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For a multinational group with offices across several countries, preparing a tax return is rarely a matter of checking one company’s accounts. Finance teams have to understand how entities fit together, where income is earned and taxed, and how figures reported in one jurisdiction connect with information held elsewhere. The UAE’s latest Pillar Two reporting decision brings that coordination into sharper focus.
In August 2026, the UAE Ministry of Finance announced Ministerial Decision No. 133 of 2026, identifying the entities required to submit a Pillar Two Information Return to the Federal Tax Authority (FTA). The measure does not create a new minimum tax or change the underlying revenue threshold. Instead, it explains who is responsible for reporting under the top-up tax framework already introduced by Cabinet Decision No. 142 of 2024.
For affected businesses, the practical question is simple: which member of the group will prepare the return, where will it be filed, and what evidence is needed to show the UAE reporting obligation has been met? This guide explains the answers in plain English, without losing the detail that tax and finance teams need.
1. What exactly has changed?
The new ministerial decision is about filing responsibility. UAE businesses within the relevant multinational group must assess whether they are among the entities covered by the Pillar Two Information Return rules and, if so, whether they should file locally, appoint a Designated Local Entity, or rely on a qualifying filing made abroad.
The decision was issued on 3 August 2026 and applies to fiscal years starting on or after 1 January 2025. That is an important distinction: the filing arrangements were clarified in 2026, but they apply to reporting periods that may have begun in 2025. Groups should therefore review the position for the first affected fiscal year, not wait for the next annual reporting cycle.
KEY POINT The key takeaway: Ministerial Decision No. 133 of 2026 clarifies who files a Pillar Two Information Return. It is a reporting measure within an existing top-up tax regime, not a separate new corporate tax.
2. Understanding Pillar Two and the 15% minimum tax
Pillar Two forms part of an OECD/G20 initiative intended to establish a minimum effective level of corporate taxation for large multinational enterprise (MNE) groups. Under the UAE’s Domestic Minimum Top-up Tax (DMTT), the broad objective is to bring the effective taxation of relevant UAE profits up to a 15% minimum, using the specific calculations required by the Pillar Two rules.
The regime generally targets multinational groups with consolidated annual revenue of at least €750 million in at least two of the four financial years preceding the year under review. It is the revenue of the consolidated international group that matters, rather than the turnover of one UAE subsidiary. A group that operates solely within the UAE is not an MNE group for these purposes, even if its revenue is substantial.
Scope snapshot based on the UAE Top-up Tax framework; the 15% test uses Pillar Two calculations, not a simple statutory rate comparison.
For example, imagine a business group with a parent company overseas, operating companies in several countries and two subsidiaries in Dubai. If the group passes the revenue test, its UAE entities may have obligations even if their individual turnover is relatively modest. Conversely, a local standalone company does not become subject to Pillar Two simply because it has a large domestic business.
It is equally important not to calculate a potential top-up tax simply by subtracting the UAE’s ordinary corporate tax rate from 15%. The Pillar Two effective tax rate is calculated from adjusted income, covered taxes and other prescribed adjustments, elections and reliefs. A company’s actual outcome can therefore be different from what a headline tax-rate comparison suggests. Businesses should assess these obligations alongside their existing UAE Corporate Tax services and compliance requirements, while keeping the two tax frameworks distinct.
3. Which UAE entities must file the Information Return?
Article 2 of Ministerial Decision No. 133 of 2026 specifies three broad categories of entities that must be considered for local filing, subject to the provisions for designated or qualifying overseas filings.
The categories are legal definitions. A group-level entity mapping exercise is essential before deciding who files.
• Constituent Entities in the UAE: Each UAE-located Constituent Entity is covered except an Investment Entity. Whether an entity meets a defined category must be tested under the legislation.
• Joint Ventures and JV Subsidiaries: The decision expressly includes qualifying Joint Ventures and JV Subsidiaries located in the UAE, so these arrangements should not be overlooked when mapping the group.
• Specified stateless Reverse Hybrid Entities: A Stateless Constituent Entity that is a Reverse Hybrid Entity created under UAE law is also specifically mentioned. These arrangements require technical classification.
This makes entity-level mapping a priority. A group may have several UAE companies, branches or special structures, and filing responsibility is not necessarily limited to its largest subsidiary or regional headquarters. Internal legal, consolidation and tax records should tell the same story about which entities exist and how they are classified.
