On 8 January 2024, the UAE Federal Tax Authority (FTA) released the Corporate Tax Guide on Tax Groups – CTGTGR1.

This guide is designed to provide general guidance to Taxable Persons, helping them to understand the taxation of two or more juridical Resident Persons that form a Tax Group.

Once a Tax Group is formed, the juridical Resident Persons that are part of the Tax Group are treated as a single Taxable Person and, therefore, Taxable Income needs to be calculated on a consolidated basis for the entire Tax Group. As a result, only one Tax Return for the Tax Group needs to be submitted to the FTA.

This guide provides readers with an overview of what is a tax group, who is eligible to form or be a member of a tax group, when a tax group can be formed and when it ceases to exist, how the taxable income of a tax group is determined, and related compliance requirements.

Tax Groups are an optional regime, and a Tax Group is only formed if juridical Resident Persons who meet the relevant conditions apply to form one and it is approved by the FTA. Therefore, the concept of a Tax Group will not apply to every Taxable Person.

This guide does not cover the concept of a Qualifying Group for the purposes of Article 26 of the Corporate Tax Law (under which assets and liabilities may be transferred between members of a Qualifying Group on a no gain or loss basis for Corporate Tax purposes), except insofar as this provision interacts with the rules related to Tax Groups.

This guide should be read by any juridical Resident Person that thinks it may qualify to form a Tax Group (with a Parent Company and at least one Subsidiary) or join an existing Tax Group as per the Corporate Tax Law and that wants to enjoy the benefits of the Tax Group regime (for example consolidated Taxable Income, reduced compliance burden, etc.).

The relevant Articles of the Corporate Tax Law and the implementing decisions are indicated in each Section of the guide. It is recommended that the guide is read in its entirety to provide a complete understanding of the definitions and interactions of the different rules. Further guidance on some of the areas covered in this guide can be found in other topic specific guides (such as participation exemption and foreign tax credit).

This guidance is not a legally binding document but is intended to provide assistance in understanding the tax implications for Tax Groups relating to the Corporate Tax regime in the UAE. The information provided in this guide should not be interpreted as legal or tax advice. It is not meant to be comprehensive and does not provide a definitive answer in every case. It is based on the legislation as it stood when the guide was published.