The United Arab Emirates (UAE) has taken a further step in implementing the Organisation for Economic Co-operation and Development (OECD)'s 'Pillar Two' global minimum tax framework with the issuance of Ministerial Decision No. 133 of 2026 (the Decision). While the Decision does not introduce any new tax liabilities, it provides important practical guidance on who must file the Pillar Two Information Return (PTIR) under the UAE's Domestic Minimum Top-up Tax (DMTT) regime and when UAE entities may rely on filings made elsewhere within their company group. For multinational enterprise (MNE) groups operating in the UAE, this represents an important development in the evolving Pillar Two compliance landscape.
Background
The UAE first implemented its DMTT regime through Cabinet Decision No. 142 of 2024 (the Implementing Decision), introducing a DMTT broadly aligned with the OECD's Pillar Two Global Anti-Base Erosion (GloBE) Rules. Consistent with the GloBE rules, the UAE's DMTT regime applies to MNE groups with annual consolidated revenues of at least €750 million in at least two of the four preceding fiscal years. The objective of Pillar Two is to ensure that in-scope MNE groups pay a minimum effective corporate tax rate of 15% in every jurisdiction in which they operate. The DMTT allows the UAE to collect any top-up tax arising in respect of UAE activities before taxing rights are ceded to other jurisdictions under the GloBE 'Income Inclusion Rule' or 'Undertaxed Profits Rule'. If an MNE group's effective tax rate in the UAE falls below 15%, the DMTT collects the difference.
The Implementing Decision established that MNE groups are required to submit a PTIR within 15 months after the end of each fiscal year, although it left it to a future ministerial decision to prescribe the specific entities responsible for filing the return. Against this backdrop, the Decision now provides much-needed clarity on PTIR filing requirements under the UAE's DMTT regime.
For ease of reference, capitalised terms used in connection with the UAE DMTT regime in this article have the meanings given to them in the Implementing Decision. Capitalised OECD Pillar Two concepts and rules are used with the meanings given to them under the OECD Pillar Two framework.
Ministerial Decision No. 133 of 2026
The Decision clarifies which entities are required to submit the PTIR to the Federal Tax Authority (FTA) and sets out the circumstances in which a UAE entity may be exempt from a local filing where an equivalent report has been submitted elsewhere within the group. Importantly, the Decision is procedural in nature. It does not modify the €750 million revenue threshold or impose any additional tax liabilities.
The Decision applies to fiscal years commencing on or after 1 January 2025. Accordingly, for MNE groups operating on a calendar-year basis, the first reporting period subject to the new requirements will generally be the financial year ending 31 December 2025.
Which entities must file?
Subject to an important exemption discussed below, the Decision requires the following UAE-connected entities to file a PTIR:
- Each Constituent Entity located in the UAE, other than an Investment Entity;
- Each Joint Venture and Joint Venture Subsidiary located in the UAE; and
- Each Stateless Constituent Entity that is a Reverse Hybrid Entity established under UAE law.
This is a broad formulation and is consistent with the wider OECD Pillar Two framework, which seeks to ensure that tax authorities have access to information relating to entities within their jurisdiction. Of particular note is that the filing obligation is not restricted to a group's UAE parent company or principal operating entity. Multiple UAE entities within the same group may therefore fall within scope of the filing requirements.
The Designated Local Entity
To reduce the administrative burden that could arise from multiple entity-level filing obligations, the Decision permits a Designated Local Entity to submit the Pillar Two Information Return on behalf of the relevant Constituent Entities, Joint Ventures or Joint Venture Subsidiaries.
This important flexibility should allow MNE groups to centralise compliance and reporting processes within the UAE. In practice, many groups are likely to designate a single UAE entity with responsibility for collecting data, managing interactions with the FTA, and coordinating Pillar Two reporting across local operations.
The local filing exemption
Perhaps the most commercially significant aspect of the Decision is its recognition of foreign group-level filings.
The Decision clarifies that a UAE Constituent Entity, Joint Venture or Joint Venture Subsidiary is not required to submit its own PTIR where a compliant return has already been filed by the Ultimate Parent Entity (UPE) or a Designated Filing Entity, provided that the filing entity is located in a jurisdiction that has a Qualifying Competent Authority Agreement (QCAA) in force with the UAE for the relevant reporting fiscal year. A QCAA is an agreement that allows the automatic exchange of Pillar Two GloBE information between tax authorities, enabling the FTA to obtain the relevant information directly from the foreign jurisdiction.
The UAE has not yet published a comprehensive list of jurisdictions with which a QCAA is in effect. However, a QCAA is expected to arise through the OECD's exchange framework for GloBE information returns known as the Multilateral Competent Authority Agreement (MCAA). Major Pillar Two jurisdictions including the United Kingdom, France, Germany, Switzerland, Singapore, Japan, Canada and Australia, have signed the MCAA. Nevertheless, whether a QCAA is in effect with the UAE for a particular reporting fiscal year will ultimately depend on the operation of the relevant exchange arrangements.
The notification requirement
The local filing exemption is not a complete exemption from UAE compliance. Under Article 2(4) of the Decision, where the relevant UAE entities rely on a filing made by a UPE or Designated Filing Entity in another jurisdiction, the UAE entities or Designated Local Entity must still notify the FTA of the identity and location of the entity responsible for filing the PTIR.
Implications for MNE groups
Increased focus on governance and filing responsibility
While Pillar Two readiness has largely centred on calculating effective tax rates and identifying potential top-up tax exposures, the Decision highlights that MNE groups should also consider carefully how their UAE entities will allocate and coordinate Pillar Two reporting responsibilities.
MNE groups should clearly identify:
- which UAE entities fall within scope;
- whether a local or foreign filing strategy will be adopted; and
- who is responsible for communications with the FTA.
Opportunity to streamline compliance
The ability to use a Designated Local Entity creates opportunities to streamline compliance and reduce duplication of effort, particularly for groups with multiple UAE subsidiaries or free zone entities. A centralised filing structure can also improve data quality, ensure consistency in positions taken across the group and provide a clear point of contact for engagement with the FTA.
Importance of a QCAA for a UPE/Designated Filing Entity filing
The local filing exemption may significantly reduce administrative burden for MNE groups. However, it should not be assumed that filing by a UPE or non-UAE Designated Filing Entity automatically eliminates UAE obligations. An overseas filing only relieves a UAE entity from local filing requirements where a QCAA exists between the UAE and the relevant jurisdiction for the reporting year. UAE-based Constituent Entities (or their Designated Local Entity) will also still be required to file a mandatory local notification to the FTA.
