Corporate Tax group: what it means in UAE tax.

What corporate tax group means

Also called: Tax Group.

A Corporate Tax group, called a Tax Group in the law, lets a parent company and its subsidiaries be treated as one Taxable Person. The parent files a single return for all members, based on consolidated results with transactions between members eliminated.

Article 40 of the Corporate Tax Law sets the entry conditions. All members must be UAE resident juridical persons, the parent must hold at least 95% of each subsidiary's share capital, voting rights and entitlement to profits and net assets, all members must share the same financial year and accounting standards, and none can be an Exempt Person or a Qualifying Free Zone Person.

For a family business with several UAE companies, the main benefits are one return, current year losses of one member offsetting profits of another, and no transfer pricing adjustments inside the group. The price is that every member is jointly and severally liable for the group's tax, unless the FTA approves a limit. It is not the same as a VAT group, which has its own rules.

How it works

• The parent and each subsidiary apply together to the FTA. Under Ministerial Decision No. 301 of 2024 the application must be made before the end of the tax period in which the group is to form or the member is to join.
• The 95% ownership conditions must be met continuously throughout the tax period.
• The parent consolidates the results, assets and liabilities of all members and eliminates transactions between them.
• Losses a subsidiary brings into the group can only be used against income attributable to that subsidiary.
• Assets moved between members and followed by either member leaving within two years can trigger the gain that was eliminated.
• The group must prepare consolidated financial statements.

Worked example

A family owns a Dubai contracting company that holds 100% of a UAE interiors company. Both use a calendar financial year and the same accounting standards. In the year, the contractor has taxable income of AED 900,000 and the interiors company has a tax loss of AED 300,000.

Parent taxable income	AED 900,000
Subsidiary tax loss	AED -300,000
Group taxable income	AED 600,000
Corporate Tax as a Tax Group (9% on 225,000)	AED 20,250
Corporate Tax filing separately (parent: 9% on 525,000)	AED 47,250
Difference this year	AED 27,000

The group uses the loss in the same year; filing separately, the subsidiary would carry its loss forward, so part of the difference is timing, and the group gets one AED 375,000 zero rate band rather than two.

Common mistakes

• Applying after the tax period has ended. The application must be in before the end of the period it is meant to cover.
• Including a Qualifying Free Zone Person or a company with a different financial year.
• Forgetting that each member is liable for the whole group's tax, which matters when a member is sold.

The law

• Federal Decree-Law No. 47 of 2022, as amended, Article 40 (Tax Group), Article 41 (date of formation and cessation) and Article 42 (Taxable Income of a Tax Group)
• Ministerial Decision No. 301 of 2024 on Tax Group, Articles 2, 3 and 5 (continuous ownership, residence, application timing)
• Cabinet Decision No. 116 of 2022, Article 2 (AED 375,000 at 0%)

Frequently asked questions

Can a free zone company join a Tax Group?

A Qualifying Free Zone Person cannot. A free zone company that is not a Qualifying Free Zone Person, and meets the other conditions, can.

Is a Corporate Tax group the same as a VAT group?

No. They are separate regimes with different conditions and separate applications. Being in one does not put a company in the other.

Related terms

VAT group · Tax loss relief · Transfer pricing · Qualifying Free Zone Person · Resident person. See every term in the UAE tax glossary.

For the full picture, read our guide: UAE Corporate Tax Groups: Should Your Companies File as One?.

Need help with Corporate Tax filing? See our Corporate Tax filing service.