4. Does every UAE entity need to prepare a separate return?
Not necessarily. The decision allows a relevant UAE Constituent Entity, Joint Venture or JV Subsidiary to file directly or to have a Designated Local Entity file on its behalf. For groups with multiple UAE businesses, a properly organised local filing arrangement can reduce duplication and establish one clear point of responsibility for gathering information and dealing with the FTA.
What if the parent company files in another country?
There is also a route to avoid duplicate local filing where a compliant Pillar Two Information Return has been submitted by the Ultimate Parent Entity or a Designated Filing Entity in another jurisdiction, provided a Qualifying Competent Authority Agreement is in effect between that jurisdiction and the UAE for the relevant reporting fiscal year.
Crucially, relying on a foreign return does not mean there is nothing left to do in the UAE. The relevant UAE entities, or a Designated Local Entity, must notify the FTA of the identity and location of the entity that is filing the return. The existence and effectiveness of the information-exchange agreement should be confirmed for the relevant year, not assumed because two countries both participate in Pillar Two.
The overseas filing route is conditional. The exact entities eligible for each alternative follow Article 2 of Ministerial Decision No. 133 of 2026.
A sensible internal approach is to document the chosen route, the filing entity, the supporting legal assessment, responsibility for notifications and the evidence the group expects to retain. Otherwise, different teams may assume another office has taken care of the requirement.
5. What information must be reported?
The Pillar Two Information Return is designed to give tax authorities a consistent picture of an in-scope multinational group and the calculations supporting its Pillar Two position. Under Article 15 of the annexure to Cabinet Decision No. 142 of 2024, the return is based on the OECD/G20 standard information-return template, as amended from time to time.
The reporting framework addresses the identification and tax location of group entities, the overall ownership structure, jurisdiction-level effective tax rate calculations, top-up tax computations, relevant elections and other information required by the implementation framework. Preparing the return typically requires data from consolidation systems, tax computations, local ledgers and entity master records.
Conceptual data workflow, not a representation of an official filing portal or mandated technology system.
A common challenge is that information can be technically correct in one system but inconsistent with another. The legal entity name in a group chart may differ from a tax registration record; a tax figure may be presented differently in the consolidation package; or a recent acquisition may not yet be reflected in an old reporting template. A reliable reporting process includes reconciliations and documented review, not simply importing a spreadsheet at year-end.
Reliable reporting starts with consistent financial information, and financial statement preparation services can help businesses organise their accounts and supporting documentation for review.
6. When are the filing deadlines?
Article 15.4 of Cabinet Decision No. 142 of 2024 provides that the Pillar Two Information Return and related notifications must generally be filed no later than 15 months after the end of the reporting fiscal year. For a group whose first relevant fiscal year runs from 1 January to 31 December 2025, the standard 15-month deadline points to 31 March 2027, subject to any applicable FTA instructions or legislative changes.
Calendar-year example only. Verify the reporting year-end, final applicable instructions and any subsequent changes.
Do not confuse the Pillar Two Information Return with the separate UAE Top-up Tax Return. The latter has its own filing rule under Article 8.1.2: generally 15 months after the reporting fiscal year, or 18 months where the specified first Transition Year rule applies. The special 18-month period should not automatically be carried over to the Pillar Two Information Return. Existing UAE Corporate Tax and Country-by-Country Reporting requirements are also distinct obligations, with their own conditions and timelines.
KEY POINT Practical deadline example: For a 31 December 2025 year-end, the normal Pillar Two Information Return and notification date is 31 March 2027. A separate Top-up Tax Return may have a different due date depending on the transition-year rule.
7. What might these rules look like in real business situations?
Example A: A UAE subsidiary of a large overseas group
A global manufacturing group operates in Europe and Asia and has a UAE distribution subsidiary. Its consolidated revenues meet the Pillar Two threshold. The UAE subsidiary must be assessed as a potential Constituent Entity, even though the UAE operation itself is small compared with the wider group. The group then decides whether to make an eligible filing locally, through a Designated Local Entity, or by relying on a qualifying filing elsewhere while completing the mandatory UAE notification.
Example B: Several UAE entities under one group
A multinational services group has three UAE operating companies and a qualifying JV. Finance is centralised at a regional office, but ownership and financial information are maintained by different departments. Before filing, the group needs one complete entity map, a reporting owner and a clear process for collecting and reviewing the required data. A Designated Local Entity may streamline some filing responsibilities where the conditions are met.
