Every other major economy in the Gulf has now legislated a domestic minimum top-up tax. Saudi Arabia has not. For a multinational group weighing where to headquarter its GCC operations, that single gap is becoming one of the more consequential regional tax differences to understand — not because it’s a loophole, but because of what it does and doesn’t actually protect a group from.
Here’s the current state of Pillar Two across the GCC, and why the absence of a Saudi DMTT is not the same as being outside Pillar Two’s reach.
What Pillar Two Actually Requires
Pillar Two is the OECD/G20 Inclusive Framework’s global minimum tax initiative — a coordinated set of rules (the GloBE Model Rules) designed to ensure large multinational groups pay an effective tax rate of at least 15% on profits in every jurisdiction where they operate. Saudi Arabia is a member of the OECD/G20 Inclusive Framework on BEPS, confirmed in the OECD’s own published membership record.
Crucially, a jurisdiction does not have to enact Pillar Two domestically for the rules to reach income connected to it. The framework is designed so that if a low-taxed jurisdiction hasn’t implemented its own top-up tax, another jurisdiction in the group’s structure — typically the ultimate parent’s home country, under the Income Inclusion Rule — can collect the shortfall instead. Non-adoption redirects where the top-up tax is collected; it does not eliminate the tax.
Where Saudi Arabia Stands Against Its GCC Neighbors
As of 2026, a Domestic Minimum Top-up Tax (DMTT) applying a 15% minimum rate to in-scope multinational groups (those with global consolidated revenues of at least €750 million) is in effect across most of the GCC:
| Country | DMTT Status |
|---|---|
| UAE | Enacted, effective for financial years starting on or after 1 January 2025 |
| Qatar | Adopted into domestic law, including an Income Inclusion Rule alongside the DMTT, effective from fiscal years starting 1 January 2025 |
| Kuwait | Legislated, effective 1 January 2025 |
| Bahrain | Applies from 1 January 2025 — notable as the only GCC country without a broader corporate tax regime otherwise |
| Oman | Applies from 1 January 2025, per regional tracking by international tax advisory firms |
| Saudi Arabia | No domestic minimum top-up tax enacted, per current tracking by international tax and audit firms |
Saudi Arabia’s position here is consistently reported by major international tax advisory trackers as an outlier within the GCC — it is an OECD Inclusive Framework member expected to align with the two-pillar consensus generally, but it has not, as of this writing, followed its neighbors in legislating a domestic top-up tax specifically.
Why “No DMTT” Doesn’t Mean “No Exposure”
This is the point multinational groups most often get wrong. If a Saudi Arabia entity within an in-scope group is taxed below the 15% GloBE minimum — plausible given Saudi Arabia’s mix of the standard 20% CIT rate for foreign-owned entities, 2.5% Zakat for Saudi/GCC-owned entities, and incentive regimes like the RHQ Program’s 0% CIT rate — the absence of a Saudi DMTT does not make that low-taxed income invisible to Pillar Two.
Instead, another jurisdiction elsewhere in the group’s ownership chain — typically wherever the ultimate parent entity sits, if that jurisdiction has adopted the Income Inclusion Rule — can pick up the top-up tax on that Saudi income instead. The tax liability doesn’t disappear; it relocates to a different tax authority’s balance sheet.
A group that assumes “Saudi Arabia has no DMTT, so our Saudi operations are Pillar Two-neutral” may simply be handing the top-up tax collection to its parent jurisdiction instead of eliminating it. The compliance and reporting obligation (the GloBE Information Return) still applies to the group globally regardless of where any individual entity sits.
What In-Scope Groups Should Actually Check
- Confirm whether your group meets the €750 million global revenue threshold — Pillar Two only applies to groups at or above this consolidated revenue level.
- Model the effective tax rate of your Saudi entities specifically, factoring in Zakat, CIT, RHQ, or SEZ incentives where applicable — a blended low rate is what triggers top-up exposure, not simply operating in Saudi Arabia.
- Identify where in your ownership chain the Income Inclusion Rule would apply if Saudi income is under-taxed relative to the 15% floor — this determines which jurisdiction actually collects the shortfall.
- Track this as a live regulatory question, not a settled one. Saudi Arabia’s own DMTT position is exactly the kind of policy area that can change with limited notice, given every other major GCC economy has already moved.
Frequently Asked Questions
No. As of this writing, Saudi Arabia has not enacted a domestic minimum top-up tax, unlike the UAE, Qatar, Kuwait, Bahrain, and Oman, which have all legislated a DMTT effective from 1 January 2025 per current international tax tracking.
Yes. Saudi Arabia is a confirmed member of the OECD/G20 Inclusive Framework on BEPS, per the OECD’s own published membership record, and is expected to align with the two-pillar consensus generally — it simply has not enacted a domestic top-up tax specifically.
Not necessarily. Under Pillar Two’s design, if a Saudi entity’s income is taxed below 15% and Saudi Arabia hasn’t collected a top-up itself, another jurisdiction in the group’s ownership chain — typically the parent’s, under the Income Inclusion Rule — can collect the shortfall instead.
Groups with global consolidated revenues of at least €750 million. Below that threshold, Pillar Two’s minimum tax rules don’t apply.
Potentially, for in-scope groups. Any effective tax rate on Saudi income below the 15% GloBE minimum can trigger a top-up tax obligation somewhere in the group, whether that income is taxed under standard CIT, Zakat, or an incentive regime like RHQ or an SEZ.
- The UAE, Qatar, Kuwait, Bahrain, and Oman have all enacted a 15% domestic minimum top-up tax effective 1 January 2025; Saudi Arabia has not, per current international tax tracking.
- Saudi Arabia is nonetheless a confirmed OECD/G20 Inclusive Framework member and is expected to align with the Pillar Two consensus generally.
- Non-adoption of a domestic DMTT does not remove Pillar Two exposure — it can simply shift where the top-up tax is collected, typically to the parent jurisdiction under the Income Inclusion Rule.
- Only groups with €750 million+ in global consolidated revenue are in scope for Pillar Two’s minimum tax rules.
- Saudi incentive regimes (RHQ’s 0% CIT, SEZ’s 5% CIT, standard 2.5% Zakat) can all produce effective tax rates below the 15% GloBE floor, which is what actually triggers exposure — not simply the absence of a Saudi DMTT.
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Sources
- OECD — Members of the OECD/G20 Inclusive Framework on BEPS (updated 5 December 2025) — confirms Saudi Arabia’s Inclusive Framework membership
- OECD — Global Anti-Base Erosion Model Rules (Pillar Two) — official Pillar Two / GloBE framework overview
- PwC — Pillar Two Country Tracker — GCC-wide DMTT implementation status
- EY — UAE Issues Domestic Minimum Top-up Tax Legislation — UAE DMTT effective date confirmation
- KPMG — Kuwait Legislation Implementing Pillar Two Global Minimum Tax Rules — Kuwait DMTT confirmation
This article is based on the OECD’s official Inclusive Framework membership record and Pillar Two / GloBE framework materials, cross-checked against Pillar Two implementation tracking published by PwC, EY, and KPMG. Saudi Arabia’s DMTT status reflects publicly available information as of the time of writing and may change; Pillar Two exposure analysis for a specific group should be confirmed with a qualified international tax advisor. This article does not constitute tax advice. dariba.co is an independent platform with no consulting relationships.