Through 2024 and 2025 the UAE issued a cluster of Ministerial, Cabinet and Federal Tax Authority decisions that take effect for tax periods starting on or after 1 January 2025. Together they refresh the rules on tax groups, participation exemption, audited accounts, Pillar Two, non-resident nexus and investment funds — the framework every business must apply across the FY 2025-26 filing cycle.
Key takeaways
- Ministerial Decision No. 301 of 2024 replaces MD 125 of 2023 and updates how corporate tax groups are formed, maintained and consolidated, effective 1 January 2025.
- Ministerial Decision No. 302 of 2024 revises the participation exemption, with a 5% minimum holding and an acquisition-cost test of at least AED 4 million that is now determinative.
- Cabinet Decision No. 142 of 2024 introduces the UAE's Domestic Minimum Top-Up Tax (DMTT) — a 15% minimum for multinational groups with turnover of €750 million or more — with Ministerial Decision No. 88 of 2025 providing the implementing guidance.
- Cabinet Decision No. 35 of 2025 defines when a non-resident juridical person has a taxable nexus in the UAE — through UAE immovable property income or qualifying investment fund and REIT holdings — and failing to register where nexus exists can trigger penalties.
- FTA Decision No. 5 of 2025 clarifies compliance for unincorporated partnerships, foreign partnerships and family foundations, effective 1 July 2025.
What changed for tax groups and accounts?
Two decisions reshape group filing. Ministerial Decision No. 301 of 2024 rewrites the tax-group rules — eligibility and control tests, the parent's responsibilities, joint filing and the treatment of intercompany transactions. The practical work for FY 2025-26 is to confirm whether a group should form or continue, and to map pre-group losses and net interest expenditure carefully, because getting that mapping wrong can cause disallowances. In practice, groups that map their pre-group losses and net interest position before forming the tax group save weeks of rework at filing time.
Running alongside it, Ministerial Decision No. 84 of 2025 expands the population of entities that must prepare and submit audited financial statements under Article 54 of the CT Law, and FTA Decision No. 7 of 2025 prescribes the format and aggregation rules for the audited special-purpose financial statements that tax groups file. The message is consistent: group reporting is becoming more formal, and audit readiness needs to be arranged well before the deadline.
How does the participation exemption change?
Ministerial Decision No. 302 of 2024 revises the exemption for dividends and capital gains from qualifying shareholdings, aligning it with the OECD BEPS 2.0 standards. It updates the conditions that make a shareholding "qualifying" — a minimum 5% holding, an ownership period, and a "subject to tax" test.
A position built on the 5% ownership percentage alone can now fail — under the revised participation exemption it is the AED 4 million acquisition-cost test that is determinative.
For investment holding entities and groups with foreign permanent establishments, that shifts the analysis. The immediate actions are to re-evaluate foreign PE status and loss utilisation, tag participations against the AED 4 million cost threshold, and update the dividend and disposal playbooks the group relies on when it distributes profits or sells a shareholding.
What do the Pillar Two, nexus and fund decisions mean?
Each decision imposes a new duty on a distinct population: Cabinet Decision No. 142 of 2024 applies a 15% Pillar Two minimum tax to multinationals with turnover of €750 million or more, Cabinet Decision No. 35 of 2025 defines when a non-resident has a taxable UAE nexus, and Cabinet Decision No. 34 of 2025 updates the conditions for tax-exempt investment funds.
| Instrument | What it covers | Who is affected |
|---|---|---|
| Cabinet Decision No. 142 of 2024, with MD 88 of 2025 | Introduces the DMTT and the agreed administrative guidance implementing OECD Pillar Two (a 15% minimum tax) | Multinational groups with turnover of €750 million or more operating in or through the UAE |
| Cabinet Decision No. 35 of 2025 | Defines a non-resident juridical person's nexus, covering immovable property income and certain QIF and REIT investments | Non-resident investors with UAE property-linked income |
| Cabinet Decision No. 34 of 2025 (replacing CD 81 of 2023) | Updates the conditions for tax-exempt Qualifying Investment Funds and Qualifying Limited Partnerships, including when exemption is lost | Fund managers, private equity and venture capital funds, and institutional investors |
For in-scope multinationals, the DMTT means a genuine effective-tax-rate model, clean intercompany and deferred-tax data, and a top-up-tax compliance calendar. For non-residents, the priority is screening for nexus and registering where it exists. For funds, it is re-confirming Qualifying Investment Fund or Qualifying Limited Partnership eligibility before an exemption is quietly lost. Groups with cross-border structures should also revisit their international tax and transfer pricing positions, since these decisions interact.
Turning the decisions into an FY 2025-26 plan
The common thread is a shift from registration readiness to regulatory precision. Each instrument implies concrete, near-term action: decide on grouping and stand up an audited SPFS workflow; tag participations and verify the holding and asset tests; run the €750 million threshold test and build the DMTT model; screen non-residents for nexus; and reassess partnership and family-foundation status under the revised rules. The UAE regime is moving from principle-based to data-driven compliance, and the groups that align their reporting systems and consolidation controls before the 2025 year-end will carry the least risk into filing.
Frequently asked questions
Which UAE corporate tax decisions take effect for FY 2025-26?
The core changes are Ministerial Decisions 301 of 2024 (tax groups), 302 of 2024 (participation exemption), 84 of 2025 (audited accounts) and 88 of 2025 (Pillar Two guidance); Cabinet Decisions 142 of 2024 (DMTT), 35 of 2025 (non-resident nexus) and 34 of 2025 (funds); and FTA Decisions No. 7, No. 1 and No. 5 of 2025. Most apply from 1 January 2025.
What is the DMTT and who does it affect?
The Domestic Minimum Top-Up Tax, introduced by Cabinet Decision No. 142 of 2024, is the UAE's implementation of the OECD Pillar Two 15% global minimum tax. It affects multinational enterprise groups with consolidated revenue of €750 million or more that operate in or through the UAE, along with their UAE constituent entities.
How did the participation exemption change?
Ministerial Decision No. 302 of 2024 revised the participation exemption to align with OECD BEPS 2.0, keeping the 5% minimum holding but making the AED 4 million acquisition-cost test determinative alongside a "subject to tax" test. Positions relying on the ownership percentage alone may now fail, so holdings should be reassessed against the cost threshold.
Do non-residents need to register for UAE corporate tax?
A non-resident that has a permanent establishment or nexus in the UAE — as defined by Cabinet Decision No. 35 of 2025 through UAE immovable property income or QIF and REIT investment thresholds — generally must register. Failing to register where nexus exists can trigger penalties, so non-residents with UAE-facing revenue should screen their position early.
How SBC Tax Consulting can help
SBC translates this decision cluster into an FY 2025-26 action plan: assessing tax-group formation, re-testing participation-exemption and foreign-PE positions, building DMTT effective-tax-rate models, screening non-residents for nexus, and re-confirming fund eligibility. We align audited SPFS workflows and group consolidation controls before year-end. Explore our corporate tax services, review our tax FAQs, or contact us to prioritise the decisions that affect you.
This publication is for general information only and does not constitute professional advice. Please consult your SBC advisor before acting on any matter covered here.