Benefits & Eligibility of Registration as a Tax Group under UAE Corporate Tax Laws

With the introduction of the UAE Corporate Tax Laws under Federal Decree Law No. 47 of 2022 effective 1 June 2023, businesses operating through multiple UAE entities have the option to form a corporate tax group.

The UAE has two main types of tax groups: Value Added Tax (VAT) Groups and Corporate Tax (CT) Groups. For the purpose of this article, we will only cover corporate tax groups.

CT groups require careful planning and structuring of their business activities for compliance efficiency. This framework allows qualifying companies to be treated as one taxable person for corporate taxation purposes, subject to strict ownership, residency and accounting conditions.

In this article, we explain how UAE mandates groups, who is eligible, key benefits and obligations business entities should consider before registering.

What is a Corporate Tax Group?

A corporate tax group is a tax treatment that allows two or more UAE-resident companies to be treated as a single taxable person for corporate tax purposes, subject to approval by the Federal Tax Authority (FTA).

In practice, this means that:

• The group files one tax return
• Tax is assessed at the group level vs per entity
• Compliance is centralized under one representative member of the group
• All members are jointly and severally liable for tax obligations

Typically, a tax group is formed by:

• One parent company and one or more incorporated subsidiaries
• Overall best suited for: operating groups, family conglomerates, regional HQ structures and holding companies

Given members of the group must be juridical resident persons (i.e. legal corporate entities), resident natural persons (i.e. sole proprietors, freelancers, founder personally holding multiple businesses) are excluded even if they are subject to corporate tax individually.

Eligibility Requirements & Conditions to Form a Tax Group

To qualify for group eligibility, all conditions must be met at the same time:

1. Ownership and Control This requirement ensures that the group operates as a single economic unit (vs loosely connected)
   • Parent company must own at least 95% of each subsidiary’s:
     • share capital
     • voting rights
     • entitlement to profits and net assets
2. Residency and Tax Status
   All members must be:
   • UAE tax residents
   • Subject to UAE Corporate tax laws (i.e. must be within scope, required to register AND comply with corporate tax obligations)
3. Accounting Standards and Alignment
   Members must agree to:
   • Have the same financial year
   • Follow the same accounting standards This is required so the group can prepare one consolidated tax return and avoid mismatches in timing or how profits are recorded. This also makes it easier for the companies to fulfill the group’s tax obligations.

Who is not eligible to register as a tax group under UAE CT Law?

Not every business structure can form a tax group. The regime is intentionally narrow and designed to consolidate companies, not individuals.

1. Resident natural persons cannot be members of a UAE corporate tax group. This includes:
   • Sole proprietors
   • Freelancers
   • Partners acting in their personal capacity
2. Non UAE tax residents This includes foreign companies without UAE tax residency and overseas parents or subsidiaries
3. Certain exempt persons and entities not subject to CT are excluded from registering as a group. Examples:
   • Government entities and qualifying government controlled entities
   • Certain extractive or natural resource businesses
   • Other entities treated as exempt persons under Corporate Tax Law
4. Similarly, free zone companies may only join if they do not claim the 0% tax bracket under Qualifying Free Zone Persons status. Free zone entities must choose between opting for free zone incentives and preferential treatment or benefits of a tax group.
5. And lastly, companies that do not meet the 95% ownership requirement are not eligible to register. Even a small shortfall (e.g. 94%) disqualifies the group.
   The law requires this to ensure the group operates as one unit and prevents profits and losses from being shuffled around. When control is centralized, decisions on strategy, funding and operations are not independent or conflicting.

