The UAE’s tax landscape has taken an important step forward. The Ministry of Finance recently announced that the Domestic Minimum Top-up Tax (DMTT) has been granted “Transitional Qualified Status” by the OECD.

This recognition is more than just a technical milestone. It confirms the UAE’s commitment to international minimum tax rules, strengthens its reputation as a transparent and trusted jurisdiction, and sets the stage for the rollout of Pillar Two rules from 1 January 2025.

 

What Does “Transitional Qualified Status” Mean?

Under Cabinet Decision No. (142) of 2024, the UAE introduced a DMTT effective for financial years starting on or after 1 January 2025. The rule applies a 15% top-up tax to multinational groups with annual consolidated revenues of EUR 750 million or more in at least two of the four years before 2025.

The OECD’s transitional endorsement means that, during the initial phase, the UAE’s DMTT will be treated as a Qualified DMTT (QDMTT). This recognition provides legal certainty while the OECD completes its full review.

 

Why This Matters for Multinationals in the UAE?

1. Reduced Complexity and Lower Risk of Double Taxation

With this recognition, the UAE’s QDMTT will be treated as a “Transitional Safe Harbour.” Other countries will generally need to give priority to the UAE’s top-up tax before applying their own rules. In practice, this means UAE profits will be taxed at home, preventing extra layers of tax abroad and simplifying compliance.

2. Strengthened International Credibility

The endorsement boosts the UAE’s profile as a trusted, cooperative tax hub, giving global investors more confidence. Importantly, the UAE has achieved this recognition without adopting the Income Inclusion Rule (IIR) or Undertaxed Profits Rule (UTPR), making it an attractive destination for international businesses.

3. Greater Certainty for Businesses

The OECD has confirmed that any future changes to a country’s qualified status will apply prospectively, not retroactively. For UAE multinationals, this provides assurance that today’s rules can be relied upon without the fear of back-dated adjustments.

 

What Businesses Should Do Next

If you’re part of a multinational group operating in the UAE, now is the time to prepare:

  • Assess your position – Understand how Pillar Two rules could impact both your UAE operations and global structure.
  • Seek advice – Tailored guidance on elections, exclusions, and tax attributes may significantly affect your effective tax rate.
  • Stay updated – Keep an eye on announcements from the UAE Ministry of Finance and Federal Tax Authority as more details are released.


The OECD’s recognition of the UAE’s DMTT as “Transitional Qualified” is a landmark moment. It protects UAE profits from being taxed twice, builds international trust, and gives businesses clarity as they plan for Pillar Two.

That said, 2025 will require careful planning, compliance, and continuous monitoring. Businesses that prepare now will be better positioned to adapt confidently to this new chapter in international taxation.

For tailored advice on how Pillar Two may affect your business, please get in touch with our tax team.

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