The implementation of Pillar Two across the GCC is creating new responsibilities for multinational groups. With domestic minimum top-up tax regimes (DMTT) taking effect in several jurisdictions and the first reporting and filing cycles approaching across several jurisdictions, Group CFOs and Tax Directors must ensure that local compliance requirements are supported by consistent financial data, clear accountability and coordinated tax processes.
The OECD's global minimum tax framework is designed to ensure that large multinational enterprise (MNE) groups, generally those with consolidated annual revenues of at least EUR 750 million under the applicable tests, are subject to a minimum effective tax rate of 15% in each relevant jurisdiction.
For groups operating across the GCC, implementation presents a particular challenge: the same multinational group may face different registration procedures, reporting requirements and compliance timelines across its regional entities. Saudi Arabia remains an important exception to the region's domestic implementation trend. However, the absence of an enacted Saudi Pillar Two regime does not necessarily remove Saudi-headquartered multinational groups from the framework's international reach. Their foreign operations may already be subject to domestic minimum top-up taxes and other Pillar Two requirements in jurisdictions that have implemented the rules.
Pillar Two across the GCC: where do countries stand?
The GCC tax landscape has evolved significantly since the introduction of the OECD/G20 Pillar Two framework. Five GCC jurisdictions have introduced global minimum tax mechanisms, although the applicable rules, administrative procedures and implementation dates differ.
| Country | Pillar Two position | Key consideration for multinational groups |
|---|---|---|
| UAE | Domestic Minimum Top-up Tax (DMTT) applies for financial years beginning on or after 1 January 2025 | Determine applicable registration requirements, complete registration before applicable deadlines, identify filing responsibilities and prepare UAE top-up tax calculations |
| Bahrain | DMTT applies for financial years beginning on or after 1 January 2025 | Prepare for the first filing cycle, including calculations, supporting schedules and advance payment requirements |
| Qatar | DMTT and Income Inclusion Rule (IIR) apply for financial years beginning on or after 1 January 2025 | Complete applicable registration through Dhareeba and establish local reporting responsibilities |
| Kuwait | DMTT applies for financial years beginning on or after 1 January 2025 | Prepare for the first filing cycle and align local calculations, transfer pricing documentation and compliance reporting with group-level requirements. Undertake the DMTT registration update and obtain the electronic DMTT tax card. |
| Oman | Global minimum tax legislation has been introduced, with implementation and compliance requirements governed by its domestic framework. Recently, Oman removed the IIR and retained the DMTT. | Assess registration and designated filing entity requirements, prepare for local tax returns and payments and review compliance obligations under the amended law |
| Saudi Arabia | No Saudi domestic Pillar Two implementation identified as at 11 November 2026. Saudi-headquartered groups may nevertheless be affected by Pillar Two rules applied in other jurisdictions where they operate. | Assess foreign constituent entities, joint ventures and group structures; determine exposure to overseas DMTTs, IIR and UTPR rules where applicable; and establish whether Saudi financial and tax data is required for group-level calculations and reporting |
Saudi Arabia has not introduced a domestic Pillar Two regime equivalent to those implemented in several neighbouring GCC jurisdictions. Nevertheless, Saudi-headquartered multinational groups meeting the applicable revenue threshold should assess whether their overseas subsidiaries, branches and other constituent entities fall within foreign Pillar Two rules.
A Saudi parent company may need to coordinate information and calculations for foreign entities subject to domestic minimum top-up taxes, even where the parent itself has no Saudi Pillar Two registration or filing obligation. The application of foreign income inclusion and undertaxed profits rules must also be assessed against the group's ownership structure and the relevant jurisdictions' legislation.
Groups should therefore distinguish between three questions: whether a Saudi domestic Pillar Two obligation exists, whether foreign operations give rise to overseas top-up tax or filing obligations and what information Saudi entities must provide to support group-level compliance.
The distinction between domestic top-up taxation and wider international Pillar Two mechanisms is important. A country may implement a domestic minimum tax without adopting every component of the OECD framework. Currently, only Qatar has adopted the IIR when compared with the rest of the GCC countries. Kuwait has introduced specific transfer pricing rules applicable to MNEs in scope of DMTT.
Businesses should therefore assess their obligations under each applicable jurisdiction's legislation rather than treating Pillar Two as a single regional tax regime.
