Compliance
How UAE’s Pillar Two Information Return Decision Impacts Multinational Entities
With UAE’s Ministerial Decision No. 133 of 2026 now specifying who must file Pillar Two returns under the Top-up Tax regime, MNEs need clarity on obligations, structure, and compliance.
By NomadicTax Research Team • 5-8 min read • September 7, 2026
## Understanding the Top-Up Tax and Pillar Two Rules in the UAE
The UAE implemented the **Top-Up Tax** regime under **Cabinet Decision No. 142 of 2024**, aligning with the OECD/G20 **Inclusive Framework’s Pillar Two** (Global Anti-Base Erosion – GloBE) rules. A key component is the **Pillar Two Information Return** – a mandatory reporting return intended to ensure transparency of multinational enterprises’ effective tax rates, income structure, and tax top-ups across jurisdictions. ([mof.gov.ae](https://mof.gov.ae/wp-content/uploads/2025/02/English-Cabinet-Decision-142-of-2024-on-Top-up-Tax-on-MNEs-1.pdf?utm_source=openai))
## What Ministerial Decision No. 133 of 2026 Introduces
Issued on **August 25, 2026**, this decision clarifies which entities must file the Pillar Two return. The following are in scope:
- Each **Constituent Entity** located in the UAE (excluding any Investment Entity)
- Each **Joint Venture** or JV Subsidiary located in the UAE
- **Stateless Constituent Entities** that are **Reverse Hybrid Entities** under UAE law
Also, filing may be done **directly by those entities** or **on their behalf by a Designated Local Entity**. And the rule is effective 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))
## Practical Implications and Actionable Advice
Multinational enterprises operating in the UAE need to take strategic steps now:
- **Identify all in-scope entities** in your UAE operations: check status as Constituent Entity, JV or reverse hybrid.
- **Assess whether to appoint a Designated Local Entity**: if certain entities lack capacity or structure, appointing someone locally might be needed.
- **Plan financial year alignment**: since the effective date is fiscal years beginning on or after 1 Jan 2025, ensure accounting and reporting periods are set accordingly.
- **Update your governance & tax reporting controls**: internal systems must capture data in line with the OECD template – revenue, tax paid, ETRs, Top-Up Tax, etc.
- **Review double tax treaty impacts & permanent establishment status** for non-resident or hybrid entities.
## Example Scenario
ABC Corp, based across multiple jurisdictions, has a UAE subsidiary (Constituent Entity) plus a JV partly in UAE and has an offshore SPV that is a reverse hybrid. Under Decision No. 133 of 2026:
- ABC Corp must prepare and file a Pillar Two Information Return for the UAE Constituent Entity and JV Subsidiary.
- For the reverse hybrid SPV, file if it is a Stateless Constituent Entity under UAE law.
- If some entities are not well-structured for filing themselves, ABC may appoint a Designated Local Entity to submit on their behalf.
## Risks of Non-Compliance
Failing to file on time or omitting required entities can lead to:
- financial penalties under UAE’s Top-Up Tax / Corporate Tax Law;
- difficulties in accessing treaty benefits or credibility with tax authorities;
- reputational risk in investor relations.
## Stay Updated
The UAE’s regime is evolving. While this decision clarifies obligation for Pillar Two, additional guidance or template updates may follow. Entities should monitor the **Ministry of Finance** and **Federal Tax Authority** for notifications.
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Author: NomadicTax Research Team
Read Time: ~7 min