Tax Planning
Maximizing UAE Top-Up Tax: What Multinationals Must Know Under Decision 96-2026
With UAE’s Ministerial Decision No. 96 of 2026 clarifying rules under Cabinet Decision No. 142, this article breaks down what multinationals must do now to manage their Top-Up Tax exposure.
By NomadicTax Research Team • 5-8 min read • August 13, 2026
## What is the Top-Up Tax Framework in the UAE?
The UAE has adopted a **Global Minimum Tax** regime (Pillar 2), under which large Multinational Enterprises (MNEs) must pay a minimum effective tax rate. When profits from UAE entities beneath that rate are taxed abroad, a **Top-Up Tax** under Cabinet Decision No. 142 of 2024 applies to bring taxation up to minimum standard. Ministerial Decision No. 96 of 2026, issued 22 June 2026, replaces its predecessor Decision No. 88 of 2025. It provides detailed **commentary and administrative guidance** for implementation, effective for fiscal years starting on or after **1 January 2025**.([mof.gov.ae](https://mof.gov.ae/wp-content/uploads/2026/06/Ministerial-Decision-No.-96-of-2026-on-the-Commentary-and-Agreed-Administrative-Guidance-for-the-Purposes-of-Cabinet-Decision-No.-142-of-2024-on-the-Imposition-of-Top-Up-Tax-on-Multinational-Enterprises-en.pdf?utm_source=openai))
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## Key Provisions of Decision No. 96 of 2026
- Clarifies definitions: what constitutes **Covered Taxes**, **Ancillary Operations**, and **Excluded Entities**.
- Lays out the **calculation methods** for determining the effective tax rate: numerator/denominator rules, adjustments, exclusions.
- Reinforces **reporting and documentation** obligations for UAE entities involved in MNE groups.
- Sets forth **audit and compliance roles** of Ministry of Finance in assessing and enforcing Top-Up obligations.([mof.gov.ae](https://mof.gov.ae/wp-content/uploads/2026/06/Ministerial-Decision-No.-96-of-2026-on-the-Commentary-and-Agreed-Administrative-Guidance-for-the-Purposes-of-Cabinet-Decision-No.-142-of-2024-on-the-Imposition-of-Top-Up-Tax-on-Multinational-Enterprises-en.pdf?utm_source=openai))
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## Implications & Action Steps for Multinationals
| Area | What Companies Must Do |
|---|---|
| **Entity Assessment** | Identify if your entity is “in scope” by reference to size, revenue thresholds, and structure. Entities below thresholds may still be impacted via consolidation. |
| **Tax Rate Gap Analysis** | Compute your effective tax rates (ETR) for each jurisdiction. Where ETR is below minimum standard, expect UAE Top-Up obligations. |
| **Data Collection & Systems Upgrade** | Ensure you have accurate financial data for numerator/denominator, exclusions. Consider system changes to track these elements across jurisdictions. |
| **Documentation & Exchange** | Maintain transparency in reporting. Prepare documentation subject to audit under UAE rules. These must align with global consistency requirements. |
| **Planning & Restructuring Opportunity** | Offsets, incentives, or entities with sufficiently high tax in jurisdiction might minimize Top-Up Exposure. Review group structure. |
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## Examples: How Decision No. 96 May Play Out
- A UAE holding company earning **royalties** from abroad, taxed at 5% abroad, while UAE tax incentives bring its UAE tax rate to 0%. Under Top-Up rules, it may face additional tax in the UAE to reach the global minimum (e.g. 15%).
- A foreign-incorporated subsidiary with a low ETR could trigger Top-Up on UAE parent entity, depending on ownership and consolidation. The guidance helps define when consolidation applies.
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## What Happens Next & Compliance Timeline
- **Effective date**: fiscal years beginning on or after 1 January 2025—so companies with December year ends should prepare for the Top-Up obligations now. ([mof.gov.ae](https://mof.gov.ae/wp-content/uploads/2026/06/Ministerial-Decision-No.-96-of-2026-on-the-Commentary-and-Agreed-Administrative-Guidance-for-the-Purposes-of-Cabinet-Decision-No.-142-of-2024-on-the-Imposition-of-Top-Up-Tax-on-Multinational-Enterprises-en.pdf?utm_source=openai))
- **Transition from previous decision**: Decision No. 96 of 2026 repeals Decision No. 88 of 2025. Ensure that any ongoing compliance under the older guidance is updated. ([mof.gov.ae](https://mof.gov.ae/wp-content/uploads/2026/06/Ministerial-Decision-No.-96-of-2026-on-the-Commentary-and-Agreed-Administrative-Guidance-for-the-Purposes-of-Cabinet-Decision-No.-142-of-2024-on-the-Imposition-of-Top-Up-Tax-on-Multinational-Enterprises-en.pdf?utm_source=openai))
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## Practical Advice Before Year End
1. Conduct a Top-Up readiness assessment now—baseline your tax across offices and jurisdictions.
2. Review incentive regimes or tax holidays that may inadvertently lower your ETR.
3. Update internal policies and train teams on keeping the required documentation.
4. Engage external advisors or audit to validate your approach under the new decision.
Implementing Decision No. 96 offers not just compliance coverage, but strategic value. Early movers will gain clarity and reduce compliance risk under this evolving global tax landscape.