23 August 2026 · GloBE
The Pillar Two GloBE Rules
Pillar Two is the OECD/G20's global minimum tax framework, agreed by a broad international coalition of countries, and its GloBE (Global Anti-Base Erosion) rules are the technical engine that makes it work. The rules test, jurisdiction by jurisdiction, whether a large MNE group's effective tax rate reaches 15%; where it does not, a top-up tax is triggered to close the gap. That top-up can be collected in three different ways, by a parent entity's country under the Income Inclusion Rule (IIR), by other group members' countries under the backstop Undertaxed Profits Rule (UTPR), or by the low-taxed country itself through a Domestic Minimum Top-up Tax (DMTT). The UAE introduced its own DMTT precisely so that any top-up generated by UAE profits is collected in the UAE, rather than flowing abroad under a foreign IIR or UTPR charge.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
What Pillar Two does
Pillar Two was built to stop large multinational groups from routing profit through very low-tax jurisdictions, by guaranteeing a 15% effective tax rate wherever their profit is booked. It sits alongside, not instead of, each country's normal corporate tax system, and only reaches groups large enough to meet the EUR 750 million revenue test. Where a jurisdiction's blended effective tax rate falls short of 15%, the shortfall is calculated using the GloBE rules and collected as a top-up tax through one of three defined mechanisms.
- Guarantees a 15% minimum effective tax rate per jurisdiction.
- Applies to MNE groups above EUR 750 million.
- Top-up is charged where the ETR falls below 15%.
- Collected via IIR, UTPR or a domestic top-up tax.
- Developed by the OECD/G20 Inclusive Framework on BEPS.
- GloBE income and covered taxes follow a standardised, cross-border definition.
- The framework tests jurisdictions as a whole, not individual entities.
- A large majority of the Inclusive Framework's members have committed to some form of Pillar Two.
Keeping the top-up in the UAE
Without a UAE DMTT, a low UAE effective tax rate would simply hand the top-up revenue to another country in the group's structure, typically the jurisdiction of an intermediate or ultimate parent entity, acting under the IIR. The UTPR exists as a backstop, letting other group jurisdictions collect any remaining shortfall, generally through denied deductions, if the IIR does not fully apply. By legislating its own qualifying DMTT, the UAE claims the first right to collect that revenue, and a properly designed DMTT is treated as satisfying the group's Pillar Two obligation on UAE profits, so the same profit is not taxed twice under both the UAE DMTT and a foreign IIR or UTPR.
- A DMTT lets the UAE collect its own top-up first.
- It aligns the UAE with the global Pillar Two framework.
- It protects UAE revenue from foreign IIR/UTPR charges.
- In-scope groups compute UAE ETR and pay any shortfall here.
- A qualifying DMTT is designed to be credited against foreign top-up charges.
- It keeps the compliance conversation with the FTA rather than a foreign authority.
- It signals the UAE's alignment with international tax standards to investors and rating agencies.
IIR, UTPR and DMTT: the collection order
Think of the three mechanisms as a queue rather than three separate taxes on the same profit. A qualifying DMTT, where implemented, is generally applied first against low-taxed profit in that country. Only any amount not already collected by the DMTT can then be picked up by an IIR at a parent entity's level, with the UTPR acting as the final backstop across the remaining group jurisdictions. Because the UAE's DMTT is designed to meet the OECD's qualifying standard, in-scope groups should not expect to pay the same top-up twice, the practical challenge is producing accurate data to support the UAE figure, not the ordering of the rules themselves.
- DMTT is applied at source, in the low-tax jurisdiction itself.
- IIR sits with a parent entity if the DMTT does not fully cover the shortfall.
- UTPR is the final backstop, spread across other group jurisdictions.
- A qualifying DMTT is intended to prevent double taxation of the same UAE profit.
Related guides
Frequently Asked Questions
For finance teams new to Pillar Two and trying to understand how the pieces fit together.
What is Pillar Two?
An OECD/G20 framework, agreed by a broad international coalition, that ensures large multinational groups pay an effective tax rate of at least 15% in every country they operate in. It works through the GloBE rules, which define how income and covered taxes are measured and how any shortfall against 15% is calculated and collected. Only groups with consolidated revenue of EUR 750 million or more are affected.
Why did the UAE introduce a DMTT?
So that any top-up owed on UAE profits is collected in the UAE, rather than by another country under the IIR or UTPR. Without a domestic top-up tax, the UAE would effectively be exporting its own tax base to whichever jurisdiction hosts the group's parent entity. A qualifying DMTT keeps that revenue at home while still satisfying the group's global Pillar Two obligation.
What are the IIR and UTPR?
The Income Inclusion Rule (IIR) lets a parent entity's jurisdiction charge top-up tax on a subsidiary's low-taxed profit. The Undertaxed Profits Rule (UTPR) is the backstop that spreads any remaining top-up across other group jurisdictions, typically through denied tax deductions. A qualifying DMTT takes priority over both, so it is collected before either mechanism can reach the same UAE profit.
Does GloBE income equal accounting profit?
Not exactly. GloBE income starts from the accounting profit reported under the group's consolidated accounting standard, then applies a defined set of adjustments — for items such as certain tax credits, excluded dividends and stock-based compensation — to arrive at a standardised figure comparable across every country a group operates in. This standardisation is what allows the 15% test to be applied consistently worldwide.
Is Pillar Two the same as UAE corporate tax?
No, the two systems apply side by side. UAE corporate tax is the general 0%/9% regime that applies to all taxable persons, while Pillar Two and the UAE DMTT apply only to the small number of groups above the EUR 750 million threshold, as an additional top-up where the blended UAE effective rate falls short of 15%.
Who decides if the UAE's DMTT counts as a qualifying DMTT?
The OECD Inclusive Framework runs a peer review and transitional qualification process for each country's domestic top-up tax legislation. A DMTT confirmed as qualifying is treated as satisfying the group's Pillar Two liability for that jurisdiction, which is what lets it take priority over a foreign IIR or UTPR on the same profit.
Can Exiloz help us understand our exposure?
Yes. We walk your finance team through how the GloBE rules apply to your specific group structure, identify which UAE entities are affected, and quantify the potential UAE top-up before it appears on a return. Where useful, we also explain how the IIR and UTPR interact with the UAE DMTT so head office sees the full picture, not just the local piece.
Make sense of Pillar Two
Exiloz translates the GloBE rules, the IIR/UTPR mechanics and the UAE DMTT into what they actually mean for your group's UAE entities.