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Pillar Two in the UAE, Answered Entity by Entity

The 15% Domestic Minimum Top-up Tax applies to UAE entities of groups with EUR 750 million or more in consolidated revenue. IMC confirms scope, registers each entity and models the UAE effective tax rate, so the group knows its position well before the first return.

Check your group's scope Download the scoping guide
Registration deadline · 30 Nov 2026

Top-up Tax registration deadline for UAE entities whose first in-scope fiscal year ended before 30 April 2026, including calendar-year 2025 groups.

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  • Scope and threshold test
  • Top-up Tax registration
  • Effective tax rate modelling
  • Top-up Tax and GloBE returns

Key Dates

The UAE top-up tax calendar

The UAE regime applies to fiscal years starting on or after 1 January 2025 under Cabinet Decision No. 142 of 2024. Registration, returns and penalty relief each run on their own clock.

  • 30 Nov2026
    Calendar-year 2025 group

    Top-up Tax registration

    Within seven months of the end of the first in-scope fiscal year; 30 November 2026 where that year ended before 30 April 2026

    Next deadline
  • 30 Jun2027
    Calendar-year 2025 group

    Top-up Tax Return

    Within 15 months of year end, extended to 18 months for the first transitional year

  • 30 Jun2027
    Calendar-year 2025 group

    Pillar Two Information Return

    OECD GloBE Information Return template, on the same first-year timeline

  • FY2025 & FY2026
    Calendar-year 2025 group

    Transitional penalty relief

    Fiscal years beginning on or before 31 December 2026, where the group took reasonable measures to apply the rules correctly

    Covers FY2025 and FY2026

Registration timing follows FTA Decision No. 12 of 2026. Fiscal years can differ within a group, so each UAE entity's date should be confirmed on its own.

Scope Test

Three questions that settle scope

Scope is decided at group level and applied entity by entity. Three questions, answered in order, give a reliable first view.

  1. Group revenue

    Did consolidated revenue reach EUR 750m in at least two of the four preceding fiscal years?

    Why it matters

    The test runs on the group's consolidated accounts, not on any UAE entity's own revenue. A small UAE subsidiary of a large group is in scope.

  2. UAE entities

    Which UAE entities are constituent entities of that group?

    Why it matters

    Mainland companies, free zone companies, branches and holding entities all count unless specifically excluded.

  3. Exclusions

    Are any of those UAE entities excluded entities?

    Why it matters

    Government entities, international organisations, non-profit bodies, pension funds and certain investment funds sit outside the charge.

Free Zone Entities

Free zone 0% meets the 15% floor

The UAE now runs two profit taxes side by side. They share a jurisdiction and very little else, which is why a group can be fully compliant on Corporate Tax and still owe top-up tax.

Point of difference UAE Corporate Tax UAE Top-up Tax
Who it applies toAll taxable personsConstituent entities of in-scope multinational groups
Rate9% above AED 375,000; 0% on qualifying free zone incomeTop-up to a 15% effective rate
Unit of calculationEach taxable person or tax groupAll UAE constituent entities blended together
Profit measureTaxable income under the Corporate Tax LawGloBE income, starting from the financial accounts
RegistrationCorporate Tax registrationSeparate Top-up Tax registration

For an in-scope group, free zone entities enter the UAE effective tax rate calculation alongside mainland entities. The 0% rate on qualifying income still applies for Corporate Tax, but if the blended rate across all UAE constituent entities falls below 15% under the GloBE rules, top-up tax is payable in the UAE.

The Substance-based Income Exclusion softens the effect for groups with real UAE payroll and tangible assets. Modelling it early shows how much of the free zone benefit survives, and where substance or structure decisions would change the answer.

Where to look first

UAE regional hubs, holding companies and free zone trading entities with high margins and modest headcount are the entities most likely to pull the blended rate below 15%.

  • Regional hubs
  • Holding companies
  • Free zone trading entities

Our Services

What IMC handles

  • Scope and threshold test

    The four-year revenue test run on consolidated figures, with excluded entities identified.

  • Entity map and registration

    Every UAE constituent entity listed with its fiscal year, deadline and EmaraTax registration.

  • Effective tax rate modelling

    UAE jurisdictional rate modelled with the Substance-based Income Exclusion and available safe harbours.

  • Data readiness

    The ledger fields, deferred tax balances and adjustments the return needs, captured during the year.

  • Returns

    Top-up Tax Return and Pillar Two Information Return prepared and reconciled to group reporting.

  • Transfer pricing alignment

    Year-end adjustments and intercompany pricing aligned with the top-up calculation.

    See transfer pricing documentation
Check your group's scope

Cross-Border Groups

For groups headquartered outside the UAE

The UAE top-up tax applies to UAE constituent entities wherever the group's parent sits. For Indian, Singapore and European parents, most of the data needed for the UAE calculation lives in the parent's consolidation, chart of accounts and tax provision, not in the UAE ledgers.

