Pillar 2 Tax (OECD)
Guidance on global minimum tax compliance and implementation strategy under the OECD's Pillar Two framework.
Overview
The OECD's Pillar Two framework introduces a 15% global minimum tax for large multinational groups, and the UAE has moved to implement it through Domestic Minimum Top-up Tax rules. If your group has consolidated revenue above the EUR 750 million threshold, Pillar 2 changes how — and where — tax is calculated across every jurisdiction you operate in.
Royal Grace assesses your group's exposure under the GloBE Rules, models the impact of the Qualified Domestic Minimum Top-up Tax, and builds the reporting structure needed to stay compliant as UAE guidance continues to evolve.
Scope & Applicability
Pillar 2 applies to multinational enterprise (MNE) groups with consolidated annual revenue of EUR 750 million or more in at least two of the four preceding fiscal years. If your UAE entity is part of such a group, its effective tax rate in the UAE — and in every other jurisdiction the group operates in — must be tested against the 15% minimum, regardless of the local statutory rate.
Compliance Requirements
In-scope groups must register for Domestic Minimum Top-up Tax with the Federal Tax Authority, prepare a GloBE income and covered taxes computation for each UAE constituent entity, and file a GloBE Information Return — either locally or via a group entity in a jurisdiction with an accepted exchange arrangement — within the deadlines set by UAE guidance.
Business Impact
Pillar 2 adds a substantial new compliance layer on top of standard UAE Corporate Tax: parallel GloBE computations, jurisdiction-by-jurisdiction effective tax rate testing, and additional data collection from every constituent entity in the group. Groups that previously relied on the UAE's favourable tax regime may now face a top-up liability, making early modelling essential for accurate financial planning.
Penalties & Risks
Failure to register, compute, or file on time can result in administrative penalties under the UAE's tax procedures rules. Beyond direct penalties, an unmodelled top-up tax liability can materially affect group cash flow forecasts and financial statement provisions if discovered late.
What's Included
- Global Minimum Tax
- GloBE Rules Compliance
- Qualified Income Assessment
- Pillar 2 Reporting
Who This Is For
UAE entities within a multinational group nearing or exceeding the Pillar Two revenue threshold, and finance teams preparing for GloBE information return filings.
Frequently asked questions
Common questions about Pillar 2 and the OECD global minimum tax.
Pillar 2 only applies to entities that are part of a multinational group with consolidated annual revenue of EUR 750 million or more in at least two of the last four years. A UAE-only business below that threshold isn't in scope, regardless of its size within the UAE.
The DMTT is the UAE's mechanism for collecting any Pillar 2 top-up tax locally, rather than ceding that revenue to another jurisdiction. In-scope UAE constituent entities register for and pay DMTT directly to the Federal Tax Authority.
Filing deadlines follow the timelines set out in UAE guidance for Domestic Minimum Top-up Tax, generally allowing an extended period after the end of the relevant fiscal year for the first return in a new regime.
Corporate Tax applies UAE-wide at a 9% rate above the AED 375,000 threshold. Pillar 2 sits alongside it as a separate global minimum tax test — it only affects large multinational groups, and it can create an additional top-up liability even where standard Corporate Tax has already been paid.
Not sure if Pillar 2 applies to you?
We'll assess your group's exposure and next steps.