Key Aspects of Tax Group Formation under UAE’s Corporate Tax

A “tax group” can be formed by business organizations that own many firms, according to UAE corporate tax law. Although the said concept’s inclusion in the UAE Corporate Tax Law is a positive development, the corporate organizations would still need to assess the merits and cons of tax grouping by consulting a reliable partner providing corporate tax services in uae before deciding whether to join one.

 

Companies frequently create tax groups to reduce or ring-fence obligations associated with particular operations as well as to simplify monitoring and management of various business lines.

 

Furthermore, tax groups might increase the expense of your entire tax compliance in situations where each organization must report taxable on an individual basis. The UAE corporate tax policy permits tax grouping so that businesses can take advantage of these advantages. If you want to apply for the creation of a tax group, you can speak with trusted consultants that provide corporate taxation in UAE like ACL Tax Consultants . 

Requirements for tax group formation under corporate taxation in UAE

  • Only when all of the group members are UAE residents can companies form a tax group.
  • The parent organization must own at least 95% of the voting rights and share capital of its subsidiaries.
  • A free zone entity that enjoys the 0% corporation tax rate or an exempt person should not be the parent business or its subsidiaries.
  • If a subsidiary is indirectly held by its parent organization and other subsidiaries control at least 95% of its shares, the subsidiary may join a tax group.
  • If a subsidiary is a parent company’s UAE branch or one of its subsidiaries, it can also be a member of the tax group.

How do you create a tax group under the corporate tax services in uae?

Businesses must have all the requirements stipulated by the Federal Tax Authority (FTA) ready, and they can get help from tax agents in Dubai to do this. The FTA must receive a notice before a tax group can be created. The parent firm and each of its subsidiaries must sign the notice. Additional subsidiaries wishing to join an existing tax group must follow the same procedure.

tax group in corporate tax

Establishing Taxable Income

A parent firm must comply with the FTA’s rules in order to determine the tax group’s taxable revenue. The parent entity must eliminate all transactions between the parent firm and every affiliate member of the group member and combine the financial records of each subsidiary for the applicable tax period. Additionally, the subsidiary group members’ transactions must be stopped.

ACL Tax Consultants goes beyond simply providing tax advice. We take a proactive approach to help clients optimize their tax strategies and identify opportunities for cost savings.

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