One multinational group, different compliance obligations
Consider a multinational group headquartered in Saudi Arabia, with subsidiaries and joint ventures in the UAE, Bahrain, Qatar and Kuwait, alongside its domestic operations. Although Saudi Arabia has not implemented a comparable domestic Pillar Two regime, several of the group's foreign entities may be subject to local registration, calculation and reporting requirements.
Even where the group has a centralised tax function, its regional entities may have different registration requirements, filing processes and reporting obligations.
A consolidated group-level tax calculation alone may not provide the information necessary to satisfy every local authority.
The following areas require particular attention:
Registration and designated entities
Different jurisdictions require groups to identify local entities responsible for registration, communication with tax authorities or filing. In Qatar and Kuwait, for example, the Pillar Two registration framework requires the appointment of a Designated Local Entity. Consideration should also be given to the applicable procedures for registering a JV of the MNE Group.
Financial data and calculation methods
Effective tax rate calculations depend on detailed financial information, including GloBE income or loss, covered taxes and relevant adjustments. Existing statutory accounts or corporate tax returns may not contain all the information required.
For Saudi-headquartered groups, this may require reconciling Saudi Zakat and income tax records with consolidated financial information, while separately obtaining the accounting and tax data needed to calculate the effective tax rates of foreign constituent entities.
For example, Kuwait's DMTT framework requires ETR calculations to be undertaken based on the standalone IFRS-based audited financial statements of each CE, subject to certain conditions.
Reporting calendars
Groups must coordinate local obligations with international reporting requirements, including the GloBE Information Return (GIR), considering that domestic filing obligations do not necessarily eliminate separate international reporting requirements. The availability of centralised filing or information exchange does not automatically eliminate domestic obligations.
Documentation and internal controls
Calculations, elections, SBIE, safe harbour assessments and supporting information must be appropriately documented. Internal review and approval procedures become particularly important where local finance teams, including those in Saudi Arabia, contribute information to the same group's Pillar Two position.
For Group CFOs, these requirements create a need for clear regional governance and reliable information flows between local finance teams and the central tax function.
The immediate priorities: five GCC markets preparing for Pillar Two compliance
Although Pillar Two implementation is a regional development, some compliance requirements warrant particular attention before 2027. Five GCC jurisdictions have introduced Pillar Two measures, creating immediate compliance priorities for affected multinational groups. Saudi Arabia's position is different, but Saudi-headquartered businesses with operations in these markets should understand how local registration, tax calculations and reporting requirements interact with their group-wide tax governance.
UAE: registration and compliance readiness
The UAE's DMTT applies to in-scope MNE groups for financial years beginning on or after 1 January 2025.
FTA Decision No. 12 of 2026 provides registration, deregistration and notification requirements, including transitional registration deadlines. A transitional registration deadline of 30 November 2026 applies to qualifying entities whose first in-scope financial year ended on or before 30 April 2026.
Registration obligations apply even where no top-up tax is ultimately payable.
Businesses should review which entities fall within scope, determine whether a Domestic Designated Filing Entity should be appointed and establish responsibility for ongoing compliance and reporting.
Qatar: registration through Dhareeba
Qatar introduced its Global and Domestic Minimum Tax framework for financial years beginning on or after 1 January 2025.
The General Tax Authority launched Pillar Two registration through the Dhareeba platform on 2 August 2026. On 4 November 2026, the Authority announced an extension of the registration deadline from 2 November 2026 to 31 January 2027.
Registration obligations may apply even where no top-up tax is ultimately payable.
Groups must identify the relevant constituent entities, determine the Designated Local Entity and coordinate local registration with their wider reporting arrangements.
Bahrain: preparing for the first DMTT return
Bahrain has introduced DMTT for qualifying multinational groups, supported by guidance from the National Bureau for Revenue.
The DMTT Return Filing Manual published in August 2026 provides practical information on the filing process, including the return, information schedules and tax computations.
For an in-scope group with a financial year ending on 31 December 2025, 30 June 2027 is the expected first filing deadline under the transitional timetable, subject to confirmation of the applicable administrative requirements.
Businesses should use the remaining preparation period to validate their calculations, supporting documentation, payment obligations and internal approval processes.