Other Benefits of Forming a UAE Corporate Tax Group

To summarize the benefits of forming a tax group:

Activity	Additional Context
Simplifying compliance and reduced administrative burden	One tax return instead of multiple filings in a single tax periodThe group must prepare consolidated financial statements
Tax efficiency and loss utilization	Losses of one entity can offset profits for another
Cash flow optimization	Reduced immediate tax outflowsInstead of paying for multiple tax payables, the group can optimize the process
Reduced transfer pricing documentation and error exposure	Intragroup transactions within the tax group are generally disregarded

Tax Group Formation: Steps how to Register

In UAE, corporate tax groups are considered an example of an optional regime. An optional regime is a tax framework that businesses may choose to apply but are not required to, in order to opt in if the regime benefits it.

Before they can form a tax group, each member of the tax group must first register for corporate tax separately. After, if they fall under the eligibility criteria (parent company owns at least 95% of other group members, and all entities are juridical resident persons), they can function as a single taxable entity and get their unified Tax registration number.

One group member, known as their representative member, will be in charge of filing every tax period. If the group registration is not approved before the filing deadline, each company must file individual tax returns and pay taxes individually. Tax grouping cannot be applied retroactively to periods that have already been filed.

Registration Process under FTA

Businesses can use the Federal Tax Authority (FTA) online portal for official guidance and registration.

1. Confirm eligibility
   • Ownership of parent company (95%)
   • All entities are resident juridical persons
   • Operate on a the same financial year and accounting standards
   • None of the members are Exempt Persons, and that any Free Zone member is not claiming QFZP treatment
2. Register all members individually for Corporate Tax (if not already)You can view our guide on corporate tax registration for taxable persons here.
3. Designate the parent as the representative member
4. Log in to EmaraTax using the account linked to the parent company
5. Select the representative member profile
   • Choose the parent company’s taxable person profile
   • This is the entity that will:
     • File consolidated financial statements and returns
     • Liaise with the FTA directly
     • Submit the application
6. Choose the corporate tax registration option
   • Navigate to the corporate tax services section
   • Select the option to register a tax group
7. Add group members and confirm eligibility. Make sure that this is correct as the system cross checks TRNs, registration status and other entity details already on record.
8. Confirm the accounting alignment and disqualification for exempt persons and QFZPs. These declarations are critical. Incorrect declarations will invalidate the group later
9. Upload supporting documents. Commonly requested documents include:
   • Ownership structure chartsApproval by subsidiaries from their respective portals
   Documents are uploaded directly within EmaraTax as part of the application
10. Review and submit tax group registration via the portal for FTA review.
11. Await FTA approval
    • Group is effective from the approved tax period
    • FTA may also request clarification or additional documents
12. After approval, tax group receives its own TRN and the group should then file one consolidated tax return.

Ongoing Compliance: Obligations & Requirements for Group Structure

As a single taxable entity, tax groups are required to continuously comply under CT Law.

• File one consolidated tax return
• Maintain group-level accounting records
• Ensure continued eligibility
• Members are jointly and severally liable for penalties and unpaid tax. Each must adhere to a disciplined payment structure as internal agreements do not limit the FTA’s right to collect.
• Notify FTA of any structural changes

As such, the following are considered as joint risks for the parent company and other members.

• Members are jointly and severally liable, meaning each member is fully responsible for the entire tax obligation and not just its own share.
  If the tax liability isn’t paid, the tax administration can collect the full amount from any one member of the group (i.e. penalties can be charged to the entire group.)
• Continued eligibility must be monitored and maintained
• Structural changes must be notified to FTA
• Loss of eligibility dissolves the group

The parent company must prepare consolidated financial statements for the tax group, which can increase compliance costs. As the representative, they are responsible for the administration, including submission of one taxation returns and settlement of the tax liability for the entire group.

Group Restructuring & Changes in Tax Group UAE Composition

A corporate tax group can add new members after it has been formed, provided the new entity meets all eligibility requirements and the change is approved by the FTA. Keep in mind that all conditions must be met before the new entity can be added.

In practice, the representative member must notify the FTA through the EmaraTax portal and submit the updated group details and documentation. The new addition takes effect from the approved tax period and is not considered as retroactive.

What happens if I have to remove the members or in the event of tax group dissolution?

