UAE Announces New Tax Rules for Multinational Enterprises

The UAE has announced new tax rules governing the filing of information returns by certain multinational enterprises (MNEs), as the country continues to strengthen its commitment to international tax transparency and the implementation of global tax standards.

The UAE Ministry of Finance issued Ministerial Decision No. 133 of 2026 on Wednesday, setting out the entities required to file a Pillar Two Information Return under Cabinet Decision No. 142 of 2024 concerning the imposition of Top-Up Tax on multinational enterprises.

The new UAE tax rules form part of the country’s continued implementation of the Pillar Two framework and are designed to support the consistent application of the Global Anti-Base Erosion (GloBE) Rules developed by the OECD/G20 Inclusive Framework.

The decision also provides greater certainty for multinational enterprises by clarifying which entities are responsible for meeting Pillar Two reporting obligations in the UAE.

UAE tax rules clarify Pillar Two filing obligations

Under the new rules, specific entities operating or established in the UAE will be required to file a Pillar Two Information Return with the Federal Tax Authority.

The filing requirements apply to several categories of entities covered by the UAE’s Top-Up Tax regime.

These include each Constituent Entity located in the UAE, with the exception of investment entities. The requirements also cover each Joint Venture and JV Subsidiary located in the UAE.

In addition, the rules apply to Stateless Constituent Entities that are Reverse Hybrid Entities created in accordance with UAE laws.

The Ministry of Finance said the measures are intended to establish clear reporting responsibilities for entities falling within the scope of the Pillar Two framework.

By specifying which entities must submit the Pillar Two Information Return, the UAE is providing multinational groups with greater clarity around their compliance obligations.

What is the Pillar Two Information Return?

The Pillar Two Information Return is an important component of the OECD/G20 Inclusive Framework’s global minimum tax architecture.

Pillar Two was developed as part of the international effort to establish a global minimum level of taxation for large multinational enterprise groups and to reduce incentives for profit shifting and the erosion of tax bases.

The framework includes the Global Anti-Base Erosion Rules, commonly referred to as the GloBE Rules.

Under the framework, qualifying multinational groups can be subject to a top-up tax when their effective tax rate in a particular jurisdiction falls below the agreed global minimum tax rate.

The UAE has been implementing the Pillar Two framework through its domestic tax legislation, with the new Ministerial Decision addressing an important aspect of the reporting requirements associated with the regime.

Who must file under the new UAE tax rules?

The Ministerial Decision identifies three broad categories of entities that must file the Pillar Two Information Return with the Federal Tax Authority.

The first category covers Constituent Entities located in the UAE. Investment entities are excluded from this requirement under the decision.

The second category consists of Joint Ventures and JV Subsidiaries located in the UAE.

The third category covers Stateless Constituent Entities that qualify as Reverse Hybrid Entities and were created under UAE law.

The distinction is important for multinational groups because the filing obligation is not necessarily limited to a single entity within a group. Depending on the group’s structure and the entities located in the UAE, multiple entities may fall within the scope of the reporting requirements.

Multinational enterprises therefore need to assess their UAE structures and determine which entities are subject to the information-return requirements.

Designated Local Entity can file on behalf of others

The new UAE tax rules also provide flexibility in how the Pillar Two Information Return can be submitted.

The Ministerial Decision allows the return to be filed directly by the relevant Constituent Entity, Joint Venture or JV Subsidiary.

Alternatively, the filing can be completed by a Designated Local Entity on behalf of the relevant entities.

This provision can help multinational groups streamline their compliance processes by allowing reporting responsibilities to be centralised within an appropriate entity in the UAE.

For groups with several entities falling within the scope of the Pillar Two rules, the ability to use a Designated Local Entity could provide a more coordinated approach to preparing and submitting the required information.

Rules apply from January 2025 fiscal years

The new Ministerial Decision applies to fiscal years beginning on or after 1 January 2025.

This means multinational enterprises covered by the UAE’s Pillar Two regime need to consider the new filing requirements in relation to relevant fiscal years beginning from that date.

The application date is particularly significant because it places the reporting requirements within the wider rollout of the UAE’s domestic implementation of the international minimum tax framework.

Companies affected by the rules will need to ensure that their tax reporting processes, internal data collection and compliance systems are capable of supporting the required Pillar Two reporting.

UAE continues international tax reforms

The latest decision represents another step in the UAE’s broader efforts to align its tax framework with international standards.

The country has introduced a number of tax reforms in recent years, including the introduction of federal corporate tax and measures designed to strengthen tax administration and international cooperation.

The Pillar Two regime forms part of this wider evolution of the UAE tax system.

The Ministry of Finance has emphasised that the latest measures demonstrate the UAE’s continued commitment to international tax transparency.

The new rules are also intended to support greater consistency in the implementation of the OECD/G20 Inclusive Framework’s GloBE Rules.

For multinational businesses, the move is significant because clear domestic reporting requirements can reduce uncertainty around how international tax rules are applied at the national level.

Greater certainty for multinational enterprises

One of the key objectives of the new UAE tax rules is to provide greater tax certainty and clarity for multinational enterprises.

Pillar Two involves complex reporting and compliance requirements because multinational groups may have operations across multiple jurisdictions, each with different tax systems and reporting procedures.

Clearly identifying the UAE entities that are required to file the Pillar Two Information Return helps businesses determine their responsibilities and establish appropriate internal compliance procedures.

The option to appoint a Designated Local Entity to file the return on behalf of relevant entities may also allow larger multinational groups to simplify their reporting structures.

Businesses operating in the UAE under the Top-Up Tax regime will therefore need to review their organisational structures and existing tax compliance processes in light of the new decision.

What the new rules mean for businesses

For affected multinational enterprises, the latest measures are likely to place greater emphasis on accurate and timely tax data collection.

Companies may need to review which UAE entities qualify as Constituent Entities, Joint Ventures or JV Subsidiaries and whether any Stateless Constituent Entities fall within the specific provisions of the decision.

They will also need to determine whether filings should be completed individually by relevant entities or coordinated through a Designated Local Entity.

The decision therefore provides an important framework for businesses preparing for their Pillar Two reporting responsibilities.

Companies with UAE operations that fall within the scope of the Top-Up Tax regime should assess their obligations and ensure that their tax teams and reporting systems are prepared for the applicable filing requirements.

UAE tax changes continue into September and October

The latest Pillar Two decision comes as the UAE prepares to introduce additional tax-related changes in September and October.

The continued development of the country’s tax framework reflects the UAE’s broader strategy of strengthening tax governance while remaining aligned with international standards.

For businesses, the evolving framework means that keeping track of new ministerial decisions, cabinet decisions and Federal Tax Authority requirements will remain important.

The Ministry of Finance’s latest decision provides a clearer understanding of the entities responsible for Pillar Two Information Return filings and establishes a more defined framework for multinational enterprises operating under the UAE’s Top-Up Tax regime.

As the UAE continues implementing the Pillar Two requirements, multinational businesses will need to pay close attention to their reporting responsibilities, particularly for fiscal years beginning on or after 1 January 2025.

The new UAE tax rules ultimately represent another step in the country’s efforts to combine a competitive business environment with stronger international tax compliance, transparency and certainty.