BEPS Pillar Two & Global Minimum Taxes
At Sun Management Group, we support multinational groups in navigating the complexities of the OECD’s BEPS Pillar Two framework and the UAE’s implementation of the Global Minimum Tax (GMT). As tax transparency and anti–profit shifting measures become a global priority, businesses operating across multiple jurisdictions must ensure compliance while managing the impact on their effective tax rates and group structures.
Our approach is practical, commercially aligned, and execution-focused,ensuring you remain compliant without disrupting your global operations.
What is BEPS Pillar Two?
BEPS Pillar Two is part of the OECD/G20 global tax framework designed to ensure that large multinational enterprise groups pay a minimum effective tax rate of 15% in each jurisdiction where they operate. It is implemented through the Global Anti-Base Erosion Rules, commonly known as the GloBE Rules.
Pillar Two does not simply apply a 15% tax rate to every company or every item of income. Instead, it calculates a multinational group’s effective tax rate on a jurisdiction-by-jurisdiction basis using prescribed adjustments to its financial accounting information. Where the effective tax rate in a jurisdiction falls below 15%, a top-up tax may arise after applying the relevant exclusions, safe harbours and substance-based income exclusion.
The framework is intended to reduce profit shifting, establish greater consistency in the taxation of large multinational groups and ensure that income is subject to a minimum level of tax wherever the group operates.
15% Minimum Effective Tax Rate
Calculated Jurisdiction by Jurisdiction
A Coordinated Global Tax Framework
Who is Subject to Pillar Two?
Pillar Two generally applies to large multinational enterprise groups with operations in more than one jurisdiction. The scope is assessed using the consolidated revenue and structure of the entire group, not the turnover or profitability of an individual UAE company. To determine whether Pillar Two applies, a detailed review of the group’s consolidated revenue, ownership and consolidation structure, entity locations and financial information is required.
Revenue Threshold
The group must have consolidated annual revenue of at least EUR 750 million in two or more of the four financial years immediately preceding the relevant financial year.
Multinational Presence
The group must include entities in more than one jurisdiction, or an entity operating through a permanent establishment in another jurisdiction.
UAE Constituent Entities
Where the group meets the threshold, its UAE parent companies, subsidiaries and permanent establishments may fall within scope. This can include entities operating in UAE free zones.
Excluded Entities
Certain government entities, international organisations, non-profit organisations, pension funds and qualifying investment funds may be excluded, subject to specific conditions.
Compliance Responsibilities
An in-scope group may have assessment, data, documentation, notification and reporting responsibilities even where no top-up tax is ultimately payable.
UAE Domestic Minimum Top-up Tax
The UAE has implemented a Domestic Minimum Top-up Tax, or UAE DMTT, as part of its adoption of the OECD Pillar Two framework. The rules allow the UAE to impose and collect top-up tax where the effective tax rate on the UAE profits of an in-scope multinational group falls below 15%, after applying the prescribed GloBE adjustments.
The UAE DMTT applies to financial years beginning on or after 1 January 2025 and was introduced under Cabinet Decision No. 142 of 2024. It is designed to protect the UAE’s taxing rights by allowing any qualifying top-up tax on UAE profits to be collected domestically rather than by another jurisdiction.
The UAE DMTT has received transitional qualified status from the OECD and qualifies for the QDMTT Safe Harbour. This gives multinational groups greater certainty that eligible UAE top-up tax will be recognised under the wider Pillar Two framework.
Key points at a glance:
Introduced under Cabinet Decision No. 142 of 2024
Effective for financial years beginning on or after 1 January 2025
Applies to UAE Constituent Entities of in-scope multinational groups
Top-up tax may arise where the UAE effective tax rate is below 15%
Recognised under the OECD's transitional qualification mechanism
Need Visas Processed Quickly?
Applicable Tax Rate
Under the UAE QDMTT regime, this top-up tax is collected locally to align with global standards while preserving UAE taxing rights.
Applicability Assessment
If the effective tax rate in a jurisdiction falls below 15%, a top-up tax is applied
Our BEPS Pillar Two Services
Impact Assessment & Scoping
Initial evaluation to determine whether your group falls within Pillar Two scope, including revenue threshold analysis, entity mapping, and jurisdictional exposure.
Data Readiness & Gap Analysis
Assessment of financial and tax data required for GloBE calculations, identifying system gaps, inconsistencies, and reporting challenges.
Effective Tax Rate (ETR) Modelling
Computation and modelling of jurisdictional ETRs to identify top-up tax exposure and quantify financial impact.
QDMTT Advisory (UAE-Specific)
Guidance on UAE QDMTT applicability, computation, and compliance requirements.
Structuring & Tax Planning
Strategic advisory on group structuring and operational adjustments to manage exposure while maintaining commercial efficiency.
Compliance & Reporting Support
Preparation of Pillar Two calculations including IIR, UTPR, and QDMTT, along with disclosures and filings.
Policy Design & Documentation
Development of internal tax and transfer pricing policies aligned with Pillar Two requirements.
Ongoing Advisory & Regulatory Updates
Continuous support on evolving OECD guidance and UAE regulatory developments.
Unsure if your group is impacted by Pillar Two?
Our team can review your group’s revenue, structure and footprint to confirm whether Pillar Two applies and what it means for your UAE entities.