GloBE Pillar 2—the Global Anti-Base Erosion framework—was officially implemented in the UAE through Cabinet Decision No. 142 of 2024, with requirements applying to multinational enterprises (MNEs) for fiscal years starting on or after 1 January 2025. This marks a fundamental shift in the UAE’s corporate tax landscape and signals strong alignment with international tax transparency and fairness standards.
What Is GloBE Pillar 2?
The OECD’s GloBE Pillar 2 initiative aims to curb tax avoidance and base erosion by introducing a global minimum tax rate of 15% for large multinational groups with revenues exceeding €750 million in at least two of the previous four years. The measures, applicable to Constituent Entities, Joint Ventures, Permanent Establishments, and Minority Owned Constituent Entities, target profits that are subject to effective tax rates below the minimum threshold, requiring “top-up” tax payments until the rate is met.
UAE’s Implementation Approach
The UAE’s new framework primarily relies on the Domestic Minimum Top-Up Tax (DMTT)—a chargeable mechanism designed to ensure qualifying groups pay at least the 15% minimum tax on UAE-derived profits. Unlike some jurisdictions implementing the Income Inclusion Rule (IIR) or Undertaxed Profits Rule (UTPR), the UAE has chosen not to adopt these, simplifying the regime and focusing on the DMTT. The Ministry of Finance has signaled that further regulations and procedural guidance will be issued to clarify nuances and ensure robust implementation.
Key Features and Compliance Obligations
- Scope: Applies to large MNEs with annual global revenues of €750 million or more, as reported in consolidated financial statements in two out of four preceding years.
- Registration: Pillar Two entities must register with the Federal Tax Authority (FTA) in advance of filing deadlines and submit the Top-Up Tax Return within 15 months post-financial year.
- Calculations & Safe Harbours: The legislation contains transitional and simplified calculation safe harbours, as well as detailed guidelines for Pillar Two income/loss computation and interaction with UAE Corporate Tax.kpmg
- Exclusions: Certain government and investment entities are excluded in line with the OECD Model Rules.
- Alignment: Ministerial Decision No. 88 of 2025 formally adopts all OECD guidance and commentary for consistency in application and interpretation.
Impacts on UAE Businesses and Multinationals
Strategic Readiness
MNEs with UAE operations must plan carefully for compliance, review their tax structures, and engage in impact assessments to determine how Pillar 2 will affect financial, managerial, and reporting processes. Unprepared entities may face increased administrative burdens and additional tax exposure if compliance is not managed diligently.
Global Alignment
The alignment with OECD rules signals the UAE’s commitment to international standards, enhancing tax fairness, transparency, and its reputation as a compliant, attractive business hub. It also minimizes interpretive differences and risks of double taxation by adhering to globally accepted guidelines.
Group-Level Tax Effects
Businesses must now coordinate UAE filings with those in the parent entity’s jurisdiction, especially where Pillar 2 is already enforced elsewhere, potentially triggering top-up tax obligations outside the UAE prior to domestic requirements. Entities must also provide extensive data to support calculations and compliance in both local and group-wide contexts
Compliance Technology and Data
There is a heightened need for technology-driven solutions to manage new reporting, data gathering, and registration requirements. Companies must ensure systems can retrieve, consolidate, and present tax information for successful filings, leveraging advisory support as needed.
Sen & Ray’s Dubai Team brings deep expertise in GloBE Pillar 2 and UAE corporate tax to help multinational groups navigate the complexities of compliance and strategic implementation. With over 50 years of experience in global tax consulting, audit, and corporate advisory, Sen & Ray’s professionals deliver tailored solutions for Pillar 2 readiness, effective tax calculation, and seamless interaction with UAE’s regulatory framework.
How Sen & Ray’s Dubai Team Can Help
- Expert Advisory: Our team provides targeted guidance on Domestic Minimum Top-Up Tax, safe harbours, and registration requirements, ensuring every aspect of compliance is covered for global and UAE operations.
- End-to-End Support: We assist with Pillar 2 impact assessments, tax calculations, submission of Top-Up Tax Returns, and alignment with OECD rules—all supported by robust technology and streamlined processes.
- Proactive Solutions: Sen & Ray’s partner-led approach offers clients direct access to senior specialists, strategic reviews of tax structures, and actionable, cost-effective recommendations—preventing risks and optimizing financial outcomes.
Grow confidently with Sen & Ray. Reach out to our Dubai team now for a comprehensive consultation on Pillar 2 and emerging UAE tax requirements—let us simplify compliance and unlock strategic value for your business.