Minimum Tax International

A New Global Tax Reality Has Arrived - Be Prepared

The OECD's Pillar Two framework, which establishes a 15% Global Minimum Effective Tax Rate (ETR) for large multinational enterprises (MNEs), is transforming how companies organize and report profits in different jurisdictions. Although the UAE still presents a competitive 9% corporate tax rate, Pillar Two introduces an additional requirement for international compliance—especially for groups with consolidated revenues exceeding EUR 750 million.

Even if your UAE-based entity currently falls outside the scope, conforming to Pillar Two regulations is becoming essential for cross-border collaborations, attracting investors, and adhering to parent-country tax regulations.

At Finjuris Global, we offer guidance to clients in various sectors—including family offices, digital service providers, energy firms, venture capital-backed technology companies, and state-backed investment portfolios—on how to legally, structurally, and financially position themselves to adapt to the shifting landscape of global taxation.

What is Pillar Two?

Pillar Two is a component of the OECD’s Base Erosion and Profit Shifting (BEPS 2.0) initiative. Its aim is to guarantee that large multinational groups pay a minimum effective tax rate of 15% on profits, no matter where the income is generated.

It applies to

Multinational Groups with consolidated revenues of ≥ EUR 750 million
Any group entity, regardless of its location, if it belongs to such a group
Parent jurisdictions and host nations implementing Income Inclusion Rules (IIR) and Undertaxed Payments Rules (UTPR)
Even entities in Free Zones and those exempt in the UAE may be liable for additional tax
overseas if the overall group does not achieve the minimum threshold.

Our Pillar Two & Minimum Tax Solutions

Impact Evaluation & Scope Identification

We assess whether your entity or group based in the UAE falls under the Pillar Two regulations and analyze the relevance of the Global Anti-Base Erosion (GloBE) Model Rules.

Effective Tax Rate (ETR) Analysis

We analyze your group's tax positions by jurisdiction to determine if there is a potential top-up tax liability and identify the necessary steps to mitigate this risk.

Entity Categorization & Structural Guidance

We assist in categorizing your UAE Free Zone, Holding, or Operating entity within the Pillar Two framework, ensuring compliance with substance, reporting, and economic nexus criteria.

Financial Reporting Preparedness

We align your local accounting methods with GloBE’s deferred tax treatment and handling of temporary/permanent differences, facilitating clean audit trails and easing consolidation processes.

Safe Harbour Assessment

We review whether your entity is eligible for transitional safe harbours (for example, simplified ETR tests or de minimis thresholds) and advise on the necessary documentation to demonstrate compliance.

Governance & Record-Keeping

We aid in the preparation of internal memos, board resolutions, and tax documentation to withstand scrutiny from both UAE and international tax authorities.

Collaboration with Global Advisors

We collaborate with your parent company’s tax advisors and auditors to ensure consistent reporting, minimize redundancy, and maintain a defensible position across the group.

The Importance of Pillar Two - Even in the UAE

Global investor oversight is intensifying. If your group has international presence or foreign investors, adherence to minimum tax standards is increasingly becoming a crucial part of due diligence.

Benefits of Free Zones are not immune. Even if you benefit from a local 0% tax rate, you might incur top-up tax liabilities in your parent company’s jurisdiction unless properly structured and documented.

Your future operations could be subjected to these regulations. As revenue increases or if you are acquired by a larger group, being prepared for Pillar Two can facilitate a smooth transition without the need for restructuring.

Comprehensive Pillar Two evaluation customized for your organization and group

Calculations of Effective Tax Rates and modeling for top-up tax exposure

Recommendations for legal restructuring to prevent top-up liabilities

Internal governance structures that conform to GloBE Model Rules

Collaboration with worldwide tax, legal, and accounting teams

Our emphasis isn’t solely on preventing tax leakage, but rather on creating structural clarity and confidence as you expand internationally.

Why it matters?

Pillar Two is no longer a theoretical concept; it’s a global tax compliance mandate.

Under the OECD’s BEPS 2.0 initiative, the implementation of a Global Minimum Tax (GMT) is reshaping how multinational corporations manage their tax structures, cross-border transactions, and financial reporting.

For businesses operating from the UAE, a traditionally low-tax jurisdiction, this means heightened scrutiny, additional reporting burdens, and the possibility of top-up taxes in foreign jurisdictions. Even if you're based in a Free Zone or enjoy domestic tax exemptions, your parent group’s global reporting obligations may bring you into scope.

