In short
Article 9.3 of Cabinet Decision No. 142 of 2024 reduces UAE top-up tax to zero for a group in the initial phase of international activity: entities in no more than six jurisdictions, tangible assets outside the reference jurisdiction under EUR 50 million, and no parent subject to a Qualified IIR elsewhere. It expires five years after the group first crossed the threshold.
The UAE's Domestic Minimum Top-up Tax contains a relief that can take a qualifying group's top-up tax down to zero for a limited period. It sits in Article 9.3 of Cabinet Decision No. 142 of 2024, under the heading "Initial Phase of International Activity", and it is aimed at groups that have recently come into scope but have not yet built much of a presence outside their home market.
It is worth being clear about who this is for. The rules only bite on groups with consolidated revenue of EUR 750 million or more in at least two of the four fiscal years before the tested year. Within that population, the relief is narrower still: it is drawn around a small international footprint, it is closed off entirely if a parent above the UAE entities is already subject to a Qualified Income Inclusion Rule somewhere else, and it expires on a fixed timetable whether or not the group still passes the size tests. In practice it is aimed at UAE-headquartered groups rather than at UAE subsidiaries of established foreign multinationals.
What the relief actually does
Article 9.3.1 provides that, notwithstanding the charging requirements in Article 5, the top-up tax calculated under the Decision is reduced to zero during the initial phase of the group's international activity — provided none of the ownership interests in the UAE constituent entities are held by a parent entity subject to a Qualified IIR in another jurisdiction.
The calculation still has to be performed. The UAE effective tax rate is still determined, the excess profit is still identified, and the resulting figure is then reduced to nil. That matters for planning: a group relying on Article 9.3 carries the same data collection and computation burden as a group writing a cheque, and has to be able to show the conditions were met in every year it claims the benefit.
The parent entity condition does most of the work
Where a UAE subsidiary sits beneath a parent in a jurisdiction that has brought in a Qualified IIR, the relief is simply unavailable. The logic is not hard to follow. If the UAE reduced its top-up tax to zero in that situation, the same amount would be collected by the parent jurisdiction instead — the UAE would give up revenue and the group would be no better off.
The condition is drafted by reference to ownership interests generally, so intermediate holding structures have to be traced all the way up rather than only to the immediate shareholder. It follows that the relief is of real interest to two groups: those whose parent is in the UAE, and those beneath a parent in a jurisdiction that has not yet brought a Qualified IIR into force. The second category should watch legislative progress abroad closely, because the relief can be lost through a change in another country's law rather than through anything the group itself does.
The two size tests
A group is in the initial phase of its international activity for a fiscal year only if it satisfies both of the tests in Article 9.3.2.
| Test | The threshold | What catches people out |
|---|---|---|
| Jurisdiction count | Constituent entities in no more than six jurisdictions | It counts jurisdictions, not entities — and a permanent establishment counts as one |
| Tangible assets | Net book value outside the reference jurisdiction of no more than EUR 50 million | Only tangible assets count, but right-of-use assets on the balance sheet can push you closer than expected |
On the first test, twenty subsidiaries across four countries passes; seven subsidiaries across seven countries does not. A permanent establishment is treated as a constituent entity located where it arises, so a modest branch, project office or construction site abroad can consume one of the six places while holding almost no assets and earning almost nothing. Dormant and newly incorporated entities count the same as trading ones. Any group near the limit should go through its legal entity register properly, including structures that create a taxable presence without a separate company.
On the second, the Decision defines net book value as the average of the beginning and end values for the year after accumulated depreciation, depletion and impairment — not a single point-in-time figure. Intangibles, goodwill, cash and financial assets are all outside the measure. Asset-light overseas operations such as sales offices may sit comfortably below the threshold for years. Acquiring property, plant or equipment abroad can change that quickly, and because the limit is set in euro while the assets are usually recorded in other currencies, exchange rates move you towards or away from it without any commercial change at all.
Both tests are applied year by year. Failing either in a particular year costs you the relief for that year — but passing them again in a later year, within the overall time limit, restores it.
The reference jurisdiction is fixed, and it is not always home
Article 9.3.3 defines the reference jurisdiction as the one where the group has the highest total value of tangible assets, measured for the fiscal year in which the group originally met the EUR 750 million threshold.
Two features of that definition are easy to miss. It is fixed by reference to a single historic year and does not move as the asset base shifts, so a group whose centre of gravity later migrates keeps testing its foreign assets against the original jurisdiction. And it is determined by tangible assets — not by headquarters, revenue or profit — so it will not always be the country the group thinks of as home. Groups whose principal asset base sits outside the UAE should test this specifically rather than assume the relief follows from the numbers alone.
The five-year clock, and when it started
Article 9.3.4 disapplies the relief for any fiscal year starting more than five years after the first day of the first fiscal year in which the group originally met the threshold. The clock runs from the moment the group came into scope — not from the first claim, and not from the first year it had a UAE top-up tax exposure. A group that crossed the threshold some years ago may find much of its window already gone.
A separate rule covers groups that had already met the threshold as at 31 December 2023. For those, the five years begin when a Qualified UTPR comes into effect. The point is to give groups that were already in scope when the regime began a common starting point, rather than to hand early entrants a longer run.
What to do now
- Register, if you have not. The relief does not defer this — under FTA Decision No. 12 of 2026 the application is due within seven months of the end of your first in-scope fiscal year, or by 30 November 2026 for a fiscal year ending before 30 April 2026.
- Fix the date on which the group originally met the EUR 750 million threshold. It determines both the reference jurisdiction and the expiry of the relief, so everything else depends on getting it right.
- Put a monitoring process around the two size tests — entity formations, branch and project registrations, and movements of tangible assets outside the reference jurisdiction — so a breach is spotted before the year end rather than after it.
- Track legislative progress in every jurisdiction above the UAE entities in the ownership chain. A Qualified IIR coming into force in any of them ends access to the relief.
- Model the year the window closes. The relief defers a cost rather than removing it, and expiry can produce a sudden, material change in the group's tax profile.
Article 9.3 is a genuine benefit for a narrow population: groups headquartered in the UAE, or beneath a parent not yet subject to an Income Inclusion Rule, that have recently crossed the threshold and still have a compact international presence. For them it can remove the cash cost of the minimum tax for several years while the structure matures. It rewards groups that know precisely when their clock started — and plan for the year it stops.
Key takeaways
- The relief sits in Article 9.3 of Cabinet Decision No. 142 of 2024, the UAE's Domestic Minimum Top-up Tax rules, which apply to fiscal years starting on or after 1 January 2025.
- It reduces the top-up tax to zero. It does not remove the group from the rules — registration, computation and reporting all continue exactly as if the group were paying.
- Two size tests apply each year: constituent entities in no more than six jurisdictions, and tangible assets outside the reference jurisdiction of no more than EUR 50 million.
- The relief is unavailable where any ownership interest in the UAE entities is held by a parent subject to a Qualified Income Inclusion Rule in another jurisdiction — so it mainly suits UAE-headquartered groups.
- The reference jurisdiction is fixed by a single historic year — the year the group first crossed the EUR 750 million threshold — and does not move as the asset base shifts.
- The five-year clock runs from the first day of the first fiscal year the group met the threshold, not from the first claim. For groups already over the threshold at 31 December 2023, it starts when a Qualified UTPR takes effect.