There are provisions under CT Law that allows a parent company to remove entities under relevant conditions.

Removing members can occur due to ownership dilution (i.e. 95% ownership no longer applies), by application, or upon sale and restructuring of entities. Once a company leaves, past returns are not reopened or recalculated. Tax outcomes for closed periods remain final.

Instead, the CT Law focuses on how calculations are treated moving forward.

1. Pre-group losses (i.e. losses that the leaving company incurred before joining the group) remain linked to the subsidiary and leave with it if they were not yet utilized.
   
   Losses that arose while the group was complete do not move with the leaving subsidiary and there is no reversal of losses already used in prior taxation periods.
2. Tax Adjustments and Clawback
   If an asset or liability was transferred between group companies, and then the transferor or transferee leaves within 2 years, the normal elimination/consolidation treatment may be switched off and income that was not previously taken into account must be taken into account when the entity leaves, with a corresponding cost base adjustments (i.e. depreciation costs, amortization and similar adjustments on asset value).
   
   In simpler terms, any gain or income that was temporarily ignored while companies were in a group structure may need to be recognized going forward.

This prevents groups from using losses temporarily and keeps them from gaming the system by restructuring to keep the tax benefit without the underlying company.

What is tax group dissolution?

Dissolution happens when a tax group ceases to exist for corporate tax purposes and each company returns to being taxed separately.

This happens by operation of law once eligibility conditions are no longer met or when the group is formally ended. Here are specific examples of what triggers a dissolution:

• Common ownership falls below 95%. Even a temporary dilution of ownership can trigger dissolution
• A member becomes ineligible (i.e. an exempt person, claims QFZP or generally no longer subject to corporate tax)
• Accounting alignment breaks (i.e. no longer sharing the same financial year or accounting standards)
• Change of residency (i.e. member ceases to be a UAE resident)
• Other structural changes – sale of subsidiaries, group reorganization, mergers, spin-offs or demergers
• FTA initiated dissolution if compliance breaches were identified or information provided earlier proved to be incorrect

After dissolution and if a member of the tax group ceases its business activities, the parent company must apply to the FTA for deregistration of the group. Each entity must then confirm its standalone CT profile and meet future filing deadlines independently.

Failure to notify can lead to administrative penalties, filing mismatches and further compliance issues in subsequent periods.

Calculating Tax Liability, Tax Loss Treatment and Offset for the Entire Group

Calculating Taxable Income at Group Level

In practice, each company still prepares its own financial statements. These records are then combined at group level for tax purposes.

The Parent consolidates the members’ results and eliminates intra-group transactions to produce Tax Group consolidated financial statements.

Afterwards you apply Corporate Tax adjustments (e.g., non-deductible expenses, interest limitation rules, exempt income/reliefs) to arrive at Tax Group taxable income.

Calculating Tax Liability for the Group

Once group taxable income is determined, the group applies the standard tax rates:

• 0% on the first AED 375,000
• 9% on the excess

This will produce the group’s tax payable to be reflected when filing. Remember that all members are jointly and severally liable for the full amount.

For most businesses, the 9% tax rate will apply.

However, for large multinational enterprise groups, they may be subject to additional layer of tax under global minimum tax rules.

Multinational enterprises with global consolidated revenue of EUR 750 million or more are subject to the Domestic Minimum Top-up Tax (DMTT). DMTT brings up the effective tax rate up to 15% through this top up tax, meaning it does not replace the 9% tax rate and will only apply to the difference needed to reach 15%.

How is loss treated in a tax group?

Calculated losses and loss offsets are handled based on when in the formation process they arise.

