50% Ownership Continuity Rule for UAE Tax Losses

For a negative taxable income or recording a loss in the filed returns, make sure that you meet the conditions.

• The same person(s) must hold at least 50% ownership of the business from the loss year to the year it is used; OR
• If ownership changes by more than 50%, the business must continue the same or similar activity.
• There is no need for separate application, you just need to reflect it when filing.

For tax losses carried forward in a UAE Tax Group, the key distinction is when the loss arose:

• Post-group losses can generally be used against taxable income of other group members.
• Pre-group losses remain ring-fenced to the entity that incurred them and can only offset its own future profits.
• Loss utilization is generally capped at 75% of taxable income in a tax period, but unused losses can be carried forward without a time limit.