Large multinational groups operating in the UAE now face a new tax obligation. Under Pillar Two, in-scope MNE groups must pay a minimum effective tax rate of 15% on their UAE profits, and their UAE entities must register for Pillar Two Top-up Tax with the Federal Tax Authority (FTA).
If your group has global revenue of EUR 750 million or more, this affects you for fiscal years starting on or after 1 January 2025. This guide explains who must register, who is exempt, which documents you need, and what happens if you don’t comply.
According to the UAE Ministry of Finance, the registration deadline and further guidance will be published in due course. Preparing now gives your group time to gather documents and confirm its structure before the deadline is announced.
Pillar Two Top-up Tax was introduced under Cabinet Decision No. 142 of 2024. It ensures that in-scope MNE groups pay a minimum effective tax rate of 15% in the UAE.
It is part of the global minimum tax framework developed by the OECD, which many countries have adopted. The UAE’s version, known as the Domestic Minimum Top-up Tax (DMTT), means any top-up tax owed on UAE profits is collected in the UAE rather than by another country.
Does Pillar Two replace UAE Corporate Tax? No. Top-up Tax is charged on top of the covered taxes already paid in the UAE, and its compliance obligations are separate from Corporate Tax. Groups in scope must comply with both.
Registration is not mandatory for all UAE companies. Only in-scope MNE groups must register, and purely domestic UAE groups that do not meet the global revenue threshold are generally out of scope.
Your entity is likely required to register if all of the following apply:
Two special cases also matter. If any fiscal year used in the test is shorter or longer than 12 months, the EUR 750 million threshold is adjusted proportionally. And a group can also come into scope because of a merger, acquisition or demerger.
The following entity types can be subject to Top-up Tax:
Are free zone companies exempt? No. Free zone entities are not automatically exempt. If they belong to an in-scope MNE group, they must register and comply with Pillar Two Top-up Tax rules.
Some entities do not need to register, even within an in-scope group:
It is also not mandatory for every Corporate Tax registrant to register for Pillar Two. Only entities that meet the eligibility criteria in the legislation must do so.
The rules use several technical terms. Here is what they mean in plain language.
Term | What it means |
|---|---|
MNE Group | A group with at least one entity or Permanent Establishment located outside the country of its Ultimate Parent Entity. A single entity with Permanent Establishments in other countries also counts, if it is not part of another group. |
Group | Entities related through ownership or control whose results are included in the Ultimate Parent Entity’s Consolidated Financial Statements (or excluded only for size, materiality, or because they are held for sale). |
Domestic Designated Filing Entity (DDFE) | A Constituent Entity that registers, files the Top-up Tax Return and pays Top-up Tax on behalf of all members of a Domestic Main Group, Domestic Minority-owned Subgroup or Reverse Hybrid Entity. A JV or JV Subsidiary can play this role for a Domestic JV Group. |
Designated Filing Entity (DFE) | A Constituent Entity, other than the Ultimate Parent Entity, appointed by the MNE Group to file the Pillar Two Information Return for the whole group. |
Designated Local Entity (DLE) | A UAE-based Constituent Entity appointed by the group’s other UAE entities to file the Pillar Two Information Return or submit notifications. |
Can a domestic group have more than one DDFE? No. Either all entities of the Domestic Main Group, Domestic Minority-owned Subgroup and Reverse Hybrid Entities register together through one DDFE, or every entity registers separately. A group cannot use a DDFE for some entities while others register on their own. Each Domestic JV Group may appoint its own DDFE from within that JV Group.
Prepare these documents before you start your application on EmaraTax:
Files must be in PDF, DOC or DOCX format, with a maximum size of 15 MB per file
Registration is done through the FTA’s EmaraTax portal. In broad terms, the process looks like this:
You can save an application as a draft and finish it later, but it will be automatically cancelled if not submitted within 60 calendar days of starting it. Reminders are sent to your registered email and verified mobile number.
Once submitted, your application will show one of these statuses:
Status | What it means |
|---|---|
Draft | The application has not been completed or submitted |
In Review | The FTA has received the application and is processing it |
Awaiting Information | You need to provide additional information to the FTA |
Approved | The application is approved and tax records are updated |
Rejected | The FTA has rejected the application |
Once registered, you must file a Top-up Tax Return. Depending on where the Ultimate Parent Entity and any Designated Filing Entity are located, you may also need to file a Pillar Two Information Return.
You do not need to file the Information Return in the UAE if the Ultimate Parent Entity, or an appointed Designated Filing Entity, files it in a country that has signed a Multilateral Competent Authority Agreement (MCAA) with the UAE.
Note that the tax period for Top-up Tax is the Reporting Fiscal Year used for the Ultimate Parent Entity’s Consolidated Financial Statements. This may differ from your UAE Corporate Tax period.
Failing to register or comply with Pillar Two Top-up Tax rules can lead to:
Because Pillar Two involves group-wide data from multiple countries, late preparation is a real risk. Starting early helps avoid rushed filings once the FTA announces the registration deadline.
Is Pillar Two applicable in the UAE?
Yes. The UAE introduced Pillar Two Top-up Tax through Cabinet Decision No. 142 of 2024. It applies to fiscal years starting on or after 1 January 2025, but only to entities of MNE groups with annual revenue of EUR 750 million or more in at least two of the previous four fiscal years. Most purely domestic UAE businesses are not affected.
What is the Pillar Two minimum tax rate in the UAE?
In-scope MNE groups must pay a minimum effective tax rate of 15% in the UAE, under Cabinet Decision No. 142 of 2024.
Do all UAE companies need to register for Top-up Tax?
No. Only entities of MNE groups with annual revenue of EUR 750 million or more, in at least two of the previous four fiscal years, need to register.
When does Pillar Two apply in the UAE?
It applies to fiscal years starting on or after 1 January 2025.
What is the deadline for Pillar Two registration in the UAE?
The Ministry of Finance has stated that the registration deadline and guidance will be published in due course. Check the Ministry of Finance Top-up Tax page for updates.
Are free zone entities exempt from Pillar Two? No. Free zone entities that belong to an in-scope MNE group must register and comply.
Is the Pillar Two tax period the same as the Corporate Tax period?
Not necessarily. The Top-up Tax period follows the Ultimate Parent Entity’s Reporting Fiscal Year, which may differ from your Corporate Tax period.
How long can I keep a registration application in draft?
Up to 60 calendar days. After that, EmaraTax cancels it automatically.
Pillar Two adds a new layer of compliance for multinational groups in the UAE, from checking eligibility to choosing a filing structure and preparing group-wide documents. Getting it right early reduces the risk of penalties and reporting issues.
AM Audit’s CPA-led tax team supports businesses across Abu Dhabi, Dubai and ADGM with Corporate Tax, Transfer Pricing and regulatory compliance. If you’re unsure whether your group is in scope, or need help preparing your registration, contact our tax experts for a consultation.
This article is for general information only and is based on guidance published by the UAE Ministry of Finance. It is not tax advice. Please consult a qualified tax advisor about your specific situation.
