Compliance
New Rules for Pillar Two Reporting in the UAE: Who Must File the Information Return?
Understand Ministerial Decision No. 133 of 2026, which clarifies which UAE entities must file Pillar Two returns under the Top-up Tax regime, effective for financial years beginning 1 January 2025.
By NomadicTax Research Team • 5-8 min read • August 31, 2026
## Background: What’s Pillar Two and the UAE’s Top-Up Tax?
Pillar Two stems from OECD rules to ensure large Multinational Enterprises (MNEs) pay a **global minimum tax**. The UAE’s Top-up Tax (Domestic Minimum Top-up Tax, or DMTT) implements these standards through **Cabinet Decision No. 142 of 2024**. ([mof.gov.ae](https://mof.gov.ae/en/public-finance/tax/top-up-tax/?utm_source=openai))
## What Ministerial Decision No. 133 of 2026 Says
Issued **August 25, 2026**, this decision clarifies **which entities** are obliged to file the Pillar Two Information Return with the Federal Tax Authority. It applies to fiscal years beginning **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))
### Entities Required to File
- Every **Constituent Entity** located in UAE — **excluding** Investment Entities.
- Joint Ventures and JV Subsidiaries located in the UAE.
- Stateless Constituent Entities that are **Reverse Hybrid Entities** under UAE law.
Entities may file directly **or** have a **Designated Local Entity** file on their behalf. ([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))
## Real-World Example
- A fintech company in Dubai, part of a multinational group with global revenues over €750 million, meets the Constituent Entity definition. Even though it is in a free zone, it must file the Information Return.
- A UAE-based JV between two foreign companies falls under requirement if it’s a JV Subsidiary.
- Investment vehicles or funds classified as “Investment Entities” are exempt from filing this return.
- A reverse hybrid entity (one created under UAE law but tax treated differently elsewhere) also must prepare for this reporting.
## Compliance Tips
- **Identify entity classification** early: know if you’re a Constituent Entity, JV Subsidiary, Investment Entity, or a reverse hybrid.
- **Establish local filing capabilities**: whether filers submit directly or via a Designated Local Entity, ensure required data systems and governance are ready.
- **Retrospective coverage**: fiscal years starting 1 January 2025 are covered—so if your financial year ends later (e.g. Dec 2025), don’t wait until next cycle.
- **Align with other global reporting**: Pillar Two reporting overlaps with other international tax compliance—CRS, OECD guidance—so avoid duplicate or conflicting disclosures.
## What This Means for Businesses
- **Increased transparency and disclosure**: Many UAE group entities will now have to prepare new schedules and financial disclosures.
- **Potential tax liabilities**: Top-up Tax may become payable if your effective tax rate (ETR) in UAE or elsewhere is below the OECD minimum.
- **Governance and audit risk**: Errors or late filing could bring penalties.
By understanding the new decision and mapping your entity structure now, you can avoid surprises and position your business to meet its global tax obligations efficiently.