UAE Ministry of Finance Clarifies Pillar Two Reporting Obligations for Multinational Enterprises

The UAE Ministry of Finance has issued ministerial decisions detailing compliance obligations under the Domestic Minimum Top-up Tax framework for multinational enterprise (MNE) groups. The decisions, including Ministerial Decision No. 129 of 2024, define the administrative and operational procedures for submitting GloBE Information Returns (GIR) and required notifications to the Federal Tax Authority (FTA).

The Pillar Two rules apply to MNE groups whose consolidated annual revenue in the consolidated financial statements of the Ultimate Parent Entity reached EUR 750 million or more in at least two of the four fiscal years preceding the tested fiscal year. The framework aligns UAE corporate tax systems with the OECD/G20 minimum 15 percent taxation standards established under Cabinet Decision No. 98 of 2023, effective for fiscal years starting on or after January 1, 2024.

Under the clarifications, MNE groups can designate one UAE-resident constituent entity as the Local Filing Entity to submit the GIR on behalf of all domestic constituent entities. A local filing requirement arises if the ultimate parent is not required to file a GIR in its home jurisdiction, lacks an active exchange agreement, experiences systemic exchange failures, or has not appointed an equivalent designated filer elsewhere. If the group fails to appoint a local filer, the FTA may select one.

The regulatory guidance establishes that the general deadline for submitting the GIR is 18 months after the end of the reporting fiscal year for the group's first year in scope, and 15 months after fiscal year-end for subsequent years. In addition to the GIR, groups must submit initial notifications identifying in-scope status and any filing elections directly to the FTA.