Example C: A large business operating only in the UAE
A UAE-only business group generates substantial annual revenue, but has no foreign operations and does not meet the definition of a multinational enterprise group. The UAE FTA’s October 2026 guidance confirms that wholly domestic groups are not within the scope of the UAE Qualified Domestic Minimum Top-up Tax solely because of their size. Other tax obligations can still apply, but Pillar Two should not be assumed from turnover alone.
Example D: Meeting the €750 million test in two of four years
Consolidated revenue is €720m (2021), €790m (2022), €810m (2023) and €700m (2024). For fiscal year 2025, the group meets the €750m test in two preceding years (2022 and 2023). Its UAE entities need a Pillar Two scope review despite revenue falling below the threshold in 2024.
Example E: A small UAE free zone subsidiary of a large group
A global technology group earns €1.1bn in consolidated annual revenue. Its UAE free zone subsidiary has AED 3m in sales. Neither its modest turnover nor free zone status automatically removes it from Pillar Two. The group must assess its classification, exclusions, reliefs and available filing arrangements.
Example F: A return filed overseas, but a UAE notification is still needed
A parent company submits a compliant Pillar Two Information Return overseas. If a Qualifying Competent Authority Agreement with the UAE is effective for the relevant fiscal year and all conditions are met, its UAE subsidiary may avoid duplicate local filing. The subsidiary or its Designated Local Entity must still notify the FTA of the overseas filer’s identity and location.
Example G: A group with a June year-end
A group’s first relevant fiscal year runs from 1 July 2025 to 30 June 2026. Under the standard 15-month rule, its Pillar Two Information Return and notification would normally be due by 30 September 2027, subject to FTA instructions and legal changes. The separate Top-up Tax Return may have a different transition-year deadline and must be tracked independently.
FTA WEBINAR | WORKED EXAMPLES ON QDMTT SCOPE AND REGISTRATION
The FTA webinar held on 22 October 2026 also explained which UAE entities must register for Domestic Minimum Top-up Tax (DMTT/QDMTT), how registration can be centralised and why Corporate Tax status does not settle Pillar Two obligations. The following examples are simplified adaptations of the structures and procedures illustrated in the webinar.
IMPORTANT DISTINCTION A Designated Domestic Filing Entity (DDFE) may handle UAE Top-up Tax registration and filing for the domestic group. A Designated Local Entity (DLE) is the filing alternative used for the Pillar Two Information Return under Ministerial Decision No. 133 of 2026. The two roles and their requirements should not be confused.
Example H: A UAE Corporate Tax group still has separate Top-up Tax registrations
Company X (the parent), Company Y and Company Z form one UAE Corporate Tax group. All three are UAE Constituent Entities of an in-scope multinational group. For Top-up Tax, the Corporate Tax grouping does not replace the need to register the relevant entities. X, Y and Z may apply individually or use an eligible DDFE; each receives its own Top-up Tax Tax Registration Number (TRN). Webinar slides 47–48.
Visual example: One UAE Corporate Tax group can comprise multiple QDMTT registrants with separate Top-up Tax TRNs (FTA webinar slides 47–48).
Example I: A company exempt from ordinary Corporate Tax may still register
Company S carries on an activity that is exempt under the UAE Corporate Tax Law, while related Company T is registered for Corporate Tax. Both are UAE Constituent Entities of the same in-scope MNE group. The ordinary Corporate Tax exemption of S does not by itself remove its Top-up Tax registration obligation. Each entity must be separately assessed for the QDMTT rules. Webinar slides 49–50.
Example J: An overseas parent with a UAE subsidiary and branch
An overseas parent, Company A, owns a UAE subsidiary, Company B, and operates a qualifying UAE Permanent Establishment (Branch P). Under the webinar example, B and Branch P are separate UAE Constituent Entities. They each require Top-up Tax registration, either individually or through an appropriately appointed DDFE; separate Top-up Tax TRNs are issued. Webinar slides 51–52.
Example K: Two UAE permanent establishments of one foreign company
Company C is based outside the UAE and operates through Branch X and Branch Y in the UAE. If each branch meets the relevant Permanent Establishment definition, each is considered a separate Constituent Entity for Top-up Tax purposes even though both belong to Company C. Accordingly, two registration applications or one eligible DDFE process covering both are required. Webinar slides 53–54.
Visual example: Two qualifying UAE permanent establishments of one foreign company are assessed separately for Top-up Tax (FTA webinar slides 51–54).
