Tax Planning
How Pillar Two & Top-Up Tax Reporting Changes Impact UAE Multinationals
With UAE’s Ministerial Decision No. 133 of 2026, multinationals operating in the UAE face new filing obligations under the Pillar Two / Top-Up Tax regime starting from 2025. Learn who’s affected, how to comply, and what this means for your global tax planning.
By NomadicTax Research Team • 5-8 min read • September 14, 2026
## Introduction
From **1 January 2025**, certain entities operating in the UAE will need to begin filing a **Pillar Two Information Return** as required by **Ministerial Decision No. 133 of 2026**, issued under **Cabinet Decision No. 142 of 2024**. This aligns with UAE’s implementation of the GloBE rules under the OECD/G20 Inclusive Framework. ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-issues-ministerial-decision-on-requirements-for-filing-pillar-two-information-return/?utm_source=openai))
This article dives into what these requirements are, who is affected, and how companies can prepare.
## Who Must File?
According to the decision, the following entities are required to file the Pillar Two Information Return in the UAE:
* Constituent Entities **located in the UAE** (excluding investment entities)
* Joint Ventures (JVs) and JV Subsidiaries established in the UAE
* Stateless Constituent Entities that are **reverse hybrid entities** under UAE law ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-issues-ministerial-decision-on-requirements-for-filing-pillar-two-information-return/?utm_source=openai))
Entities may file directly or appoint a **designated local entity** to file on their behalf. Filing applies **for fiscal years starting on or after 1 January 2025**. ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-issues-ministerial-decision-on-requirements-for-filing-pillar-two-information-return/?utm_source=openai))
## What Information Needs to be Reported?
The return requires details mirroring the global minimum tax / top-up tax regime:
* Financial results of each Constituent-Entity and JV/JV Subsidiary (revenues, profits/losses)
* Structural information on ownership, jurisdiction, any hybrid status
* Entity’s elective compliance if they opt for alternative filings via designated local entity
The objective is to guarantee **tax transparency**, prevent base erosion, and ensure multinationals pay effective tax rates compliant with Pillar Two rules. ([mof.gov.ae](https://mof.gov.ae/en/news/ministry-of-finance-issues-ministerial-decision-on-requirements-for-filing-pillar-two-information-return/?utm_source=openai))
## Key Implications & Tax Planning Actions
| Area | Implication | Action Steps |
|---|---|---|
| Data collection & systems | Multinationals must gather global financial data and legal entity info across their group. | Audit internal data readiness; assign responsibility; standardize reporting formats |
| Entity structuring | Reverse hybrids and joint ventures may introduce unexpected responsibilities. | Review JV agreements; assess whether any constituent entities qualify as reverse hybrids |
| Timing & fiscal periods | Filings start for FYs beginning Jan 1, 2025 — many entities will need their first returns in 2026/2027 depending on year-ends. | Map fiscal years; start internal projections; liaise with advisors |
| Penalties & compliance risk | Failing to file or misreporting could expose entities to penalties or reputational risk. | Engage legal/tax counsel early; ensure internal review; possibly request clarifications from UAE MoF or FTA |
## Example Scenario
A US parent company has a JV subsidiary in Abu Dhabi (Non-investment entity), whose fiscal year runs from 1 July to 30 June. Here’s what to anticipate:
* **FY 2025/2026** (beginning July 2025) is the first fiscal period that includes a January 1, 2025 start – thus subject to Pillar Two return.
* The UAE Constituent Entity (the JV-subsidiary) must file the return, whether directly or via a designated local entity.
* Relevant ownership, revenue, income, and hybrid status info must be collected and reported.
## Practical Tips for Compliance
1. **Assess entity types** — identify whether any part of your group qualifies as a reverse hybrid, or whether your JV partners fall into categories requiring filing.
2. **Align accounting and jurisdictions** — financials must reflect those used globally under OECD/GloBE rules.
3. **Engage local counsel or advisors early** — local tax advisory firms (e.g. Deloitte, EY) often provide implementation guidelines for Pillar Two in GCC.
4. **Prepare for disclosures** — besides financial, legal, structural, perhaps transfer pricing overlap.
5. **Train your team** — finance, tax, legal, and compliance teams will need to understand new rules and procedures.
## Conclusion
The UAE’s Pillar Two Information Return requirements signal a major step in international tax harmonization. Multinationals should view these changes as part of broader compliance obligations, not just reporting burdens. Starting early, structuring properly, and seeking clarity will help minimize risks and avoid penalties while aligning with global tax standards.