UAE Corporate Tax Groups: Should Your Companies File as One?

Many owners run their business through more than one UAE company. Under Corporate Tax, each is normally a separate taxable person with its own return.

A Tax Group changes that. If the companies qualify and the Federal Tax Authority approves the application, they are treated as one taxable person, represented by the parent company. That can save tax and paperwork, but it also ties the companies together.

What a Tax Group is

In practice this means:

• One return. The parent company files a single Corporate Tax return for the whole group.
• Profits and losses offset automatically. A loss in one member reduces another member's profit in the same period.
• Intra-group transactions eliminated. Sales, recharges and asset transfers between members are generally removed when the group's taxable income is worked out.

A Corporate Tax Group is separate from a VAT group.

The 95% test and the other conditions

A parent company can apply to form a Tax Group with one or more subsidiaries only where all of these are true:

• Resident juridical persons. Every member is a UAE resident company or other juridical person. Individuals cannot join.
• 95% ownership, three ways. The parent holds at least 95% of each subsidiary's share capital, at least 95% of its voting rights, and is entitled to at least 95% of its profits and net assets, directly or through other subsidiaries.
• No Exempt Persons. Neither the parent nor the subsidiary is an Exempt Person.
• No Qualifying Free Zone Persons. A Free Zone company that benefits from the 0% rate on qualifying income cannot be a member.
• Same year and standards. All members share the same financial year and the same accounting standards. One company on IFRS and another on IFRS for SMEs would fail.

Ministerial Decision No. 301 of 2024 adds that these conditions must be met continuously throughout the tax period. The application to form or join a group must reach the FTA before the end of the tax period from which it is to apply.

A worked example

"Our holding company owns 100% of three UAE companies. This year Company A expects taxable income of AED 2,000,000, Company B a tax loss of AED 600,000, and Company C taxable income of AED 300,000."

Filed separately:

• Company A pays 9% on the AED 1,625,000 above AED 375,000, which is AED 146,250.
• Company B pays nothing and carries its AED 600,000 loss forward.
• Company C stays inside its own AED 375,000 band at 0% and pays nothing.

Total tax this year: AED 146,250.

Filed as a Tax Group:

• Combined taxable income is AED 2,000,000 less AED 600,000 plus AED 300,000, which is AED 1,700,000.
• The whole group gets one AED 375,000 band at 0%, however many members it has. Tax is 9% of AED 1,325,000, which is AED 119,250.

The group pays AED 27,000 less this year. B's loss is used immediately instead of waiting, but C loses its own 0% band. Run both calculations before you apply.

The drawbacks

Joint and several liability

Every member is jointly and severally liable for the Corporate Tax payable by the group for the periods it was a member, and the FTA guide confirms this extends to administrative penalties. The group can ask the FTA to limit this to certain members, but approval is needed.

The audit requirement

The FTA's Tax Groups guide, published in January 2024, says a Tax Group needs audited statements only if its consolidated revenue exceeds AED 50 million. That rule has since changed. Under Ministerial Decision No. 84 of 2025, every Tax Group must prepare and maintain audited special purpose financial statements for tax periods starting on or after 1 January 2025, whatever its size.

The FTA's public clarification CTP007 confirms this. Members do not need standalone audited statements for Corporate Tax purposes. For a small group, the audit cost can outweigh the tax saved.

Pre-grouping losses

A subsidiary that joins with its own unused tax losses keeps them, but they become pre-grouping losses. They can only be set against the part of the group's taxable income attributable to that subsidiary, and they are still subject to the 75% cap on loss relief, applied at group level. Pre-grouping losses must be used before the group's own carried-forward losses.

To use them, the group must work out the taxable income attributable to that member on an arm's length basis. If it does not, and uses less of the loss than it could have, Ministerial Decision No. 301 of 2024 says the unused pre-grouping loss is forfeited.

How a Tax Group differs from a 75% qualifying group

The law also has a looser group test at 75% ownership. It does not merge the companies; each still files its own return. It gives two reliefs:

• Asset transfers at no gain or loss. Assets can move between members at net book value, but the relief is clawed back if the asset leaves the group, or the group breaks up, within two years.
• Loss transfers. A tax loss can be moved from one company to another where the 75% common ownership runs from the start of the loss period to the end of the period in which it is used.

The other conditions mirror the Tax Group ones: juridical persons, no Exempt or Qualifying Free Zone Persons, the same year end and the same accounting standards.

	Tax Group	75% qualifying group
Ownership	95% of capital, votes, profits and net assets	75% ownership interest
Returns	One return by the parent	One return per company
Intra-group transactions	Eliminated	Taxed as normal, subject to the reliefs above
Liability	Joint and several	Each company for its own tax
Audit	Always, from 2025 periods	Normal rules per company

Small Business Relief inside a group

A Tax Group is one taxable person, so Small Business Relief is tested on the group's consolidated revenue. Three companies with revenue of AED 1,200,000 each would together pass the AED 3,000,000 limit and lose the relief. In August 2026 the Ministry of Finance extended the relief (Ministerial Decision No. 131) to tax periods ending on or before 31 December 2029.

How we help

We keep the monthly books of each company on the same accounting standards and year end, prepare the aggregated figures and elimination schedules the group return needs, and compare grouped and standalone tax. Our Corporate Tax filing service covers the return itself, and our management accounts and CFO support gives owners a consolidated view through the year.

Frequently asked questions

Can a Free Zone company join a UAE Tax Group?

Not if it is a Qualifying Free Zone Person. The Corporate Tax Law excludes Qualifying Free Zone Persons and Exempt Persons from being a parent or a subsidiary in a Tax Group.

Does each member still file its own Corporate Tax return?

No. The parent company files one return on behalf of the whole Tax Group. Each member is still jointly and severally liable for the group's Corporate Tax for the periods it was a member.

Does a small Tax Group need audited financial statements?

For tax periods starting on or after 1 January 2025, Ministerial Decision No. 84 of 2025 requires every Tax Group to prepare and maintain audited special purpose financial statements, whatever its revenue.

Can a Tax Group claim Small Business Relief?

Only at group level. The AED 3,000,000 revenue test is applied to the consolidated revenue of the whole group, not to each member, and the relief now runs to tax periods ending on or before 31 December 2029.