Large companies working across borders have faced growing uncertainty about how countries will tax them. Multinational groups want clarity to avoid double taxation and stay competitive.
In the UAE, this issue came to the fore with the introduction of the top-up tax under Cabinet Decision No. (142) of 2024. Many businesses were unsure how it would apply, what rules to follow, or how to prepare.
The UAE’s Ministry of Finance answered this concern through Ministerial Decision No. (88) of 2025, which sets out how multinationals should apply this new tax. It adopts several important OECD documents to help companies comply in a clear and consistent way.
Tax Gian, one of the renowned tax consultants in the UAE, helps businesses understand the UAE’s tax system comprehensively, enabling them to stay up to the minute and comply fully and properly.
Official Approval and Legal Basis
Ministerial Decision No. (88) of 2025 was issued by the Minister of State for Financial Affairs, Mohamed bin Hadi Al Hussaini, on 28 March 2025. It follows the Cabinet Decision No. (142) of 2024, which introduced a Domestic Minimum Top-up Tax (DMTT) for multinational enterprise (MNE) groups.
The new rules will take effect for fiscal years starting on or after 1 January 2025.What does Decision No. 88 cover?
This Ministerial Decision adopts several OECD documents as part of the UAE’s approach to applying the new top-up tax. These documents are not only adopted but are also considered official guidance for tax application under Cabinet Decision No. (142) of 2024.
The Key OECD Documents Adopted include:- OECD’s Consolidated Commentary(April 2024) – Consolidates earlier guidance from 2023 and helps explain how the rules should be read and applied.
- OECD’s Administrative Guidance(June 2024) – : Adds updates and further instructions to cover newer scenarios.
- Central Record and updates issued in January 2025 – Includes a record of national rules that may qualify for transition relief.
- Guidance on Articles 8.1.4, 8.1.5, and 9.1 – : Focuses on the treatment of deferred tax and blending issues.
- Article 9.1 Guidance: Deals with the allocation of tax credits and the handling of covered taxes.
- GloBE Information Return (January 2025) – A new standard form for companies to report their tax data to authorities.
These references will guide the UAE’s tax authority and businesses on how to calculate, report, and comply with the DMTT rules. Businesses can take further assistance from tax consultants in Dubai.
UAE’s Alignment with Global Tax Standards
This move confirms that the UAE is aligning with the OECD’s Global Anti-Base Erosion (GloBE) Model Rules, also known as Pillar Two. These rules aim to ensure that large multinational groups pay a minimum level of tax, no matter where they operate.
The UAE’s approach doesn’t include the Income Inclusion Rule (IIR) or Under-Taxed Profits Rule (UTPR). Instead, it focuses on applying a domestic top-up tax to reach the minimum 15% tax rate on local profits of MNEs.
Why This Matters for Multinational Groups
With the UAE adopting the OECD’s administrative materials, businesses now have a clearer path forward. Here’s what this means in practice:- Consistent rules: Companies can apply the same tax principles in the UAE as in other countries that follow OECD guidelines.
- Advance planning: Multinationals can use the official guidance to forecast and plan for any additional tax due.
- Easier compliance: The GloBE Information Return offers a standard way to report relevant data, reducing surprises during audits.
What Businesses Should Do Now
This shift raises the need for more careful review and internal planning. Companies that fall under the DMTT should consider the following:- Update tax systemsto follow the OECD’s rules now adopted by the UAE.
- Review intra-group pricingand make sure it is supported by documentation.
- Prepare for reportingunder the GloBE Information Return starting from fiscal year 2025.
- Seek assistance from tax consultants in Dubai to check whether transitional reliefs apply.
Timing and Impact
The Ministerial Decision and its guidelines apply to MNE groups starting from fiscal years beginning on or after 1 January 2025. This gives companies some time to prepare, but also puts pressure on early-stage planning. Tax consultants in the UAE can help businesses prepare.
With this early announcement in March 2025, and the groundwork already laid in 2024, UAE businesses have clear notice of what to expect.
How can Tax Gian Assist?
To comply with tax regulations properly, the UAE businesses have to stay ahead of the curve and prepare for every new tax update. Tax Gian can help you do that. Our expert tax consultants in Dubai, UAE, are devoted to helping businesses operate smoothly while they take care of the tax aspects.
