UAE Tax Group Dissolution: Triggers, Effect and Next Steps

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.