What is the Domestic Minimum Top-Up Tax (DMTT)?

It’s a tax rule ensuring MNEs pay at least 15% effective tax rate in UAE.

MNEs with global revenue over €750m in two of the last four years.

How is DMTT calculated?

If UAE subsidiary ETR is below 15%, the difference is paid as top-up tax.

Why did UAE adopt DMTT?

To align with OECD’s Pillar Two reforms and strengthen global compliance.

How can Mubarak Al Ketbi (MAK) Auditing help with DMTT?

They guide MNEs in ETR calculation, compliance, reporting, and top-up payments.

Domestic Minimum Top-Up Tax (DMTT) in UAE 🥇

Introduction: Domestic Minimum Top-Up Tax (DMTT) in UAE The Domestic Minimum Top-Up Tax (DMTT) in UAE is a new rule that starts on 1st January 2025. It applies to large multinational enterprises (MNEs). The DMTT follows OECD’s Pillar Two plan, which sets a 15% minimum tax on global groups. The

Introduction: Domestic Minimum Top-Up Tax (DMTT) in UAE

The Domestic Minimum Top-Up Tax (DMTT) in UAE is a new rule that starts on 1st January 2025. It applies to large multinational enterprises (MNEs). The DMTT follows OECD’s Pillar Two plan, which sets a 15% minimum tax on global groups.

The UAE introduced DMTT to align with international standards while keeping its business-friendly environment. Mubarak Al Ketbi (MAK) Auditing explains what DMTT means, how it works, and what MNEs must do to comply.

What Does Domestic Minimum Top-Up Tax Mean?

DMTT is a tax that ensures MNEs in UAE pay at least 15% effective tax rate (ETR).

It applies to MNEs with €750 million+ revenue in at least two of the last four years.
It ensures UAE subsidiaries meet OECD’s “GloBE” rules.
It closes gaps created by low-tax regimes or free zone benefits.

This makes UAE compliant with global tax reforms while protecting competitiveness.

Practical Considerations for UAE-Based MNEs

MNEs in UAE must plan ahead for DMTT.

Key considerations:

Increased Taxation: Groups with low ETRs, like free zone firms, face new top-up payments.
Compliance Overhaul: MNEs need strong systems for GloBE data collection.
Cross-Border Planning: Tax structures across countries may change.

Advance preparation reduces risks and builds trust with regulators.

How Is the DMTT Calculated?

Calculation of DMTT requires computing the Effective Tax Rate (ETR) under GloBE rules.

If UAE subsidiary ETR ≥ 15%, no top-up is due.
If UAE subsidiary ETR < 15%, the difference must be paid as top-up tax.

Example:
MNE “ABC” earns €200m profit in UAE. At 9% corporate tax, it pays €18m. Under DMTT, it must pay €30m (15%). So, an extra €12m is added as top-up.

Planning Considerations and Next Steps for MNEs

MNEs must act now to prepare for 2025.

Steps include:

Assess Pillar Two impact: Identify subsidiaries under €750m revenue rule.
Ensure compliance: Collect accurate data for GloBE calculations.
Improve reporting: Adjust FY24 financials with required disclosures.
Seek expert guidance: Work with Mubarak Al Ketbi (MAK) Auditing for clarity.

These steps ensure smooth transition into DMTT compliance.

Impact of DMTT on UAE Business Environment

The DMTT may feel like extra pressure, but it also brings benefits.

Protects UAE against foreign-imposed top-up taxes.
Builds stronger international reputation.
Creates fair tax competition across MNEs.
Aligns UAE with global tax standards.

It also ensures transparency and sustainable growth.

What Can Help You – Mubarak Al Ketbi (MAK) Auditing

Mubarak Al Ketbi (MAK) Auditing provides expert tax services for MNEs in UAE. Their professionals assist with DMTT compliance, calculation, and reporting, ensuring smooth operations without penalties.

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