Which groups are subject to the 15% top-up tax?

Article 2 – Charging Provision 2.1 The following Entities shall pay the Top-up Tax for a Fiscal Year: (a) Constituent Entities located in the UAE during that Fiscal Year, including those that are members of a Minority-owned Subgroup. (b) Joint Ventures and JV Subsidiaries located in the UAE during that Fiscal Cabinet Decision No. 142 of 2024 – As published in the Official Gazette 5 2.2 2.3 Year; (c) Stateless Constituent Entities created in accordance with the laws of the UAE and that are Reverse Hybrid Entities, with respect to any of their Pillar Two Income or Loss as allocated and computed in accordance with this Decision. Notwithstanding Article 2.1: (a) the Constituent Entities of the Domestic Main Group and a Domestic Minority-owned Subgroup, may appoint a Domestic Designated Filing Entity to pay the Top-up Tax on behalf of the members of their Domestic Groups; (b) the Joint Venture and JV Subsidiaries of a Domestic JV Group may appoint a Domestic Designated Filing Entity to pay the Top-up Tax on behalf of the members of their Domestic JV Group; and (c) the Reverse Hybrid Entities referred to in Article 2.1 (c), may appoint a Domestic Designated Filing Entity that is a member of the Domestic Main Group or Domestic Minority-owned Subgroup to pay its Top-up Tax. An Investment Entity located in the UAE is not subject to the Top-up Tax.

3. What is the Top-up Tax on Multinational Enterprises and why was it introduced in the UAE? 3.1. Background In October 2021, members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“BEPS Inclusive Framework”), including the UAE, reached a landmark agreement on a two-pillar solution to address the tax challenges of the digitalisation of the economy. The two-pillar solution agreed by the BEPS Inclusive Framework is based on two main components: • Pillar One which aims to ensure a fairer distribution of profits and taxing rights among jurisdictions with respect to large Multinational Enterprises. • Pillar Two includes the Global Anti-Base Erosion Rules (“GloBE Rules”) that ensure that MNE Groups are subject to a minimum level of tax in each jurisdiction where they operate, essentially by the operation of a “top-up tax” mechanism. Pillar Two also includes a “subject to tax” rule which is a treaty-based rule that allows source jurisdictions to “tax back” where certain defined categories of crossborder intra-group covered income are subject to adjusted nominal corporate income tax rates below 9%. The subject to tax rule is not further considered within this guide. The GloBE Rules under Pillar Two ensures that the global minimum tax of 15% is charged through two interlocking rules, the Income Inclusion Rule (“IIR”) and the Undertaxed Profits Rule (“UTPR”), which are together referred to as the GloBE Rules. The IIR is the primary rule that applies a top-down approach. It generally requires the Ultimate Parent Entity (“UPE”) of an MNE Group to collect and pay to its tax authority the total Top-up Tax due by the MNE Group across all jurisdictions that have not taxed the profits at a minimum rate of 15%. If the jurisdiction of the UPE has not implemented an IIR, then the next Intermediate Parent Entity down the ownership chain is required to collect the Top-up Tax of the Constituent Entities of that Intermediate Parent Entity. This would continue down the group chain, as appropriate. Any Top-up Tax remaining after the application of an IIR is collected by means of a UTPR. Where UTPR applies, the Top-up Tax is levied across the group, based on the proportion of tangible assets and employees in each jurisdiction that has implemented a UTPR. Top-up Tax Guide | Scope and Registration | TTGREG1 20

Article 12 – Joint and Several Liability 12.1 All Constituent Entities of a Domestic Main Group and Domestic Minorityowned Sub-Group located in the UAE and all Reverse Hybrid Entities referred to in Article 2.1 (c) shall be jointly and severally liable for the full amount of the Top-up Tax attributable to members of those Groups and to the Reverse Hybrid Entities. Cabinet Decision No. 142 of 2024 – As published in the Official Gazette 68 12.2 All Joint Ventures and JV Subsidiaries of a Domestic JV Group located in the UAE shall be jointly and severally liable for the full amount of the Top-up Tax attributable to members of that Domestic JV Group. 12.3 Any partner, beneficiary or any other person who holds an Ownership Interest in a Constituent Entity that is not a legal person, that are created under the laws of the UAE and that is required to pay the Top-up Tax in accordance with Article 2.1 shall be jointly and severally liable to pay the Topup Tax of that Constituent Entity to the extent of its Ownership Interests in that Entity.