UAE FTA Issues Registration and Deregistration Requirements for Top-Up Tax Under Pillar Two Rules
Federal Tax Authority Decision No. 12 of 2026 introduces compliance timelines for entities subject to UAE Top-Up Tax
The United Arab Emirates (“UAE”) Federal Tax Authority (“FTA”) has issued Federal Tax Authority Decision No. 12 of 2026 on 16 July 2026, establishing the requirements and timelines for the registration, deregistration, and in-scope/out-of-scope notifications of entities subject to the UAE Top-Up Tax regime introduced under Cabinet Decision No. 142 of 2024 on the Imposition of Top-Up Tax on Multinational Enterprises.
The Decision applies to Fiscal Years beginning on or after 1 January 2025 and provides further clarity on the administrative obligations of entities within the scope of the UAE implementation of the OECD Pillar Two framework.
Background – UAE Top-Up Tax Regime
As part of its commitment to implementing the OECD’s Global Anti-Base Erosion (“GloBE”) rules, the UAE introduced a Top-Up Tax framework through Cabinet Decision No. 142 of 2024.
The regime generally applies to UAE entities that are members of multinational enterprise (“MNE”) groups with consolidated annual revenues meeting the prescribed threshold under the Pillar Two rules. The objective of the framework is to ensure that large multinational groups are subject to a minimum effective tax rate in jurisdictions where they operate.
Federal Tax Authority Decision No. 12 of 2026 establishes the procedural requirements for entities to notify the FTA of their status and complete the required tax registration and deregistration procedures.
Key Requirements Introduced by FTA Decision No. 12 of 2026
1. Top-Up Tax Registration Requirements
An entity that falls within the scope of the UAE Top-Up Tax rules must submit a Tax Registration application for Top-Up Tax purposes to the FTA.
The registration deadline is:
- Within seven months from the end of the first Fiscal Year in which the entity becomes subject to Top-Up Tax.
A transitional rule applies for entities with earlier financial year-ends:
- Entities with a Fiscal Year ending before 30 April 2026 must submit their Top-Up Tax registration application on or before 30 November 2026.
Example
A UAE entity that becomes subject to Top-Up Tax for the first time for the financial year ending 31 December 2025 must complete its registration application within seven months from year-end, i.e., by 31 July 2026.
2. Top-Up Tax Deregistration Requirements
An entity may apply for deregistration from Top-Up Tax purposes when it:
- Ceases to exist; or
- Leaves the MNE Group and is no longer within the scope of the UAE Top-Up Tax rules.
The deregistration application must be submitted:
- Within six months from the earlier of the above events.
A transitional rule applies for entities ceasing to exist before 30 June 2026:
- The deregistration application must be submitted by 31 December 2026.
The FTA will approve deregistration only where the entity has:
- Settled all Top-Up Tax liabilities and related penalties;
- Filed all required Top-Up Tax Returns; and
- Submitted all required Pillar Two Information Returns.
Following approval, the entity’s Top-Up Tax registration remains valid until the earliest of:
- The date the entity ceases to exist;
- The end of the Fiscal Year in which it leaves the MNE Group; or
- Another date determined by the FTA.
3. In-Scope and Out-of-Scope Notifications
The Decision also introduces notification requirements for entities whose status changes under the Top-Up Tax rules.
Out-of-Scope Notification
Where an entity is part of an MNE Group that is no longer within the scope of the UAE Top-Up Tax rules for a particular Fiscal Year, it must submit an out-of-scope notification to the FTA.
The notification must be submitted:
- Within six months from the end of the relevant Fiscal Year.
An approved out-of-scope notification remains valid for:
- The relevant Fiscal Year; and
- The following four consecutive Fiscal Years,
unless the entity becomes subject to Top-Up Tax again.
Returning to Scope
If an entity becomes subject to Top-Up Tax after previously submitting a valid out-of-scope notification, it must submit an in-scope notification within:
- Seven months from the end of the relevant Fiscal Year.
4. Deregistration After Remaining Out of Scope
Where an entity remains out of scope for five consecutive Fiscal Years based on valid out-of-scope notifications, it must submit a Top-Up Tax deregistration application within:
- Six months from the end of the fifth consecutive Fiscal Year.
This requirement does not apply if the entity becomes subject to Top-Up Tax again and is required to submit an in-scope notification.
- Role of Domestic Designated Filing Entity
The Decision provides that where a Domestic Designated Filing Entity has been appointed under the UAE Top-Up Tax rules, such entity may submit:
- Tax registration applications;
- Tax deregistration applications;
- In-scope notifications; and
- Out-of-scope notifications,
on behalf of the relevant members of:
- A Domestic Main Group;
- A Domestic Minority-Owned Subgroup;
- A Reverse Hybrid Entity; or
- A Domestic Joint Venture (“JV”) Group.
This provision is intended to simplify compliance obligations for qualifying UAE groups.
Our Recommendation
UAE entities forming part of large multinational groups should proactively evaluate their obligations under the UAE Top-Up Tax regime to ensure timely compliance with the FTA’s registration and notification requirements.
Failure to comply with the prescribed timelines may result in administrative penalties under the UAE tax procedures framework.
Businesses should review their group structure, revenue thresholds, and reporting responsibilities to determine whether Top-Up Tax registration or notification obligations apply.
Need support assessing your UAE Top-Up Tax obligations? Contact XB4 for practical guidance on registration, notification requirements, compliance timelines, and Pillar Two readiness.
