UAE issues new Top-up Tax guides and filing decision

The UAE Federal Tax Authority (“FTA”) and Ministry of Finance have, in August 2026, released three significant documents under the UAE Domestic Minimum Top-up Tax (“DMTT”) regime (Cabinet Decision No. 142 of 2024, the “QDMTT Legislation”):

• the Scope and Registration Guide (TTGREG1 – TTGREG1 - Scope and Registration guide - 08 2026),
• the Excluded Entities and Investment Entities Guide (TTGEIE1 – P2 - Excluded Entities guide - 25 08 2026), and
• Ministerial Decision No. 133 of 2026 (Ministerial Decision No133 of 2026 on Pillar Two Information Return) on the entities required to file the Pillar Two Information Return (“PIR”).

Together they complete the operational architecture of the UAE’s Pillar Two regime for Fiscal Years beginning on or after 1 January 2025.

This alert consolidates our analysis of all three documents. The package largely restates the existing charging, scope and threshold rules in the UAE legislation and the Consolidated Commentary to the Global Anti-Base Erosion Model Rules (2026), as published by the OECD (“OECD Commentary”). Its main value however is practical: the FTA’s interpretive guidance, together with the registration and filing mechanics summarised below.

Ministerial Decision No. 133 of 2026 (Pillar Two Information Return)

MD 133 of 2026 identifies the UAE entities responsible for filing the PIR and when that obligation may be discharged by another entity

The UAE Ministry of Finance has issued Ministerial Decision No. 133 of 2026, identifying the entities required to file the PIR (the GloBE Information Return) with the FTA under the QDMTT Legislation. The Decision introduces no new tax liabilities and changes no thresholds; it does however provide certainty over which UAE entity within an in-scope group is required to discharge the reporting obligation. It should be read alongside TTGREG1, which cross-references its filing mechanics.

Key points:

• Who must file. Each UAE Constituent Entity (excluding Investment Entities), Joint Venture and JV Subsidiary, plus each UAE-created Reverse Hybrid, must file the PIR, unless the obligation is discharged under one of the routes below.
• Local consolidation option. A single Designated Local Entity may be appointed to file one return for all UAE entities of the group.
• Foreign-filing exemption. No UAE filing is required where the UPE or Designated Filing Entity files in a jurisdiction with a Qualifying Competent Authority Agreement in effect with the UAE.
• Notification still required. Even where the foreign-filing exemption applies, UAE entities must notify the FTA of who is filing abroad.

In many cases, groups are expected to rely on either the foreign-filing exemption or the Designated Local Entity mechanism, rather than the default entity-by-entity filing approach, subject to meeting the relevant conditions.

Scope and Registration Guide (TTGREG1)

TTGREG1 consolidates the DMTT scope and registration rules and clarifies key administrative points for in-scope MNE groups

TTGREG1 draws together the scope, entity classification and registration rules already contained in the QDMTT Legislation, FTA Decision No. 12 of 2026 and the OECD Commentary adopted under Ministerial Decision No. 96 of 2026. While the guide largely restates the existing law, it also clarifies a few practical points in the interpretation of scope, entity classification and registration, including:

• Practical mechanics and documentation. The guide sets out the EmaraTax workflow, Domestic Designated Filing Entity (“DDFE”) / Designated Local Entity authorisation process (portal acknowledgement or signed letter), Tax Agent requirements, and the supporting documents required on registration (UPE and Designated Filing Entity details where located outside the UAE, plus a group structure overview). It also distinguishes the Designated Local Entity (PIR filing only) from the DDFE (broader compliance obligations).
• Per-entity penalty exposure under a DDFE. The AED 10,000 penalty for late registration (Cabinet Decision No. 75 of 2023) is confirmed to apply per entity where an Entity / DDFE fails to file a registration application, i.e. AED 10,000 "in respect of each Entity that the DDFE failed to submit the registration application for" rather than once at group level.

Other provisions of the guide mainly summarise the existing legislation of the UAE DMTT:

• Registration is required even where Top-up Tax is zero. Entities benefiting from the Transitional CbCR Safe Harbour, Simplified Calculations Safe Harbour, the de-minimis exclusion or the initial-phase relief remain within the charging provision and must still register. Where a DDFE is appointed, it must register all members it represents "even if the Top-up Tax of any of the members is deemed to be zero."
• Registration is independent of UAE Corporate Tax status.
• The definition of "Entity" captures Unincorporated Partnerships. The guide reiterates that the QDMTT Legislation follows the OECD GloBE Model Rules and the OECD Commentary in its treatment of tax-transparent structures. Consistent with that framework, the definition of "Entity" is not limited to juridical persons but extends to any arrangement that prepares separate financial accounts, such as a partnership or trust, so that separate legal personality is not required. In particular, the guide applies the Flow-through Entity definition, which captures both Hybrid and Reverse Hybrid Entities, confirming that a UAE Unincorporated Partnership which is tax-transparent for UAE Corporate Tax purposes can nonetheless be an "Entity", and potentially a Constituent Entity, for DMTT purposes.
• Registration timelines. Applications are due within 7 months of the end of the first in-scope Fiscal Year, subject to a transitional deadline of 30 November 2026 for Fiscal Years ending before 30 April 2026. Where an in-scope group acquires a UAE entity, that entity (or the DDFE) must register within the same window.

Excluded Entities and Investment Entities Guide (TTGEIE1)

TTGEIE1 clarifies the categories of entity that sit outside the charge and how the exclusions interact with UAE Corporate Tax status

Following TTGREG1, the FTA has issued TTGEIE1, explaining the categories of entity that sit outside the charging provision of the UAE DMTT.

