Immediate Action Required as UAE Opens Pillar Two Registration

The Federal Tax Authority (“FTA”) has officially enabled Pillar Two Top Up Tax registration through the EmaraTax portal, marking a significant step in the UAE’s implementation of the OECD Pillar Two framework.
 
From 1 January 2025, the UAE introduced a Domestic Minimum Top-Up Tax (DMTT)

• This ensures that profits earned in the UAE are taxed at a minimum of 15%.
• If the tax paid in the UAE is below 15%, a Top-Up Tax will apply to make up the difference.
• This prevents other countries from taxing that shortfall instead.

The UAE DMTT is also considered “Qualified” by the OECD, meaning tax paid in the UAE should generally reduce the risk of additional tax in other countries.

What you need to know?

• Who is affected?
  • In-scope businesses:UAE entities are likely impacted if:
    • They are part of a multinational group with global revenue above EUR 750 million
    • This threshold is met in at least 2 of the last 4 years
      
  • Out-of-scope entities:Some entities are excluded, including –
    • Government entities
    • Non-profits
    • Pension funds
    • International organizations
    • Certain investment and real estate structures 
      
• Registration: In scope UAE entities are required to register through the EmaraTax portal to comply with applicable Pillar Two obligations, including:
  • UAE DMTT Return and
  • Pillar Two Information Return and/or related notification requirements
    
• How to manage compliance?
  • Option 1: Appoint aDomestic Designated Filing Entity (DDFE)
    A UAE entity may be appointed as the DDFE to manage UAE DMTT compliance and certain Pillar Two reporting obligations on behalf of UAE group entities. This may help centralize and streamline compliance across the group.
    
  • Option 2:Individual Registration:
    Where no DDFE is appointed, or where only one UAE entity exists in the UAE, each entity would generally be required to register and comply with the UAE DMTT compliance and applicable Pillar Two filing obligations separately.
    
    Note:During the registration process, a UAE entity may also designate a filing entity responsible for submitting the Pillar Two Information Return for the group, where such entity has not already been appointed in another jurisdiction.
    
• Ongoing Obligations: Pillar Two compliance extends beyond registration and introduces recurring annual reporting obligations.

Important reminder for out-of-scope businesses Even where entities may not fall within scope:

• It would be advisable to undertake an eligibility assessment.
• This can help confirm position and reduce potential compliance risks.

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Act now to stay compliant

• Register for DMTT or Pillar Two Before It’s Late: With Pillar Two registration now available on EmaraTax, in scope UAE entities should assess their eligibility and registration obligations at an early stage to mitigate potential compliance risks and penalties.
  
• Understand Your Hidden Tax Exposure: Even if your UAE operations have historically benefited from low or zero tax (including Free Zone incentives), the new DMTT regime may trigger a Top-Up Tax where your effective rate falls below 15% – making early impact assessment critical to avoid surprises.
  
• Alignment With Global Pillar Two Compliance:UAE entities should also ensure UAE filings are consistent with the global wide Pillar Two calculations and global reporting and governance.

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How can we help?

Pillar Two compliance involves extensive data collection, cross border coordination, and complex technical analysis across multiple jurisdictions. Our tax experts can assist you with the following:

• Scoping & Impact Assessment: Assessing whether your group falls within scope and identifying key Pillar Two exposure areas.
  
• Registration Assistance: Advising on the appropriate registration approach and assisting with the EmaraTax registration process.
  
• Ongoing Compliance: Supporting the preparation and review of Pillar Two calculations, filings, and related reporting obligations, including assessment of available reliefs and transitional measures.
  
• Documentation:Helping establish appropriate documentation, governance, and audit readiness frameworks for future FTA review.

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Who we are

Re/think is an award-winning regional multi-service business advisory and outsourced services firm providing accounting, regulatory and compliance, tax and VAT advisory, audit, HR consultancy and recruitment services to regulated firms, multi- and single-family offices, and other operating businesses.

Established in the UAE in 2013, the firm has 80+ staff across three offices in Dubai and Abu Dhabi providing clients with timely, proactive and customized business solutions – from set-up and early development to the latest stages of a business lifecycle.