Federal Decree-Law No. 60 of 2023 · UAE Federal
Adds the definitions of Top-up Tax and Multinational Enterprise to the Corporate Tax Law, authorises the Cabinet to impose a top-up tax on multinational enterprises aimed at a 15% effective rate, and rewrites Article 65 on sharing tax revenue between federal and local governments.
Federal Decree-Law No. 60 of 2023 is a short amending instrument that writes the legal basis for a Pillar Two top-up tax into the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022). It does not itself impose the tax: it adds the definitions, gives the Cabinet the power to impose it, and leaves the start date to a later Cabinet decision. The operative instrument that followed is Cabinet Decision No. 142 of 2024 on the Domestic Minimum Top-up Tax.
Article One adds two definitions to Article 1 of the Corporate Tax Law. 'Top-up Tax' is the tax imposed on Multinational Enterprises under the law and the rules the Cabinet sets 'for the purposes of the pillar two rules issued by the Organization for Economic Cooperation and Development'. 'Multinational Enterprise' is an entity, or one or more of its member entities, located in the UAE or in a foreign jurisdiction, as specified by a Cabinet decision issued on the Minister's suggestion. The same article inserts a new Clause 3 into Article 3 of the law: the Cabinet, on the Minister's suggestion, must issue a decision regulating all cases, conditions, rules, controls and procedures for imposing the Top-up Tax on Multinational Enterprises and the exemptions from it, so that the total effective tax imposed on them is 15%.
Article Two replaces Article 65 of the Corporate Tax Law. Corporate Tax and Top-up Tax revenues, and the administrative penalties collected under the law, are shared between the Federal Government and the Local Governments under the federal law in force on revenue sharing. The original Article 65 referred only to Corporate Tax; the new text extends the sharing mechanism to the top-up tax.
Article Three carves the top-up tax out of the ordinary commencement rule. The Top-up Tax provisions in Clause 2 of Article One come into effect on the date fixed by a Cabinet decision, which must be published in the Official Gazette. Article Four provides that the Decree-Law itself is published in the Official Gazette and takes effect the day after publication.
The Decree-Law was issued by the President in Abu Dhabi on 2 October 2023 (17 Rabi' al-Awwal 1445H). It remains in force. Its practical effect is that any group falling within the Multinational Enterprise definition the Cabinet adopts is exposed to a 15% minimum effective rate in the UAE, over and above the 9% headline corporate tax rate, from the date the Cabinet sets.
Multinational Enterprises as the Cabinet defines them: entities, or member entities of a group, located in the UAE or abroad. Ordinary UAE companies outside such groups are unaffected by the top-up tax provisions, though the revised Article 65 on revenue sharing applies to all Corporate Tax collected.
English official text in 2 passages. Open the full text or jump to a provision:
| Article One, Clause 1 | Adds the definitions of 'Top-up Tax' (a tax on Multinational Enterprises for the purposes of the OECD pillar two rules) and 'Multinational Enterprise' (an entity or its member entities in the UAE or abroad, as specified by Cabinet decision) to Article 1 of the Corporate Tax Law. |
| Article One, Clause 2 | Inserts Clause 3 into Article 3 of the Corporate Tax Law: the Cabinet, on the Minister's suggestion, issues a decision regulating the cases, conditions, rules, controls and procedures for imposing the Top-up Tax on Multinational Enterprises and the exemptions from it, so that the total effective tax on them is 15%. |
| Article Two | Replaces Article 65 of the Corporate Tax Law so that Corporate Tax and Top-up Tax revenues and administrative penalties collected under the law are shared between the Federal Government and the Local Governments under the federal law in force on that subject. |
| Article Three | As an exception to the general commencement rule, the Top-up Tax provisions come into effect on the date specified in a Cabinet decision issued on the Minister's suggestion and published in the Official Gazette. |
| Article Four | The Decree-Law is published in the Official Gazette and comes into effect on the day following its publication. |
The Decree-Law creates no new penalties. Administrative penalties collected under the Corporate Tax Law, including in relation to Top-up Tax, fall within the revenue-sharing mechanism in the replaced Article 65; the penalty amounts themselves are set in Cabinet Decision No. 75 of 2023.
Most of our clients are owner-managed companies and family holding structures well outside the Multinational Enterprise definition, so for them this Decree-Law changes nothing. Where a client's UAE company is a member of a large international group, we flag at the structuring stage that the 9% rate is not the end of the analysis: the group may be within scope of the top-up tax the Cabinet has introduced under the power this instrument created, and the free zone 0% rate does not shield a group entity from the 15% minimum. We ask for the group's consolidated revenue and parent-entity details during onboarding, note the exposure in our corporate tax advice, and coordinate with the group's tax advisers on the Pillar Two filings rather than treating the UAE entity in isolation.
| Amends | Federal Decree-Law No. 47 of 2022 |
| Cites | Corporate Tax Law |
| Cited by | Corporate Tax Law |
“Cites” and “Cited by” are built automatically from references in the full texts held in this library; they cover only instruments in the library.
Corporate Tax Law
Imposes federal corporate tax on the taxable income of UAE companies and businesses at 0% up to a Cabinet-set threshold and 9% above it, with 0% on the qualifying income …
Domestic Minimum Top-up Tax Decision
Introduces the UAE domestic minimum top-up tax under the OECD Pillar Two framework for constituent entities of multinational groups with consolidated revenue of EUR 750 m…
Corporate Tax Penalties Decision
Lists the administrative penalties for corporate tax violations: AED 10,000 for failing to keep records (AED 20,000 on repeat), AED 500 per month rising to AED 1,000 for …
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