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UAE Corporate Tax Law: An In-Depth Look Into Tax Groups6 min read

Author: Omar Sami
Managing Partner Attorney at German Law Legal- & Tax Consultant

In this discussion, we will explore the Tax Groups, a significant component of the UAE Corporate Tax Regime. Tax Groups offer corporations and businesses in the UAE an avenue for streamlined tax compliance.

Understanding Tax Groups

In the UAE, a Tax Group consists of two or more juridical resident persons that unite for tax purposes. Once formed, these members are treated as a single taxable entity, simplifying the calculation of taxable income. Consolidating financial results allows for a more efficient tax filing process, as only one tax return must be submitted to the Federal Tax Authority (FTA).

Financial Year Condition

The Financial Year condition is a crucial aspect of Tax Groups, aiming to align the financial years of group members. This reduces the complexity of apportioning results and ensures a cohesive reporting structure. It’s worth noting that the provisions of the Corporate Tax Law, including those related to Tax Groups, apply to tax periods commencing on or after 01.06.2023.

Tax Treatment within a Tax Group

Revenue earned from members of the Tax Group is eliminated for calculating taxable income. However, interests held by entities outside the Tax Group but within the same Qualifying Group are considered for specific provisions, such as the Participation Exemption.

Compliance Requirements

The parent company, as the representative of the Tax Group, is responsible for submitting the consolidated tax return to the FTA. Accurate reporting and compliance with relevant tax regulations are imperative to avoid penalties or legal consequences.

Additional Insights

Juridical Resident Persons forming a Tax Group must meet specific eligibility criteria, including tax residency and share capital ownership. The parent company must own at least 95% of the share capital in each subsidiary, either directly or indirectly.

How TME Services Can Support Your Business

Tax Groups present an innovative approach to corporate taxation in the UAE, offering simplicity and efficiency. While these insights provide a comprehensive overview, it is crucial for entities considering Tax Group formation to refer to official publications and guidelines provided by the FTA for detailed and up-to-date information.

At TME Services, our team of 45 experts is ready to help your business make the most of your business. With over 18 years of experience in the UAE and the Middle East, we specialize in legal, tax, accounting, and compliance matters. Visit our services page to learn more about everything we do.


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