Egypt has not adopted the 15% global minimum tax, but groups with Egyptian operations can still be affected. Where things stand in Egypt and the GCC, the January 2026 OECD changes, and the steps groups should take now.
The OECD's Pillar Two rules introduce a 15% global minimum effective tax rate for large multinational groups. Egypt has not adopted them, but that does not mean Egyptian operations are outside their reach. This briefing sets out where things stand in Egypt and the GCC, the changes the OECD agreed in January 2026, and the practical steps groups should take.
The rules in brief
Pillar Two applies to multinational groups with consolidated annual revenue of EUR 750 million or more in at least two of the four preceding years. For each jurisdiction where the group operates, its effective tax rate is calculated under common rules. If that rate is below 15%, a "top-up tax" is due. Three mechanisms collect it:
- Qualified Domestic Minimum Top-up Tax (QDMTT): the country where the low-taxed profits arise collects the top-up tax itself.
- Income Inclusion Rule (IIR): the country of the parent company collects the top-up tax on low-taxed profits of its subsidiaries.
- Undertaxed Profits Rule (UTPR): a backstop that allows other countries where the group operates to collect any remaining top-up tax.
Groups within scope must also file a standardised GloBE Information Return.
Egypt: not adopted, but not out of reach
As at November 2026, Egypt has not enacted Pillar Two legislation. In early November 2026, Egypt's Deputy Minister of Finance for Tax Policy said that the government had studied the rules, that applying them is not a priority for now, and that the question would be judged on its economics rather than rejected in principle.
This matters less than it may appear, because the rules can still apply to profits earned in Egypt. If an Egyptian subsidiary's effective tax rate under the Pillar Two rules falls below 15%, its parent's country may collect the difference under the IIR, or other countries may do so under the UTPR. In that case the top-up tax is paid abroad rather than in Egypt.
Egypt's standard corporate tax rate is above 15%, but a group's effective rate in Egypt can fall below it, for example because of investment incentives, tax exemptions or the free zone regime, which levies a fee rather than corporate income tax. Whether a particular payment counts as a "covered tax" under the Pillar Two rules is a technical question that needs analysis for each group.
The GCC
Several GCC states have already acted. The UAE, Qatar, Kuwait, Bahrain and Oman have introduced domestic minimum top-up taxes, generally effective from 2025, and Qatar and Oman also apply an income inclusion rule. Saudi Arabia had not introduced Pillar Two legislation as of mid-2026, so its current position should be confirmed. In the UAE, where the standard corporate tax rate is 9%, the domestic top-up tax brings in-scope groups up to 15%, and the tax authority has set registration deadlines for groups within scope.
January 2026: the "side-by-side" package
On 5 January 2026 the OECD Inclusive Framework agreed a package of changes:
- Side-by-side system for US-parented groups. From fiscal years beginning on or after 1 January 2026, qualifying groups whose ultimate parent is in the United States can elect to be relieved from the IIR and UTPR. Domestic minimum top-up taxes still apply, so a US-parented group can still pay top-up tax in the UAE, for example.
- A permanent simplified effective tax rate safe harbour, based on consolidated financial statements with limited adjustments.
- A safe harbour for substance-based tax incentives, such as incentives linked to local payroll or investment in tangible assets, within set limits.
- A one-year extension of the transitional country-by-country reporting safe harbour.
What groups should do now
- Map the group. Identify every entity, its jurisdiction and its expected effective tax rate under the Pillar Two rules, not only the headline tax rate.
- Review incentives and special regimes, in Egypt and elsewhere, and assess whether they create exposure to top-up tax abroad.
- Check registration and filing obligations in each country, including domestic top-up tax registrations in the GCC and the GloBE Information Return.
- Assess the new safe harbours and whether the group, or any part of it, can rely on them.
- Build Pillar Two into transactions. Acquisitions, reorganisations and new holding structures should be tested for their effect on the group's effective tax rate, and due diligence should cover Pillar Two exposure.
How we can help
We work with groups and their tax advisers on the legal side of Pillar Two: reviewing holding and investment structures, documenting intra-group arrangements and addressing Pillar Two in transaction documents. Contact us to discuss how the rules affect your group.
This briefing reflects the position as at November 2026. Pillar Two implementation is changing quickly, and the position in each country should be confirmed before decisions are taken. This briefing is not tax advice.
This briefing is for general information only and is not legal advice. For advice on your situation, contact us.