Key takeaways
- Pillar Two applies to a UAE business only if the multinational group it belongs to has annual consolidated revenue of EUR 750 million or more in at least two of the four preceding financial years (Ministry of Finance, as of November 2026).
- The UAE collects Pillar Two through a Domestic Minimum Top-up Tax (DMTT) under Cabinet Decision No. 142 of 2024, which applies to financial years starting on or after 1 January 2025.
- A stand-alone UAE company, or a group that operates only inside the UAE, is outside Pillar Two however large its revenue is, according to reporting on the Federal Tax Authority's (FTA) scope and registration guide.
- A UAE subsidiary of a large foreign group can be in scope even when its own revenue is small, because the test is run on the ultimate parent's consolidated accounts, not on the UAE entity.
- UAE entities in scope must register for top-up tax on EmaraTax separately from corporate tax, even when they owe no top-up tax; advisory firms report a transitional registration date of 30 November 2026 for many groups, which you should confirm in the FTA's guide.
- The UAE does not apply an Income Inclusion Rule (IIR), according to the Ministry of Finance, so the UAE charge is a domestic top-up on UAE profits only.
Does Pillar Two apply to my UAE business?
It applies only if your business is a UAE member of a multinational group whose consolidated revenue reaches EUR 750 million in at least two of the four preceding financial years. If you own a UAE company outright with no foreign group above or around it, the answer is no.
The Ministry of Finance (MoF) describes the threshold as annual global revenues of EUR 750 million or more in the ultimate parent entity's consolidated financial statements. The test looks at the group, so your own turnover is irrelevant to whether you are in scope. Say a Dubai trading company bills AED 20m a year but is 100% owned by a foreign parent whose group revenue exceeds the threshold: that Dubai company is a constituent entity and has to be assessed. Say instead a Sharjah consultancy owned by two individuals bills AED 40m: it is not in scope, because no group consolidates it.
What is the UAE's version of Pillar Two and what rate does it charge?
The UAE's version is a Domestic Minimum Top-up Tax, introduced by Cabinet Decision No. 142 of 2024, and it targets an effective tax rate of at least 15% on in-scope UAE profits. The MoF says the rules are closely aligned with the OECD GloBE Model Rules, so the calculation follows the OECD method rather than the ordinary 9% corporate tax computation.
In practice the DMTT tops up the UAE tax on an in-scope group's UAE profits to the 15% minimum. Where a UAE entity already bears an effective rate of 15% or more under the OECD calculation, the top-up is zero. The MoF page confirms the effective date for financial years starting on or after 1 January 2025, so a calendar-year group had its first in-scope year in 2025.
Which UAE companies are in scope and which are out?
A UAE company is in scope if it is a constituent entity, joint venture or joint venture subsidiary of a group above the revenue threshold; it is out if the group is below the threshold, operates only in the UAE, or the entity is an excluded or investment entity. The table summarises the rules the MoF and FTA have published.
| Situation | In scope? | Basis |
|---|---|---|
| UAE subsidiary or branch of a group with EUR 750m+ consolidated revenue in 2 of the last 4 years | Yes | MoF Top-up Tax page; Cabinet Decision No. 142 of 2024 |
| Group operating only inside the UAE, any revenue | No | FTA Top-up Tax guide on scope and registration |
| Owner-managed UAE company with no group above it | No | Threshold applies to consolidated group revenue |
| Entity classified as an investment entity | Not subject to the DMTT | MoF Top-up Tax page |
| Group in its initial phase of international activity, with no IIR applying to any UAE entity | Excluded | MoF Top-up Tax page |
| UAE-located joint venture or joint venture subsidiary of an in-scope group | Yes | MoF Ministerial Decision No. 133 of 2026 |
Accurate as of 04 November 2026. The MoF notes that the UAE does not exclude non-wholly owned constituent entities, which differs from the OECD model rules, so a minority-held UAE entity inside a large group is not automatically excluded.
What do in-scope UAE entities have to register and file?
In-scope entities have to register for top-up tax with the FTA, file a Pillar Two information return, and file and pay any top-up tax due. Registration is separate from corporate tax registration.
- Test your group against the EUR 750 million threshold using the ultimate parent's consolidated accounts.
- Register each in-scope UAE entity for top-up tax on EmaraTax, whether or not any tax will be due.
- Prepare the Pillar Two information return. Under MoF Ministerial Decision No. 133 of 2026 (news release dated 25 August 2026), each UAE-located constituent entity, joint venture and joint venture subsidiary files with the FTA, either itself or through its designated local entity.
- File the top-up tax return and pay any tax due on the timeline set in the FTA guidance; the MoF release does not state the due date, so check the current FTA guide before relying on a date.