Example L: Minority-owned subgroup with a controlled 30% shareholding
Company F is the ultimate parent of an in-scope multinational group. It has a 30% ownership interest in Company P but retains control and consolidates P line by line; P wholly owns Company Q. Both P and Q are located in the UAE. The group must examine the minority-owned Constituent Entity and subgroup rules, rather than treating the 30% interest automatically as an ordinary joint venture. The two UAE entities remain within the Top-up Tax registration analysis. Webinar slides 55–56 (see also slides 24–25).
Example M: An equity-accounted joint venture and its subsidiary
Company D heads an in-scope group. Through its subsidiary, the group holds 50% of UAE Company X, which is accounted for using the equity method in the UPE’s consolidated financial statements; X owns 100% of UAE Company Y. Subject to the statutory JV definitions, X is a Joint Venture and Y a JV Subsidiary. They form a Domestic JV Group, distinct from the Domestic Main Group, and require the appropriate Top-up Tax registrations. Webinar slides 57–58.
Visual comparison: Minority-owned controlled subsidiaries versus an equity-accounted joint venture and its subsidiary (FTA webinar slides 24–25 and 55–58).
Example N: Using a Designated Domestic Filing Entity (DDFE)
An in-scope group has three UAE entities, A, B and C. The members authorise A to act as DDFE through the applicable EmaraTax process or signed authorisation. A files the relevant group registration application covering all three members. The FTA issues an individual Pillar Two Top-up Tax TRN to each member and a group-level TRN to the DDFE. The group should separately consider who will file the Pillar Two Information Return. Webinar slides 44–46.
Visual example: Entity-by-entity registration compared with the DDFE approach; the DLE Information Return role is separate (FTA webinar slides 44–46).
Example O: Zero top-up tax under a safe harbour does not eliminate registration
A UAE Constituent Entity qualifies for an available Transitional CbCR Safe Harbour for its first in-scope fiscal year, meaning its calculated UAE Top-up Tax for that year is deemed to be zero. It is nevertheless required to register for Top-up Tax if it remains an entity subject to the QDMTT framework. The same registration point can arise under other qualifying simplifications or exclusions noted by the FTA. Webinar slide 43.
Example P: Registration deadline for a 31 December 2025 year-end
A multinational group’s first in-scope fiscal year ends on 31 December 2025. Because this date is before 30 April 2026, its relevant UAE entities must apply for Top-up Tax registration by 30 November 2026. If three separate entities all miss the filing deadline, an AED 10,000 administrative penalty can arise for each entity (AED 30,000 in total); appointing a DDFE does not turn this into a single group penalty. Webinar slide 59.
Example Q: Registration deadline for a later fiscal year-end
A second in-scope group has a 31 December 2026 first in-scope fiscal year-end. Its normal registration window is seven months after that year-end, so the application would be due by 31 July 2027. This registration deadline is different from the 15-month Pillar Two Information Return timetable and any separately applicable Top-up Tax Return deadline. Webinar slides 59 and 61–64.
Visual comparison: Two QDMTT registration deadlines. Information Return and Top-up Tax Return deadlines must be tracked separately (FTA webinar slides 59, 61–64).
Example R: An out-of-scope year requires notification, not an automatic exit
A previously registered multinational group fails the revenue scope test for its fiscal year ended 31 December 2027. Under the webinar’s notification framework, the relevant group must submit the out-of-scope notification within six months, generally by 30 June 2028. If it later returns to scope, an in-scope notification is required within seven months of that later tested fiscal year-end. Remaining out of scope for five consecutive fiscal years can trigger a separate deregistration application within six months of the fifth year-end. Webinar slides 65–66.
Visual summary: In-scope and out-of-scope notifications and the five-year deregistration condition (FTA webinar slides 65–66).
Example S: Stateless partnerships and reverse hybrid entities are different
Consider two UAE-created partnerships owned by persons outside the UAE. Partnership P is treated as tax-transparent in both its place of creation and relevant owners’ jurisdictions, giving rise to a stateless flow-through classification in the webinar illustration. Partnership Q is transparent in the UAE but opaque where its owners are resident, so it may be a Reverse Hybrid Entity. Within an in-scope group, the UAE-created stateless Reverse Hybrid can be subject to Top-up Tax registration, whereas the non-reverse-hybrid stateless entity is not. Classification must be documented, not assumed. Webinar slides 28–32 and 41.
All scenarios and figures above are simplified illustrations for general guidance, including examples adapted from FTA webinar material dated 22 October 2026. They do not determine any particular group’s tax liability, filing exemption, entity classification, registration status or exact deadline. Verify current legislation, FTA instructions and facts before filing.
