Tax Planning
Top-Up Tax in UAE: What Multinationals Need to Know Now
A recent UAE ministerial decision clarifies how the global minimum tax (‘top-up tax’) applies—but many multinational entities may not yet be compliant unless they know the new guidance and deadlines.
By NomadicTax Research Team • 6-7 min read • August 15, 2026
## Background: UAE’s Top-Up Tax Regime
In 2022 the UAE introduced Federal Decree‐Law No. 47 of 2022 on the Taxation of Corporations and Businesses. A key component is the **Top-Up Tax**, aligning with the OECD/G20 global minimum corporate tax framework — ensuring large multinationals pay a minimum effective tax of **15%** in jurisdictions like the UAE. ([mof.gov.ae](https://mof.gov.ae/en/public-finance/tax/corporate-tax-in-the-uae/?utm_source=openai))
## What’s New: Ministerial Decision No. 96 of 2026
On **22 June 2026**, UAE issued Ministerial Decision No. 96 of 2026, adopting updated **Commentary and Agreed Administrative Guidance** to Cabinet Decision No. 142 of 2024. These changes apply to fiscal years starting on or after **1 January 2025** and supersede the earlier guidance issued under Ministerial Decision No. 88 of 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))
### Key Takeaways
- **Effective Date**: Applies to fiscal years beginning on or after **1 Jan 2025**—so many MNEs now have already entered one or more Top-Up tax years under this guidance. ([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))
- **Supersedes previous guidance**: Decision No. 88 of 2025 is repealed. Ensure you’re using the latest commentary in assessments. ([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))
- **Clarified metrics and adjustments**: Includes new stipulations on how book profit is adjusted, definitions of related party transactions, and apportionment of income across jurisdictions. (Full details are in the PDF annex.) ([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))
## Action Steps for Multinationals in UAE
1. **Review your fiscal year dates**: If your fiscal year started on or after 1 Jan 2025, ensure you’ve re-evaluated your Top-Up tax exposure under the new guidance.
2. **Update reporting and documentation**: Collect and maintain information on related party pricing, tangible and intangible allocations, income, and deductions as per the new commentary.
3. **Benchmark vs previous numbers**: If you estimated Top-Up tax under old guidance (or none), reassess with the current rules to spot potential additional liability.
4. **Engage your tax advisors**: The rules may affect many sectors differently, particularly those with cross-border operations or complex ownership structures.
5. **Plan for compliance costs**: New requirements around disclosures, returns, and possibly audits may increase administrative burden.
## Practical Example
**Scenario**: A multinational headquartered outside the UAE runs a large sales hub from the UAE with a financial year ending **30 June 2025**. Under the old guidance, they applied certain exclusions for specific intercompany payments. Under the updated commentary:
- Some of those payments may now require adjustments.
- Profit apportionment and safe harbours may change effective tax rates.
- They must recalculate for the year ending 30 June 2025 with the new guidance, potentially owing additional Top-Up tax.
## Why It Matters
- Maintaining **tax sovereign risk compliance** and avoiding penalties and interest for underpayment.
- Ensuring financial statements and tax disclosures reflect exposures accurately.
- Signaling diligence if you’re dealing with audits or regulatory reviews. Staying updated shows strong internal governance.
**Conclusion** — For multinationals operating in the UAE, the June 2026 guidance **is not optional**; if your fiscal year falls on or after 1 January 2025, you need to retool your Top-Up tax reporting framework now. Start with identifying exposed entities, mapping income streams, and aligning with the new definitions.