Ignoring Pillar Two now could jeopardize investor confidence, trigger audit risks, or lead to unanticipated foreign tax exposure.

Why does it matter to your business?

Mitigates Group-Level Tax Leakage that could result from Free Zone or low-tax operations.

Future-Proofs Expansion for M&A, IPOs, or entry into higher-tax jurisdictions.

Builds Investor & Auditor Trust through compliance with global transparency standards.

Enables Cross-Border Consistency in tax treatment and reporting disclosures.

Avoids Reputational Damage from perceived non-compliance with global tax fairness standards.

Pillar Two is not about giving up local benefits; it’s about proving you’ve earned them, legally and transparently.

Why should you choose Finjuris for Pillar Two Compliance?

Strategic Tax Defense. Regulatory Precision. Cross-Border Synergy. At Finjuris Global, we recognize that Pillar Two compliance is not just about filling forms; it’s about managing financial risk, protecting your group’s tax profile, and enabling sustainable global growth.

Our multidisciplinary team of international tax advisors, UAE-based compliance experts, and regulatory analysts helps you align your corporate setup with OECD and parent-country rules without undermining your business model.

Whether you’re a qualifying multinational or a Free Zone company under group scrutiny, we tailor compliance strategies that eliminate uncertainty and maximize advantage.

We help you

Analyze global Effective Tax Rate (ETR) positions across jurisdictions.

Prevent unintended top-up liabilities from undermining your Free Zone benefits.

Navigate safe harbors, transitional relief, and local exemptions.

Coordinate with parent entities and global tax teams to ensure groupwide alignment.

Maintain documentation that withstands FTA and foreign audit scrutiny.

What sets us apart?

Global-Local Compliance Integration

We bridge UAE-specific corporate tax strategies with OECD-aligned international rules, ensuring that your structure meets both local laws and global group expectations.

Pillar Two: Risk Modeling & ETR Simulation

We simulate realistic tax outcomes across multiple countries, identifying where top-up taxes might arise and recommending how to mitigate or avoid them through legal structuring.

Substance-Driven Structuring

We ensure your Free Zone or holding entities have real operations, qualified income, and defensible governance, all aligned with GloBE Model Rules and ESR mandates.

Multisector Experience

From sovereign funds and Web3 startups to global logistics chains and healthcare MNCs, our Pillar Two guidance is tailored to your industry and entity structure.

Coordination Across Borders

We work directly with your global tax advisors, CFOs, and audit teams to build a cohesive Pillar Two strategy, avoiding duplication and ensuring consistency in groupwide reporting.

FAQs

Is Pillar Two applicable to all companies in the UAE?

No. It currently pertains to multinational groups with a consolidated revenue of EUR 750 million or more. However, numerous smaller entities in the UAE might be indirectly impacted if they are part of or engage in business with in-scope groups.

What does "top-up tax" mean?

It refers to the difference between the minimum tax requirement (15%) and your actual Effective Tax Rate (ETR) within a specific jurisdiction. If your UAE entity pays less than 15%, a top-up may need to be paid in the parent country unless exemptions or safe harbours are applicable.

Do Free Zone companies forfeit their tax exemption under Pillar Two?

Not necessarily. Nonetheless, a top-up tax could apply overseas if the Free Zone entity belongs to a large multinational group and does not meet the substance or income criteria.

How can I determine if my structure adheres to compliance?

We perform a Pillar Two readiness evaluation that assesses ownership, income classification, levels of substance, and financial data to identify exposure and suggest mitigation strategies.

How does Pillar Two affect my financial reporting or audit process?

You may need to reclassify deferred tax items, adjust for permanent differences, and align your accounting treatments with GloBE standards. This affects your audit trails, disclosures, and group reporting formats.

What is the Income Inclusion Rule (IIR), and how does it work?

The IIR allows a parent jurisdiction to top up the tax on the low-taxed income of its subsidiaries. This means if your UAE entity pays < 15% and your parent country enforces IIR, the shortfall may be taxed back at the parent level.

How do I prepare for Pillar Two compliance now?

Start with a Pillar Two readiness assessment to identify risks, ETR gaps, and documentation shortfalls. We recommend setting up internal controls, financial modelling, and board resolutions to demonstrate proactive compliance.

VALUE ADDED TAX (PILLAR TWO)

Worldwide Compliance. Strategic Preparedness. Risk-Free Growth.