Tax Group Formation Under The UAE Corporate Tax Regime


As a leading accounting and tax consultancy firm in Dubai, Alliance Prime Accounting & Tax Consultancy is committed to keeping businesses informed about crucial aspects of the corporate tax regime. One such important aspect is Tax Grouping, which allows eligible companies to streamline their tax obligations and be treated as a single entity for corporate tax purposes.

What are Tax Groups, and when can they be formed?

A tax group is a group of companies that are taxed collectively. Under the U.A.E.’s tax laws, companies can form a group or join an existing group to file a single tax return for all the members of the group.

There are some requirements that need to be fulfilled to create a tax group or become a part of an existing tax group. All members of a permanent or temporary group, including representatives, are considered a single entity and pool their income and expenses together for filling purposes.

Intercompany transactions are “out of scope”.

  • Resident Juridical Persons: Both the parent company and its subsidiaries must be resident juridical persons in the UAE.
  • Common Financial Year and Accounting Standards: The parent company and its subsidiaries must have the same Financial Year and prepare their financial statements using the same accounting standards.
  • Ownership and Control: The parent company must own at least 95% of the share capital, hold at least 95% of the voting rights, and be entitled to at least 95% of the profits and net assets of the subsidiary.

It is important to note that the ownership, rights, and entitlement can be held either directly or indirectly through subsidiaries. However, Tax Groups cannot include an Exempt Person or Qualifying Free Zone Person.

How to calculate the Taxable Income of a Tax Group?

Once a Tax Group is formed, the parent company must prepare consolidated financial accounts covering each subsidiary that is a member of the Tax Group for the relevant Tax Period. In the process of calculating the Taxable Income of the Tax Group, transactions between the parent company and each group member, as well as transactions between the group members, would be eliminated.

By consolidating financial accounts and eliminating inter-group transactions, Tax Groups can achieve a more streamlined and accurate calculation of their Taxable Income, optimizing tax efficiencies and compliance.

What are the Benefits of Forming a Tax Group?

By forming a corporate tax group in the UAE, businesses can also enjoy benefits such as better tax planning and reduction of compliance costs. The UAE corporate tax Public Consultation Document provides a detailed description of the benefits and requirements associated with tax groups. However, it is advisable to seek advice from corporate tax advisors in Dubai before making any decision as the government is yet to issue the Corporate Tax Law. This article will provide you with valuable insights into the benefits and requirements of forming a Tax Group.

At Alliance Prime Accounting & Tax Consultancy, we understand the complexities of Tax Grouping and its potential benefits for businesses. Our team of expert professionals is here to provide comprehensive guidance and assistance in forming and managing Tax Groups, ensuring that your company’s tax obligations are met efficiently and effectively.

As the corporate tax landscape evolves, count on Alliance Prime to be your trusted partner in navigating these changes and optimizing your tax strategies to drive your business towards success. If you have any questions or require further assistance regarding Tax Grouping or any other tax-related matters, do not hesitate to reach out to us.

Why is Alliance Prime the best Tax Consultancy in Dubai?

Alliance Prime is a leading provider of auditing, accounting, taxation, and advisory services in the UAE. Our expert team will guide you through the complex laws and regulations of UAE, including Corporate Tax, VAT, Excise Tax, Accounting and Bookkeeping, ESR, Financial Advisory, ERP, etc. We stay up-to-date with the latest changes in laws and regulations in the UAE. If you’re looking for reliable and professional auditing, accounting, taxation, and advisory services in the UAE, look no further than Alliance Prime. 

If you would like additional information or clarity on Tax Group or require assistance for planning your Tax Group formation, and its impact assessment,  visit alliance-acc.com or contact us at- +971 58 825 7795 or Email us at:- contact@alliance-acc.com

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