If you’ve been seeing mentions of Pillar Two, DMTT, or the “15% global minimum tax” lately and started to worry, read to the end. For the vast majority of SMEs in the UAE, this is good news.
What DMTT actually is?
DMTT (Domestic Minimum Top-up Tax) is a tax the UAE introduced as part of the OECD’s Pillar Two initiative. The idea: large multinational corporate groups must pay an effective tax rate of at least 15% in every jurisdiction where they operate. If the actual rate is lower, the difference has to be topped up. The UAE decided to collect that top-up itself (via DMTT), rather than hand that revenue to other countries’ tax authorities.
Who does this actually affect?
Here’s the key point: DMTT only applies to corporate groups with consolidated annual revenue of €750 million or more, and this threshold must be met in at least 2 of the last 4 financial years. On top of that, the group must be genuinely multinational, meaning it needs at least one entity outside the jurisdiction of its parent company. If you’re an SME, a local family business, or even a large regional company without an international structure at that scale, you’re most likely outside DMTT’s scope. The €750 million threshold rules out the vast majority of UAE businesses.
What if my company is under the threshold but connected to an international group?
This is where you need to pay closer attention. If your UAE company is part of a larger international group (even if the UAE entity itself is small), and the group’s consolidated revenue exceeds the threshold, you can fall within DMTT’s scope as a separate Constituent Entity. This applies, for example, to local subsidiaries of large foreign holding companies or franchises registered in the UAE.
If DMTT does apply to your group
- Registration happens through the EmaraTax portal, separately from regular corporate tax
- The first Top-up Tax return (for the year ended December 31, 2025) must be filed within 15 months of the financial year-end extended to 18 months for the first transitional year
- There’s transitional relief in place: no filing penalties for periods starting on or before December 31, 2026, but only if the group takes reasonable steps toward compliance. This isn’t a free pass, the FTA expects to see that you’ve engaged advisors, done the analysis, and gathered the necessary data
The bottom line for SMEs
DMTT is a topic for large multinational groups, not typical UAE SMEs. If you’re not sure whether it affects you, especially if you have ties to a foreign structure or franchise it’s worth checking once rather than guessing.
If you’d like to find out whether DMTT applies to your structure, or have questions about regular corporate tax, book a free 15-minute consultation with Aizhan Uzakova: +971509174775.
