the GloBE standard for the transitional period.
Who is caught: the EUR 750 million threshold and the exemption
The main quantitative test is the consolidated annual revenue of the Ultimate Parent Entity (UPE) of the MNE Group:
- EUR 750 million or more as reflected in the Consolidated Financial Statements of the UPE;
- met in at least two of the four fiscal years immediately preceding the fiscal year under consideration.
Where the group meets this threshold, all of its Constituent Entities located in the UAE fall within the QDMTT Legislation. There is a clear exemption spelt out in the law itself: groups that conduct their activities exclusively within the UAE do not fall within the QDMTT regardless of their revenue. For large domestic business with no overseas footprint, this is the critical point: you may technically cross the EUR 750 million line, but with purely UAE-only activity the law does not apply.
Which structures register
The Guide specifically works through non-standard forms of group participation — this is where tax teams and tax agents most often misclassify the map. The scope of the FTA methodology covers:
- Entities — ordinary legal persons;
- Permanent Establishments — permanent establishments of foreign structures in the UAE;
- Joint Ventures — joint ventures;
- Flow-through Entities — transparent structures where profits are taxed at the participant level;
- Hybrid Entities — hybrid structures treated as opaque under one body of law and transparent under another.
For each type, the Guide explains how tax location is determined and how registration obligations work. A separate section addresses the filing of the Pillar Two Information Return — the core return under GloBE from which the effective tax rate and, where relevant, Top-up Tax are calculated.
How this sits alongside the 9% corporate tax
The QDMTT is not a replacement for the familiar 9% UAE corporate tax but an additional layer for large multinational groups. For most domestic businesses the regime remains unchanged: a 9% rate on profit above AED 375,000 plus a qualifying 0% regime for Free Zone Persons. A detailed breakdown of the base regime is in our dedicated piece on the UAE corporate tax at 9% above AED 375,000. The release of the Pillar Two methodology does not alter that base — it adds a separate overlay above it for MNE Groups above EUR 750 million.
Registration and timelines
Registration timings under the Top-up Tax are set out in a separate document — FTA Decision No. 12 of 2026, which defines the calendar for registration, deregistration and in-scope/out-of-scope notifications under the QDMTT. The new Guide on Scope and Registration logically complements that Decision: it answers the «who» question, while Decision 12 answers the «when».
For business, this means both documents need to be read together. First the Guide — to work out whether the structure is in scope and how Permanent Establishments, Joint Ventures and Hybrid Entities qualify. Then Decision 12/2026 — to lock down the registration date and the related notifications.
What an MNE Group company should do
- Test the threshold. Pull the UPE's consolidated financials for FY2021–2024 and FY2022–2025 and check against EUR 750 million — meeting the threshold in any two of the four periods means the group is in scope.
- Map the UAE Constituent Entities. All group legal entities, permanent establishments, joint ventures, flow-through and hybrid structures. For each — type and tax location.
- Apply the «UAE-only» test. If the group operates exclusively within the UAE — document this and keep the supporting evidence: the exemption is explicitly written into the law.
- Reconcile with FTA Decision 12/2026. Registration, deregistration, in-scope/out-of-scope notifications — all follow that document.
- Embed the GloBE effective tax rate calculation in the accounting system. The Pillar Two Information Return requires comprehensive data that cannot be assembled on the final day.
- Read the Guide in full. The FTA's own press release stresses that the Guide must be read in its entirety — the definitions, requirements and interactions between the rules only work in the aggregate.
The bigger picture
Pillar Two in the UAE fits into the overall logic of how UAE business regulation in 2026 has evolved over the last two years: first a federal legislative framework (the QDMTT Legislation), then operational FTA decisions (Decision 12/2026 on timings), then interpretive methodologies such as the new Guide on scope and registration. The purpose of this layer is not to tighten the rules but to give business an unambiguous reading of definitions that in the GloBE Model Rules are expressed in international tax language.
Attribution
The primary source is the Federal Tax Authority of the UAE press service (tax.gov.ae). The factual content has been cross-checked against the verbatim coverage in Gulf News Business of 7 October 2026. Key parameters (EUR 750 million threshold, 15% minimum effective tax rate, QDMTT start from 1 January 2025, listing of the UAE on the OECD central record on 18 August 2025 with «transitional qualified» status, scope of Entity types) are taken directly from the FTA text cited there. The Guide itself is published on the FTA's official website.