Kuwait: connecting calculations with reporting
Kuwait's DMTT regime applies to qualifying multinational groups for financial years beginning on or after 1 January 2025. In-scope entities must register within 120 days of becoming subject to DMTT, unless an exception applies.
The DMTT Law also introduces specific provisions for determining the existence of a permanent establishment (PE), which were not part of the previous domestic tax framework. Groups may therefore need to revisit their existing PE positions in Kuwait, especially where activities are carried out by entities resident in countries with which Kuwait does not have an applicable tax treaty.
Groups must also address registration requirements, identify the designated filing entity and prepare the DMTT computations in line with Kuwait's local requirements. Coordination with the group's central Pillar Two reporting function is important to ensure consistency in financial data, accounting adjustments, transfer pricing positions and tax elections between the Kuwait DMTT computation and the group's overall Pillar Two reporting.
DMTT returns must be filed within 15 months from the end of the tax period. For an in-scope group with a financial year ending on 31 December 2025, 31 March 2027 would be the first filing deadline.
Both the DMTT return and transfer pricing disclosure form must be certified by an audit firm approved by the Kuwait Ministry of Finance before submission. Sufficient time should therefore be allowed to review the computations, assess safe harbour eligibility, consider relevant tax elections, validate transfer pricing adjustments and finalise the supporting documentation.
Oman: new compliance obligations under the amended Top-Up Tax Law
On 29 October 2026, Oman issued Royal Decree No. 101/2026, introducing significant amendments to its Pillar Two Top-Up Tax Law. The revised framework retains the Domestic Minimum Top-up Tax (DMTT) as the sole charging mechanism, removing the Income Inclusion Rule (IIR), with key provisions applying retrospectively to financial years beginning on or after 1 January 2025.
The amendments establish requirements for registration, the appointment of a Designated Filing Entity, tax return submissions and payments. In-scope entities are generally required to register within 120 days of becoming subject to the tax, while the standard filing deadline is 15 months after the end of the reporting financial year.
Multinational groups operating in Oman should review their registration status, assess local filing responsibilities and prepare for the first compliance cycle. Further details on implementation procedures and applicable transitional arrangements are expected through the Executive Regulations.
Saudi Zakat and income tax in Pillar Two calculations
Saudi Arabia's tax system requires particular attention when determining the Pillar Two effective tax rate. Depending on the ownership structure and applicable rules, Saudi entities may be subject to corporate income tax, Zakat or both. These domestic obligations should not be confused with the separate GloBE calculation.
Importantly, the OECD's Pillar Two technical materials expressly recognise Saudi corporate Zakat as a covered tax for GloBE purposes. This does not mean that the statutory Zakat rate can be used directly as a Pillar Two effective tax rate. The calculation requires an assessment of GloBE income, adjusted covered taxes and the relevant allocation and adjustment rules.
Multinational groups should therefore ensure that their Saudi tax and finance teams can identify the relevant Zakat and income tax amounts, reconcile them to financial reporting records and support the treatment adopted in the group's Pillar Two calculations.
Five questions every Group CFO should ask before 2027
As the first compliance cycles progress, businesses should evaluate the operational readiness of their existing tax and finance processes.
| Board-level question | Why it matters |
|---|---|
| 1. Have we assessed our Pillar Two exposure across the entire GCC, including overseas operations in jurisdictions that have implemented the rules? | A group headquartered in a jurisdiction without domestic Pillar Two implementation may still face obligations through its foreign operations. Incomplete entity mapping can result in missed registrations, reporting requirements or tax exposures. |
| 2. Can our finance systems produce reliable data for local and group-level calculations? | Different accounting records and inconsistent data definitions can complicate effective tax rate calculations. |
| 3. Have we assessed the safe harbours, exclusions and elections available under the current rules? | Available simplifications may reduce calculations or top-up tax exposure, but eligibility, supporting evidence and the relevant fiscal-year rules must be established before relying on them. |
| 4. Who owns Pillar Two compliance in each jurisdiction? | Clearly assigned responsibilities help prevent gaps between local finance teams, group tax and external advisers. |
| 5. Are our reporting processes ready for the first filing cycles? | Calculations, reviews, approvals and submissions must operate within different local and international deadlines. |
These questions should form part of a broader tax governance review, particularly for groups with decentralised finance operations or multiple regional subsidiaries.