Key points:

• “Excluded Entity” ≠ “Exempt Person”. An Exempt Person under the UAE Corporate Tax Law “does not automatically qualify as an Excluded Entity,” and each entity must “independently self-assess” its DMTT status “regardless of the status under the UAE Corporate Tax Law”. This distinction is drawn out across Qualifying Public Benefit Entities, Qualifying Investment Funds, pension funds and REITs.
• Tax-exempt Excluded Entity categories that can still qualify where partly subject to UAE Corporate Tax. Certain categories of Excluded Entity classification are contingent on the entity being exempt from tax, whereas under the Corporate Tax regime entities may be regarded as ‘Exempt Persons’ while being subject to tax on specific activities only. The guide clarifies that an Entity can still meet the relevant Excluded Entity criteria even where part of its income is subject to UAE Corporate Tax, provided that "substantially" all of its income from the approved activities is exempt from Corporate Tax. A practical safe-harbour benchmark is that where the Corporate Tax-exempt income is 95% or more of the Entity's total income for the relevant Fiscal Year, the exempt proportion "would be considered 'substantial'."
• Funds / REITs are only primary Excluded Entities if they are the UPE. An Investment Fund or Real Estate Investment Vehicle qualifies as a primary Excluded Entity only where it is the Ultimate Parent Entity (UPE).
• Secondary Excluded Entities – the 95% / 85% tests clarified. The guide provides clarifications on the tests applied to determine classification of secondary Excluded Entities: the 95% value + activities test (holding assets/investing funds or ancillary activities) and the 85% value + income test (substantially all income being Excluded Dividends or Excluded Equity Gains/Losses). It clarifies that “value” is measured by total Ownership Interests, that ownership must be beneficial, that indirect holdings are multiplied through the chain, and that unrealised fair value / impairment movements are disregarded.
• Ownership is tested on a beneficial ownership basis, with indirect holdings multiplied through the chain. The 95% ownership test "is only met where 95% or more of the value of the equity interests of the Entity are beneficially owned (either directly or indirectly) by primary Excluded Entities." Where an interest is held via "an agent, nominee, fiduciary or administrator" who is "simply a conduit for another person," that holder "is not the beneficial owner." For indirect holdings through a partly-owned intermediary, "the primary Excluded Entity's holding should be counted proportionately." – if a primary Excluded Entity holds 95% of Company B, which holds 95% of Company C, but the primary entity's indirect interest in Company C is 95% × 95% = 90.25%, which is below the 95% threshold, Company C fails the ownership test and cannot be a secondary Excluded Entity.
• Secondary Investment Entities face stricter tests than secondary Excluded Entities. The guide highlights three narrower requirements:
  • a single primary Investment Entity must hold at least 95%, whereas secondary Excluded Entities may be owned by "one or more" primary Excluded Entities;
  • for the 85% (income) category, ownership must be direct, as "the Entity cannot be indirectly held by a primary Investment Entity"; and
  • any ownership chain for the 95% (activities) category must consist only of Investment Funds, REIVs or Insurance Investment Entities. The activities test also drops the "ancillary activities" limb.
• Pension Services Entities carry a carve-out. A Pension Services Entity (not to be confused with a Pension Fund) is itself a primary Excluded Entity, but entities owned by a Pension Services Entity cannot qualify as secondary Excluded Entities.
• Ownership Interest defined more broadly than under UAE Corporate Tax Law. For DMTT, an Ownership Interest carries rights to profits, capital or reserves — whereas the UAE Corporate Tax Law requires rights to both profits and liquidation proceeds. This divergence can change the ownership analysis.
• Non-profit-owned subsidiaries – a revenue-gated exclusion. An entity 100% owned by Non-profit Organisation(s) (“NPOs”) can be an Excluded Entity only if (i) group revenue excluding NPOs and their secondary Excluded Entities is below EUR 750m, and (ii) revenue of non-excluded entities is below 25% of MNE Group revenue — with no activities test.
• Insurance Investment Entities – modified ownership. The “pool assets from a number of investors” and “widely held” conditions are overridden where the entity is wholly owned by regulated insurance company members of the same MNE Group.
• Five-Year election to opt out of Excluded status. A Filing Constituent Entity (or DDFE) may elect not to treat a secondary Excluded Entity or NPO-owned subsidiary as excluded on an entity-by-entity basis. The consequence is that the entity becomes a Constituent Entity and must register for Top-up Tax.
• Excluded / Investment Entities are outside the charge and have no registration, return or PIR obligations, but their revenue still counts toward the EUR 750m threshold, and they must still appear in the MNE Group’s structure disclosure (though their income / tax / asset data is not reported).

Combined observations

Read together, the three documents confirm the UAE’s intention to apply OECD Pillar Two concepts aligned with the original provisions rather than to depart from them. Although the substantive law is unchanged, the value of the August 2026 package is in the operational certainty – who registers, who files, and how the exclusions interact with UAE Corporate Tax status.

Action points for in-scope groups

• Confirm registration by the relevant deadline (7 months from the first in-scope Fiscal Year, or 30 November 2026 for Fiscal Years ending before 30 April 2026), including for entities expecting zero Top-up Tax under a safe harbour.
• Decide the compliance architecture: entity-by-entity vs DDFE; and whether to appoint a Designated Local Entity for PIR filing, mapping the per-entity DDFE penalty risk.
• Re-assess entity classifications under TTGEIE1: test Excluded / Investment Entity status independently of UAE Corporate Tax Exempt Person status, applying the 95% / 85% and beneficial-ownership tests carefully.
• Map PIR filing under MD 133: determine whether a Qualifying Competent Authority Agreement based foreign filing removes direct UAE filing and diarise the Article 2(4) notification even where it does.