1. Post-group losses: Losses incurred after the group is formed
   • Treated as group losses
   • Can be used to offset profits of any member, and
   • Reduce the group’s overall taxable income
   • This means that one company’s bad year can reduce the tax bill for the entire group, making it one of the main advantages of forming a tax group.
   • Example: Company A profit: AED 600,000Company B loss: AED 200,000Group Taxable Income = AED 400,000 (before thresholds)
2. Pre-grouping losses: Losses incurred before joining the group
   • These losses remain with the original entity and cannot be shared with other members (i.e. losses are ring-fenced)
   • This can only offset the company’s own future profits. This prevents businesses from acquiring loss-making entities purely for tax benefits
3. Loss utilization limits still apply
   • Taxable losses can be used to offset up to 75% of income subject to tax during a tax period.
   • Even within a tax group, losses can only offset taxable income up to the allowed limit in a given tax period
   • This ensures that some taxable base remains in place
   • Loss is aral tool and may help, but it should not be treated as eliminated indefinitely like a permanent tax shield
   • Example:
     • Company A Profit: AED 900,000
     • Company B Loss: AED 400,000
     • Group taxable income before limits.= AED 500,000
     • Applying the loss utilization limit: 75% x 500,000 = AED375,000
     • Taxable income after loss relief: 500,000 – 375,000 = AED 125,000

Transfer Pricing Documentation, Arm’s Length Standard and Intragroup Transactions

When companies operate as part of a group, the tax law pays close attention to how transactions between related parties are priced. This is where the transfer pricing rules apply.

Intragroup transactions between members of the same corporate tax group are generally ignored for tax purposes, considering that they are treated as one taxable person. For example, if company A charges company B for management services, there is no impact on taxation at group level because both sit within the same group.

Transactions outside the group however follows a different principle. When a member transact with:

• a related company not in the tax group
• a parent or subsidiary outside the UAE
• a connected person that’s not considered juridical resident persons (e.g. shareholder or related entity)

These transactions must follow transfer pricing rules. Rules state that related parties must price transactions under the arm’s length standard i.e. as if they were dealing with an independent third party.

In practice, the arm’s length principle requires prices, fees, margins or interest rates to reflect market terms. This must be properly documented; transfer pricing documentation may still be required at group level.

When is transfer pricing documentation required?

Even though intragroup transactions within a tax group are ignored for tax calculations, documentation is required when:

• Transactions involve related parties outside the group
• The group is part of a larger multinational structure
• The FTA requests documentation during a review or audit

Documentation typically supports pricing methods used, comparability analysis to market rates, and commercial rationale for the transaction.

Why documentation still matters at group level

In a CT group, FTA may examine whether transactions are correctly classified as intragroup, whether entities should have been grouped at all, or whether profits were shifted outside the UAE. Proper documentation protects the group if structure changes later, and support compliance.

Why Corporate Tax Groups need the Right Support?

Forming a tax group can unlock real efficiency, but only if it is set up correctly and monitored continuously. While tax group formation can be tricky with its shared risks and benefits, structured support matters more than one-off advice.

These are the errors that most often cause issues with the FTA and where our systems and processes help founders stay ahead.

Mistake	What to do
Trying to register a tax group before individual CT registrations are complete	Skrooge can ensure that each entity is correctly registered and visible on EmaraTax before any group application is initiated
Assuming tax group approval is automatic	Approach tax grouping as an approval process, instead of a one-off compliance checkbox. Prepare the financial records with supporting and aligned documents available for review at any time. At Skrooge, we keep your transactions recorded and ready for viewing at any time using our AI-enabled accounting platform plus experienced finance professionals.
Missing or misalignment in financial year or accounting standards	A centralized and well kept bookkeeping and reporting can make inconsistencies visible early, even before filing.
Including a free zone company or branch that is already claiming the 0% QFZP status	Our expert accountants can flag inconsistencies and conflicts ahead so founders don’t run the risk of missing important information.

Skrooge is built to support complex compliance decisions like tax registration and filing, combining automation for accuracy with hands-on accountant review for judgment calls. With our multi-year experience and hundreds of clients served, we help founders make the right election, apply it correctly, and sustain compliance over time.

If you’re interested to learn more, visit our website and use our transparent pricing calculator to get a clear, upfront view of what support you might need.

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