From tax calculations to regional tax governance
Pillar Two compliance also has implications beyond the tax department.
Financial reporting and forecasting
Pillar Two may affect tax forecasts, current tax expense, disclosures and cash-flow planning, even where the relevant top-up tax arises outside the jurisdiction of the group's headquarters. Saudi-headquartered groups should therefore assess the financial reporting implications of their overseas operations and coordinate with their auditors on the applicable accounting treatment. Finance teams should also distinguish between the recognition and disclosure requirements for Pillar Two taxes and the operational data needed to calculate future liabilities.
Transfer pricing and intercompany arrangements
Cross-border transactions and related-party pricing may influence the allocation of income and taxes across jurisdictions. Pillar Two calculations should therefore be coordinated with existing transfer pricing policies and documentation. Saudi-headquartered groups should review material cross-border transactions, intercompany financing, service charges and transfer pricing adjustments to identify potential differences between local tax reporting and GloBE calculations. This assessment should be coordinated with existing transfer pricing compliance rather than treated as a separate, disconnected exercise.
Technology and data management
Groups should assess whether existing ERP, consolidation and tax reporting systems can capture the information required for Pillar Two calculations. Depending on organisational complexity, additional controls, reporting tools or process improvements may be necessary.
Governance and accountability
A coordinated compliance framework should establish responsibilities for data preparation, calculation review, tax elections, documentation and final approval.
The objective is to create a repeatable process that can support future reporting cycles as legislation and administrative guidance continue to evolve.
What multinational groups should prioritise for 2027
The OECD's Pillar Two framework continued to evolve during 2026. In January, the OECD/G20 Inclusive Framework agreed a package of simplifications and safe harbour measures, including an extension of the transitional CbCR safe harbour. In September, it published an updated GloBE Information Return and further administrative guidance, alongside a framework for reviewing the consistency of domestic implementing legislation.
Multinational groups should assess how these developments affect their calculations, elections and reporting processes, taking account of the relevant fiscal years and local implementation requirements.
For multinational groups operating in the GCC, the following actions should be prioritised:
- Confirm the scope of application. Identify relevant entities, jurisdictions, group structures and potential exclusions.
- Develop a consolidated compliance calendar. Include registration, notification, filing and payment obligations across relevant jurisdictions, taking into account transitional arrangements and retrospectively applicable provisions where relevant.
- Assess data readiness. Identify information gaps between statutory reporting, tax records and Pillar Two calculations.
- Review safe harbour eligibility. Evaluate available simplifications and applicable elections under the relevant rules.
- Establish clear governance. Assign responsibilities for preparation, review, approval and coordination with local tax authorities.
- Monitor regulatory developments. Maintain visibility over new guidance and changes affecting the group's reporting obligations.
- Assess Saudi-specific reporting dependencies. For Saudi-headquartered groups, identify the domestic finance, tax and consolidation information needed to support overseas Pillar Two calculations and filings, including the treatment of Saudi corporate income tax and Zakat where relevant.
Review BDO Global's Pillar Two implementation map, which tracks implementation developments across jurisdictions worldwide. The map provides an international perspective that complements the local technical guidance issued by BDO professionals across the GCC.
How BDO can help
Managing Pillar Two across several jurisdictions requires both international tax expertise and a practical understanding of local compliance requirements.
BDO's tax professionals can help businesses and multinational groups assess their exposure, coordinate requirements across jurisdictions and establish practical compliance processes. For Saudi-headquartered groups, this includes evaluating overseas Pillar Two obligations and the information required from Saudi finance and tax teams.
This includes:
- Pillar Two impact assessments: identifying entities in scope, evaluating potential top-up tax exposure and assessing available reliefs.
- Regional compliance coordination: supporting local registration, reporting obligations and alignment of compliance calendars.
- Effective tax rate calculations and modelling: evaluating the financial implications of the global minimum tax framework.
- Tax data and technology readiness: assessing reporting systems, data requirements and opportunities to strengthen calculation and documentation processes.
- International tax and transfer pricing advisory: reviewing cross-border arrangements and their interaction with Pillar Two requirements.
Is your GCC Pillar Two compliance framework ready for its first reporting cycles?
Speak to BDO's tax professionals to assess your multinational group's regional obligations, identify preparation gaps and develop a coordinated approach to Pillar Two compliance.