Tax Planning
Planning for UAE Pillar Two Reporting: What Multinationals Need to Do Now
With the UAE’s recent introduction of explicit Pillar Two reporting requirements under its Top-Up Tax regime, multinationals need to understand which entities are in scope, timing, and data obligations to avoid penalties.
By NomadicTax Research Team • 5-8 min read • September 1, 2026
## Overview
The UAE has issued *Ministerial Decision No. 133 of 2026*, which defines **which entities must file a Pillar Two Information Return** under *Cabinet Decision No. 142 of 2024* (the UAE’s Top-Up Tax regime).([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 digs into what this means for multinationals doing business in or via UAE-based entities — and what you should do now to comply.
## Who Has to File
According to the new decision (applicable from fiscal years starting **on or after 1 January 2025**), the following entities are required to file a Pillar Two Information Return:
- **Each Constituent Entity** located in UAE (excluding Investment Entities)
- **Each Joint Venture and JV Subsidiary** located in UAE
- **Stateless Constituent Entities** that are reverse-hybrid entities under UAE law
These entities may file the return **directly** or via a **Designated Local Entity** 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))
## Compliance Timeline & Data Requirements
| Item | Detail |
|---|---|
| Effective date | Fiscal years starting on or after **1 Jan 2025** |
| Key data required | Profit & loss, constituent entity structure, intra-group transactions, income reports across jurisdictions |
| Who can file | Individual Constituent Entities or Designated Local Entity |
## Actionable Steps for Multinations Now
1. **Identify all in-scope entities**: Constituent Entities, JVs, reverse hybrids based in UAE. Map out structures.
2. **Review data gathering procedures**: Ensure systems can capture actions across the group needed for GloBE reporting – revenue, earnings, taxes paid abroad.
3. **Determine filing route**: Decide whether the UAE entities file directly or appoint a Designated Local Entity. Requires clarity and internal agreement.
4. **Check consistency with group reporting elsewhere**: Pillar Two rules affect liabilities in multiple jurisdictions; information may need to match group financials.
5. **Assess risk & penalties**: Where filings are inaccurate or late, consequences under Top-Up Tax or corporate tax laws may follow.
## Example Scenario
Acme Global Ltd., an MNE headquartered outside UAE, owns:
- Acme Manufacturing UAE LLC (Constituent Entity)
- Acme JV Arabia (Joint Venture)
- Acme Investment Trust, a reverse hybrid entity established under UAE law
Under MD 133:
- Both the Manufacturing UAE entity and the JV must file the Pillar Two Information Return.
- The Trust, if reverse-hybrid, is also required.
- All three can file directly or via a designated entity.
## Why This Matters for Tax Planning
- **Cash flow impact**: Pillar Two rules impose minimum effective tax rates; topline rates can trigger additional tax liabilities or refusals of deductions elsewhere.
- **Deferred compliance cost**: Data system upgrades, consolidated reporting, and cross-border agreements take time.
- **Reputation & transparency**: Clear, accurate reporting is now being watched more closely by tax authorities globally.
## Key Takeaways
- The UAE’s Pillar Two Information Return requirement is active for fiscal years starting **1 Jan 2025**.
- Entities in UAE that are part of groups must assess whether they fall in scope.
- Early preparation—structure reviews, reporting systems—will make compliance smoother.
- Consult specialized advisors, especially in complex cross-border groups.
**Find out if your entities are in scope now**—begin internal audits and establish documentation trails. The deadline may be close.