8. Six practical steps multinational groups should take now
The strongest preparations begin before a reporting portal opens or a deadline approaches. Groups should treat Pillar Two as a coordinated tax, accounting, legal-entity and governance exercise.
Suggested internal action plan, not a statutory six-step procedure.
• Confirm whether the group is in scope: Test the consolidated revenue threshold using the relevant prior-year financial statements, consider any exclusions and identify which fiscal year is affected.
• Create a complete UAE entity register: Include relevant Constituent Entities, Joint Ventures, JV Subsidiaries and potentially special structures. Record their classification, location, ownership and tax identifiers where available.
• Select and document the filing strategy: Decide which entity will file, whether a local designated arrangement is appropriate, and whether an overseas filing exemption and UAE notification can legitimately be used.
• Build a consistent data pack: Gather financial accounts, covered-tax information, consolidation adjustments, entity data and the evidence supporting elections and safe-harbour positions.
• Put deadlines and ownership in one calendar: Separate Pillar Two Information Return, notification, Top-up Tax Return, ordinary Corporate Tax and other relevant reporting obligations. Add QDMTT registration, in-scope/out-of-scope notifications and deregistration to the calendar where applicable.
• Review the result and retain evidence: Reconcile figures, obtain appropriate sign-off, document technical decisions and monitor changes in FTA guidance and the relevant international exchange arrangements.
It is also worth involving overseas head-office tax teams early. The most difficult questions often concern shared data definitions, the consistency of figures across jurisdictions and who is authorised to sign off the final filing. Clear group-wide responsibilities can help avoid duplicated work and late corrections. A Pillar Two compliance readiness assessment can help identify gaps in financial data, reporting systems and internal controls before the group finalises its compliance process. Businesses may also review their financial reporting processes and internal controls through audit services in UAE.
9. How Hallmark International can support your business
For multinational companies, tax compliance is easier to manage when the legal requirements are translated into a clear work plan. Hallmark Auditors can support businesses with an initial UAE Pillar Two applicability review, entity and reporting-obligation mapping, documentation checklists, coordination of information requests, filing-readiness assessments and practical internal reporting controls.
We can also help finance and management teams organise the evidence needed to support technical advice, identify areas that require specialist Pillar Two analysis and establish an action tracker ahead of the relevant FTA deadlines. Where detailed legal interpretations, complex calculations or cross-border agreement checks are required, these should be confirmed with suitably qualified tax advisers and the latest official guidance.
The goal is not paperwork for its own sake. It is to give the business a reliable answer to three questions: Are we in scope? Who is responsible? And can we demonstrate that the required information was assessed, prepared and submitted correctly?
Frequently asked questions
Does the 2026 decision mean every UAE company now pays 15% corporate tax?
No. Pillar Two generally applies to large multinational groups that meet the revenue and other scope tests. The 2026 decision clarifies Information Return filing responsibilities; it does not replace ordinary UAE Corporate Tax for all businesses.
Does a UAE free zone company automatically fall outside Pillar Two?
No blanket conclusion should be drawn from free zone status alone. The group and entity must be assessed under the applicable Pillar Two rules, including any relevant exclusions, reliefs and elections.
Can a parent company outside the UAE file for everyone?
A compliant filing by the Ultimate Parent Entity or a Designated Filing Entity can remove certain UAE local filing obligations only when the conditions are met, including a Qualifying Competent Authority Agreement in effect for the relevant fiscal year. The UAE notification requirement still matters.
Is the Information Return the same as Country-by-Country Reporting?
No. Both involve multinational information, but they have different purposes, rules, filing procedures and data requirements. A group should maintain separate compliance checks for each.
What if no top-up tax is ultimately payable in the UAE?
A nil or reduced top-up tax outcome does not, by itself, prove that all Pillar Two information-return, notification or registration obligations disappear. Applicable reliefs, filing exceptions and administrative requirements need separate review.
A final thought: Make reporting a managed process, not a deadline surprise
The UAE’s latest filing decision brings greater clarity to the Pillar Two reporting framework. For multinational groups, that clarity is valuable—but only if it leads to an organised process across all relevant UAE entities. A documented filing route, reliable data and early coordination with the wider group can make the difference between a controlled compliance exercise and a difficult last-minute search for information.
If your business is part of an international group and you are uncertain how the UAE Pillar Two Information Return rules apply, Hallmark International can help you structure the initial review and prepare the next steps with your tax advisers.