Advisory firms report that FTA Decision No. 12 of 2026 sets a transitional registration date of 30 November 2026 for entities whose first in-scope fiscal year ended before 30 April 2026, and a seven-month window after year end for others. We could not open the decision text on tax.gov.ae at the time of writing, so treat those dates as unconfirmed until you have read the FTA's Top-up Tax guide on scope and registration. A group with a December 2025 year end that sits in scope should check this week.
If you'd rather not track these dates by hand, the UAE compliance calendar is free: it lists your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Does a free zone licence change whether Pillar Two applies?
No: free zone status does not by itself take a company in or out of Pillar Two. Scope is set by the group's consolidated revenue, so a free zone company inside a large group has to be tested like any other UAE entity.
The reverse also holds. A free zone company that belongs to no group above EUR 750 million is not affected, even when it enjoys a 0% rate on qualifying income under the corporate tax regime. Free zone treatment under ordinary corporate tax follows the conditions in the corporate tax law and Cabinet and Ministerial decisions, and free zones and emirates differ in the licensing side, so check your own authority.
Is there a corporate tax rate I should compare against?
The ordinary corporate tax rate is 9% on taxable income above a threshold set by Cabinet decision, with 0% below it (Article 3 of Federal Decree-Law No. 47 of 2022). The Pillar Two minimum of 15% is a separate charge that applies only to in-scope groups.
| Regime | Rate | Who it applies to |
|---|---|---|
| Ordinary UAE corporate tax | 9% above the Cabinet-set threshold; 0% below it | Taxable persons generally |
| Domestic Minimum Top-up Tax | Brings the effective rate up to 15% | Constituent entities of groups with EUR 750m+ revenue |
Accurate as of 04 November 2026. Check the current threshold amount on tax.gov.ae before using it in a calculation.
EUR 750 million: consolidated group revenue, in at least two of the four preceding financial years, at which a UAE entity becomes subject to the Domestic Minimum Top-up Tax. Source: Ministry of Finance, Top-up Tax page (mof.gov.ae), checked 04 November 2026.
What most guides don't tell you
Registration is required even at zero tax. The FTA's guidance, as reported by advisers, says an in-scope entity must register for top-up tax whether or not it is registered for corporate tax and whether or not any top-up tax is due. Being in scope and owing nothing are different things; skipping registration because the tax would be zero is the likeliest slip.
The trigger is a foreign parent's accounts, which you may never see. A UAE subsidiary's finance team often has no view of group consolidated revenue. Ask the parent for the figures for the last four years and ask in writing, because the two-in-four test needs all four.
Small UAE operators can still be pulled in by a merger. Entities that join a group through an acquisition or merger are tested from the point they join, so a seller or buyer in a deal should add Pillar Two to due diligence. That is reasoning from the group-level test, not a published SME statistic, but it follows directly from how scope is defined.
Which deadlines apply to your company?
Pillar Two is only one item on a UAE company's compliance list, next to corporate tax, VAT, licence renewals and visas. The free UAE compliance calendar gives you a calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Frequently asked questions
What is the domestic minimum top-up tax in the UAE? The domestic minimum top-up tax is the UAE's version of the OECD Pillar Two minimum tax, introduced by Cabinet Decision No. 142 of 2024 for financial years starting on or after 1 January 2025. It applies to UAE constituent entities of multinational groups with EUR 750 million or more in consolidated revenue.
What is the UAE corporate tax rate? The ordinary UAE corporate tax rate is 9% on taxable income above a threshold set by Cabinet decision, and 0% below it. Large multinational groups can also face the top-up tax that lifts their UAE effective rate to 15%.
What is the Country by Country reporting requirement? Under Cabinet Decision No. 44 of 2020, a UAE-resident ultimate parent of a multinational group with consolidated revenue of AED 3,150,000,000 or more has to notify the MoF and submit a Country-by-Country report. The report is due within twelve months after the end of the reporting fiscal year.
Do free zone companies pay corporate tax in the UAE? Free zone companies are within the corporate tax regime; whether a free zone company gets a 0% rate on some income depends on meeting the conditions set in the law and decisions, so check the FTA's guides for your facts. Separately, free zone status does not exempt a company from Pillar Two if its group is above EUR 750 million.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Ministry of Finance: Top-up Tax
- Ministry of Finance: Ministerial Decision on requirements for filing the Pillar Two Information Return (Ministerial Decision No. 133 of 2026)
- Cabinet Decision No. 142 of 2024 on Top-up Tax on MNEs (FTA)
- Federal Tax Authority: legislation and top-up tax guide announcements
- Federal Decree-Law No. 47 of 2022 on corporate tax (MoF)
- Cabinet Decision No. 44 of 2020 on Multinational Companies (MoF)
- Ministry of Finance: Pillar Two guidance document
Last checked: 04 November 2026
This is general information, not tax or legal advice for your specific situation.