The UAE Federal Tax Authority (FTA), in its August 2026 Scope and Registration Guide No. TTGREG1, provides an example of two Groups merging on 1 January 2025. The FTA concludes that the resulting MNE Group falls within the UAE Domestic Minimum Top-up Tax (DMTT) scope for 2025 because the combined historical revenues of the predecessor Groups exceeded EUR 750 million in two of the four preceding Fiscal Years.
This conclusion follows para 23 of the OECD Consolidated Commentary (2026), which reaches the same result for Groups merging “in Year 5”, without specifying the precise date on which the merger takes effect.
However, Article 6.1.1(a) of Cabinet Decision No. 142 of 2024 expressly provides that its special merger rule applies “if two or more Groups merge to form a single Group in any of the four Fiscal Years prior to the tested Fiscal Year…”, i.e. it applies to mergers occurring in one of the four Fiscal Years preceding the tested Fiscal Year.
Neither the OECD Commentary nor the FTA Guide explains how a merger occurring in the tested Fiscal Year satisfies that condition.
The distinction is important. Under a literal interpretation of the legislation, a newly merged MNE Group may remain outside the UAE DMTT scope in the merger year, whereas the OECD and FTA interpretation could bring it within scope immediately.
The following case study examines this inconsistency and its possible implications.