IMC works across India, the UAE and Singapore as a member of Andersen Global, so the UAE registration and calculation can be coordinated directly with the group tax team that owns the consolidated numbers. The wider set of UAE obligations for cross-border groups is mapped on the international tax services in the UAE page.

Where the data sits

The parent's consolidation, chart of accounts and tax provision, not the UAE ledgers.

  • INIndia
  • AEUAE
  • SGSingapore

Scoping Guide

UAE Pillar Two scoping guide

The scope test, the registration and return calendar, free zone treatment and a readiness checklist, on a few pages. Free to download: share a few details and we will email the PDF to you.

Pillar Two

UAE Pillar Two Scoping Guide 2026

Scope test, registration and return calendar, free zone treatment and a readiness checklist.

  • Scope test
  • Registration and return calendar
  • Free zone treatment
  • Readiness checklist
Get the PDF by email Free to download

Further reading: IMC's analysis of what the 15% domestic minimum tax means for multinational structures (Mondaq, March 2026).

Get Started

Know which UAE entities register, and by when

A scoping call with IMC runs the four-year revenue test, lists every UAE constituent entity with its deadline and outlines the data the first return will need.

Check your group's scope Download the scoping guide
FAQs
The UAE Top-up Tax applies to UAE constituent entities of multinational groups with annual consolidated revenue of EUR 750 million or more in at least two of the four fiscal years immediately before the year being tested. It was introduced by Cabinet Decision No. 142 of 2024 and applies to fiscal years starting on or after 1 January 2025. The test is made at group level, so a small UAE subsidiary of a large group can be in scope even if its own revenue is modest. Excluded entities, such as government entities, fall outside it.
Under FTA Decision No. 12 of 2026, an in-scope entity must apply for Top-up Tax registration within seven months from the end of the first fiscal year in which it falls in scope. Transitional relief applies where that first year ended before 30 April 2026, in which case the deadline is 30 November 2026. For a group with a 31 December 2025 year end, registration is therefore due by 30 November 2026. Fiscal years can differ within a group, so each UAE entity’s deadline should be confirmed separately.
No. Top-up Tax registration is a separate process from Corporate Tax registration and runs on its own track in EmaraTax. An entity that already holds a Corporate Tax registration number still needs to register for Top-up Tax if it is in scope, and the FTA’s Top-up Tax Guide on Scope and Registration confirms the point. Groups often assume the existing registration covers the new obligation, so it is worth checking the status of every UAE entity in the group, including dormant and holding companies.
Registration is required for in-scope entities even when the calculation is expected to produce no top-up tax. A group may have a UAE effective tax rate above 15%, may qualify for a safe harbour, or may have enough substance-based exclusion to remove any liability, but none of these removes the registration obligation. The calculation decides what is payable. Registration decides whether the entity is known to the FTA as part of the regime, and a missed registration is a separate compliance failure from any error in a return.
For a group in scope, free zone entities are included in the UAE jurisdictional effective tax rate calculation alongside mainland entities. The 0% rate for Qualifying Free Zone Persons continues to apply for Corporate Tax purposes, but if the blended effective tax rate of all UAE constituent entities is below 15% under the GloBE rules, top-up tax becomes payable in the UAE. Groups with significant qualifying free zone income are the ones most likely to see a top-up liability, so they are usually the first to model.
The Substance-based Income Exclusion reduces the profit on which top-up tax is calculated, based on payroll costs and the carrying value of tangible assets in the jurisdiction. It recognises that profit linked to real people and real assets in the UAE should not be fully exposed to the top-up. For groups with large UAE teams, warehouses or operating assets, the exclusion can materially reduce or remove a liability. The percentages used step down over a transition period, so the figures need to be recalculated each year.
A Top-up Tax Return is generally due within 15 months of the end of the fiscal year, extended to 18 months for the first transitional year. A group with a 31 December 2025 year end therefore faces its first filing by 30 June 2027, and the Pillar Two Information Return follows the OECD GloBE Information Return template on the same first-year timeline. Although the date may look distant, the data the return needs, such as deferred tax balances and jurisdictional adjustments, has to be captured during the year rather than rebuilt afterwards.
Transitional penalty relief applies to the Top-up Tax Return and the Pillar Two Information Return for fiscal years beginning on or before 31 December 2026 and ending no later than 30 June 2028, provided the group has taken reasonable measures to apply the rules correctly. The relief is designed for good-faith errors while groups and the FTA settle into the regime. It depends on the group being able to show the steps it took, so keeping a written record of data sources and methodology choices is worthwhile from the first year.
Transfer pricing decides how much profit is booked in each country, and Pillar Two checks whether the tax on that profit reaches 15%. The two cannot be managed separately. Moving intercompany prices to change a UAE effective tax rate would conflict with the arm’s length principle, so transfer pricing has to stand on its own merits. At the same time, year-end transfer pricing adjustments change the GloBE income of each entity, so the timing and booking of those adjustments need to be aligned with the top-up tax calculation.