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Entity Setup

Preparing for UAE’s Pillar Two Filing Requirement: What Multinationals Must Know

The UAE’s new requirements under Ministerial Decision No. 133 of 2026 impose Pillar Two Information Return obligations – here’s how multinational businesses should prepare.

By Nomadic Tax Institute research team · 5-8 min read · Created

Background on Pillar Two in UAE

UAE has adopted Cabinet Decision No. 142 of 2024 to impose a Top-Up Tax regime under the OECD’s Pillar Two (Global Anti-Base Erosion Rules, GloBE) framework. On August 25, 2026, the Ministry of Finance issued Ministerial Decision No. 133 of 2026, specifying which entities are required to file the Pillar Two Information Return for fiscal years starting on or after 1 January 2025 (mof.gov.ae).

Entities Required to File

  • Each Constituent Entity in UAE (excluding any Investment Entity).
  • Each Joint Venture (JV) and JV Subsidiary located in UAE.
  • Each Stateless Constituent Entity that is a Reverse Hybrid Entity in UAE (mof.gov.ae).

Entities may file either directly or via a Designated Local Entity, which acts as agent for the group.

Practical Steps to Comply

  1. Identify if your entity qualifies under the definitions: cross-border activities, hybrid/joint venture arrangements, reverse hybrids.
  2. Determine fiscal year: if your financial year begins on or after 1 January 2025, plan to comply. Others may have later timelines.(mof.gov.ae)
  3. Collect required data early: Routine reporting will require consolidated information from global operations—profit, tax paid abroad, adjustments for GloBE rules.
  4. Choose the filing route: Direct submission versus through a Designated Local Entity; consider which gives better control or less burden.
  5. Review local tax positions and agreements: Double tax treaties, tax credits, other local laws may affect top-up tax liability.

Example Scenario

Suppose a multinational software firm has a UAE-based joint venture (JV) and operates foreign subsidiaries. The JV is located in UAE and thus must prepare a Pillar Two Information Return. The firm elects to have its domestic holding company in UAE act as the Designated Local Entity to file for all UAE subsidiaries, simplifying coordination.

Risks & Considerations

  • Penalties for non-filing or late filing may be significant under UAE law.
  • Changes in data interpretation or audit risk where entities misclassify investment entities or reverse hybrids.
  • Need to monitor international developments—OECD guidance or future ministerial decisions may change definitions or filing requirements.

Category: Entity Setup TaxHome: MiddleEast Author: NomadicTax Research Team ReadTime: 5-8 min Published: true

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