Pillar 2 Compliance Deadline for April–March FY Groups – 30 September 2026

The FTA recently issued two guides on Pillar 2 – Scope and Registration and Excluded Entities and Investment Entities. These guides provide detailed explanations on topics including applicability of QDMTT Legislation for taxpayers in UAE, entities in scope for QDMTT, excluded entities and on QDMTT registration and its process.

The Guide also provides for certain instances where there are differences in between UAE Corporate tax and QDMTT on the taxability of income / persons. That is income / persons might be exempt from UAE Corporate Tax, but might be subject QDMTT top-up tax. Some of the instances include:

• Exempt entities
• Unincorporated partnerships
• Permanent establishments
• Tax Group
• Flow through entities
• Qualifying Free Zone Person

More importantly, the Guide emphasizes the timely registration of applicable taxpayer for the purpose of QDMTT in order to avoid penalties of AED 10,000 per entity. In instances where a group entity is appointed as the DDFE but the registration is not undertaken within the timeline – 30 November 2026, the penalty will have to levied for each of the group entities, and not just the DDFE.

The critical point that businesses will have to bear in mind is that QDMTT registration is not a usual registration, similar to registering under Corporate Taxation laws. Businesses will have to analyze several areas including:

1. Identifying the MNE Group including the UPE that the taxpayer belongs
2. Understanding if the MNE Group meets the revenue threshold
3. Ascertaining if the taxpayer is an in scope or excluded entity for QDMTT
4. Determining whether the taxpayer is a constituent entity or JV or JV subsidiary or PE
5. Deciding whether the Group will undertake entity wise registration or appointing designated entity – DDFE for registration. This would include deciding which entity would be making the required QDMTT related filings– DLE , since the same is required during the QDMTT registration process
6. Gathering information for the purpose of QDMTT registration and timely registration with FTA

QDMTT registration, the first step in QDMTT related compliance, has to be undertaken post the analysis of the aforementioned points and hence taxpayers / businesses need to exercise care.