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1. QDMTT in the UAE: Understanding the Local Impact of Global Minimum Tax Introduction The global tax landscape is undergoing a major shift with the introduction of the OECD Pillar Two Global Minimum Tax framework. One of the most significant local responses to this framework is the introduction of the Qualified Domestic Minimum Top-up Tax (QDMTT) in the UAE. QDMTT ensures that if large multinational enterprises (MNEs) operating in the UAE are taxed below the global minimum level, the UAE can collect the top-up tax domestically rather than allowing it to be collected by another jurisdiction. What is QDMTT in the UAE? QDMTT is a domestic implementation of the global minimum tax rules, designed to align the UAE with the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). Under Cabinet Decision No. 142 of 2024, the UAE QDMTT applies to fiscal years beginning on or after 1 January 2025 and sets a minimum effective tax rate of 15% for qualifying multinational groups. Who Does the UAE QDMTT Apply To? The UAE QDMTT applies only to large multinational enterprise groups, specifically those that: ● Have EUR 750 million or more in consolidated group revenue ● Meet the revenue threshold in at least two of the previous four fiscal years ● Have UAE Constituent Entities within the group structure This means QDMTT is not a general corporate tax regime, but a targeted rule for large international groups. How the QDMTT Mechanism Works QDMTT does not operate like a traditional corporate tax. Instead, it follows the Pillar Two methodology, which includes:

2. ● Starting from financial accounting profit, not taxable income ● Adjusting profits to determine Pillar Two Income ● Identifying Covered Taxes and calculating Adjusted Covered Taxes ● Computing the UAE Effective Tax Rate (ETR) on a jurisdictional basis ● Applying a top-up tax only if the ETR falls below 15% A substance-based income exclusion is applied before determining the final top-up tax amount. Why QDMTT Matters for Businesses The introduction of QDMTT affects more than just tax payments. It has implications for: ● Financial reporting and tax provisioning ● Alignment between finance and tax teams ● Cross-border tax allocation and entity mapping ● Compliance and reporting under the Pillar Two framework Businesses must ensure accurate data, consistent accounting treatment, and readiness for new reporting requirements. Compliance and Reporting Requirements Multinational groups subject to QDMTT are expected to file a Pillar Two Information Return with the UAE Federal Tax Authority, following OECD-standard templates and timelines. Although transitional relief may apply for early years, data preparation and system readiness must begin well before filing deadlines. Learn More A detailed explanation of how QDMTT operates in the UAE, including scope, calculations, and practical business implications, is available here: https://www.hayfordlearning.com/qdmtt-in-the-uae-how-global-minimum-tax-becomes-a-local-reali ty/