Cross-border Tax Talks

Pillar Two: Middle East Roundup

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Hanan Abboud, a Dubai‑based International Tax and M&A partner who leads PwC’s Pillar Two efforts across the Middle East. Doug and Hanan discuss the Cooperation Council for the Arab States of the Gulf (GCC) region’s corporate tax landscape, including country differences, Zakat as a covered tax, and the prevalence of withholding and treaty networks. They then map Middle East Pillar Two adoption: Bahrain’s QDMTT, Kuwait’s QDMTT, Oman’s IIR, Qatar’s DMTT plus IIR, the UAE’s QDMTT, and Saudi Arabia’s lack of announcements. They dive into filing timelines, estimated payments, the evolving incentive landscape, the intersection with free zones, as well as practical pain points: data, provisioning, governance, and allocating top‑up taxes. 

• [00:45] Introduction: Reading habits & recommendations 
• [02:55] Overview of middle east corporate tax environment and Pillar Two 
• [03:25] GCC corporate tax landscape: Country survey – CIT, WHT & Treaties 
• [07:40] Incentives: UAE free zones, licensing, qualified income, self‑assessment 
• [09:25] UAE’s first corporate tax return cycle noted; audits expected; no DSTs 
• [10:20] Pillar Two scope: in‑scope regional MNEs; global context 
• [12:10] Policymaker lens on Pillar Two: align globally, raise revenue, protect base; DMTT trend; no UTPRs 
• [14:25] Bahrain: QDMTT effective 2025; first direct tax for the jurisdiction 
• [15:50] Egypt: no Pillar Two announcement; 22.5% CIT; ETR near statutory 
• [16:30] Jordan: no announcement on Pillar Two 
• [16:35] Kuwait: QDMTT from 2025; interaction with CIT/Zakat 
• [18:30] Guidance conversations: resource constraints; market uncertainty 
• [19:30] Provisioning under uncertainty: practical positions until clarity emerges 
• [20:50] Oman: IIR from 2025; DMTT possibly later 
• [21:30] Qatar: DMTT and IIR from 2025 
• [21:40] Saudi Arabia: no announcements; taxpayers await direction 
• [22:15] United Arab Emirates: QDMTT effective in 2025 
• [22:35] Filing timelines: first‑year returns generally due 15–18 months after year‑end 
• [23:40] Penalties can be significant; some criminal penalties noted 
• [24:00] Incentives in a Pillar Two world: UAE R&D relief/credit anticipated 
• [25:35] Free zones vs Pillar Two: modeling matters 
• [27:15] Practical issues: data challenges, provisioning now, compliance plans 
• [29:50] Early‑filing jurisdictions drive urgency 
• [32:15] Centralized approach advocated: Pillar Two ignores business‑unit silos 
• [34:10] Data and ERP realities: decentralized systems; likely first‑year pain 
• [35:30] Transitional safe harbors v. full QDMTT calculations in the region 
• [36:10] Adopting OECD guidance to stay aligned 
• [37:40] Closing advice: start now; data, judgment, documentation are critical

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