DMTT Substance-Based Income Exclusion in a nutshell

DMTT Substance-Based Income Exclusion (SBIE) in a nutshell

The SBIE allows multinational groups to reduce their Domestic Minimum Top-up Tax (DMTT) liability by excluding a portion of income linked to genuine economic substance in the UAE.

Under the UAE DMTT rules (aligned with OECD GloBE), the SBIE is calculated as a percentage of payroll costs and the net book value of qualifying tangible assets located in the UAE.

Key points:

Rewards real economic presence (employees and fixed assets) and is particularly beneficial for Free Zone entities with adequate substance.

Standard rates are 5% on eligible payroll and 5% on tangible assets, with higher transitional rates in the early years (9.6% and 7.6 in 2025).

The excluded amount directly lowers the income subject to the 15% top-up tax.

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