Corporate Tax Group Formation

For two or more companies to be treated as one for corporate tax purposes, tax group formation is necessary. Instead of having to submit multiple tax returns, one parent company in the group may submit a consolidated tax return.The consolidated structure saves time and costs, and it allows for a more complete view of the finances of the entire group.

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UAE Corporate Tax Group Formation Eligibility

Not all business structures may be eligible to form a tax group, and the FTA has specific standards to which companies should comply before completing a tax group formation application.

Ownership – The parent company must own at least 95% of the share capital, voting rights, and profits of each subsidiary.

Residency – All members must be UAE resident companies.

Same financial year – All companies in the group must follow the same reporting year.

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How Does the Group Registration Process Work?

To find a clear picture of the corporate tax group registration process in the UAE,including:

Understanding the rules related to forming corporate groups in the UAE can be complex, and the potential mistakes can be very costly, which is why getting specialists in this area is very important.

How Top Corporate Tax Consultants in the UAE Can Assist

To seamlessly form a corporate tax group in compliance with corporate tax regulations in the UAE, businesses should seek the expert services of top Tax Consultants in the UAE. Contact us today, and we shall be glad to assist you.

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Frequently Asked Questions (FAQs)

Is forming a corporate tax group in the UAE mandatory?

No, it’s optional. Companies can choose to file separately or form a group if it makes financial and operational sense. Many businesses with multiple entities consider it for simplicity and tax efficiency.

Can free zone companies join a corporate tax group?

Yes, in some cases. If the ownership and residency conditions are met, a free zone company may join. But joining could affect certain free zone tax benefits, so it’s important to weigh the pros and cons first.

Who files the tax return for a corporate tax group?

The parent company takes responsibility. It files a single consolidated return on behalf of all members, covering the group’s overall taxable income.

Can losses in one company reduce the group’s total tax bill?

That’s one of the biggest advantages. Losses in one group company can offset profits in another, which often lowers the group’s overall tax liability.

What happens if ownership drops below 95%?

If the parent no longer holds at least 95% in a subsidiary, the group no longer qualifies under UAE corporate tax rules. The affected company may need to leave the group and file separately.

Is it easy to remove a company from a tax group?

Not always. Deregistering a member requires FTA approval and proper filings. It can be more complex than the initial group formation, which is why planning upfront is so important.

How long does it take for the FTA to approve a tax group?

There’s no fixed timeline, but in most cases, approval comes within a few weeks if documents are complete and accurate. Delays usually happen when additional clarifications are requested.

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