Get Appointment
Get Appointment
Tax Groups Under CT – Ministerial Decision No. 301 of 2024

Tax Groups Under CT – Ministerial Decision No. 301 of 2024

by | Jul 7, 2025 | PREMA Insights

The Ministry of Finance has issued updated guidance on the formation, operation, and compliance obligations of Tax Groups under Federal Decree-Law No. 47 of 2022 (UAE Corporate Tax Law). Here’s what businesses need to know:

1. Who Can Form a Tax Group?

A Parent Company and one or more Subsidiaries can form a Tax Group if the following conditions under Article 40 of the Corporate Tax Law are continuously met throughout the Tax Period:

  • All members are Resident Persons in the UAE
  • Parent Company directly or indirectly owns at least 95% of:
    • Voting rights
    • Share capital or partnership capital
    • Entitlement to profits and net assets
  • All members use the same financial year and accounting standards
  • None of the members are tax residents in another country

2. How and When to Apply?

  • The application must be submitted to the FTA before the end of the Tax Period in which the Tax Group is intended to be formed or joined
  • Newly formed subsidiaries or parent companies can join from the date of incorporation
  • If a Parent Company transfers its business to another group member and ceases to exist, the recipient becomes the new Parent automatically

3. Intra-Group Transactions & Losses

  • Prior losses from transactions (before joining the Tax Group) must be tracked, they are not eliminated until fully reversed
  • If these transactions generate income later, it must be included in the Tax Group’s taxable income up to the amount of the previous deductible loss

4. Pre-Grouping Tax Losses & Interest Expenses

Tax Groups can use pre-grouping Tax Losses and Net Interest Expenditure from individual members, but only if:

  • They calculate the taxable income attributable to that member
  • They apply losses before carrying them forward
  • If not done correctly, unused losses may be forfeited

5. Attributing Taxable Income Within a Group

Attribution is mandatory when:

  • A member brings in pre-grouping Tax Losses or Net Interest Expenses
  • A new member joins a group with existing losses
  • A member benefits from tax incentives (e.g., Qualifying Free Zone Persons)
  • The group intends to use these figures to reduce its taxable income

The group must also maintain proper transfer pricing documentation and disclose related party and intra-group transactions to the FTA.

6. Business Restructuring Simplified

If one group member transfers its entire business to another member:

  • No separate Business Restructuring Relief election is needed
  • If only two members exist and one absorbs the other, the Tax Group ceases to exist on the effective transfer date
  • Transfers to newly formed group members are treated as internal

7. Exit & Cessation Rules

  • If a member becomes tax resident abroad or conditions for the Tax Group are no longer met, they must notify the FTA within 20 business days
  • The exiting member or dissolved group must prepare standalone financials using the same accounting basis and carry over the same asset/liability values used by the Tax Group

8. Other Clarifications

  • When calculating ownership thresholds for tax loss transfers or qualifying group provisions, aggregate the assets and liabilities of all members
  • Transfers of assets between Tax Group members that would normally qualify under Article 26 or 27 are deemed compliant—no need to opt-in explicitly