Tax Grouping

What is Corporate Tax (CT) Grouping?

Corporate Tax grouping allows related businesses to be taxed as a single entity under UAE Corporate Tax law. This means profits and losses within the group can be consolidated, reducing the overall tax liability.

Eligibility for CT Grouping

Entities must meet the following criteria:

✅ Each company must be a UAE tax resident.
✅ The parent company must own at least 95% of the share capital, voting rights, and profits of each subsidiary.
✅ All entities must use the same financial year.
✅ None of the entities should be an exempt person or a Qualifying Free Zone Person (QFZP).

Benefits of CT Grouping

✅ Single Tax Return: Only one tax return is filed for the entire group.
✅ Loss Utilization: Losses from one entity can offset profits from another.
✅ Administrative Efficiency: Reduces corporate tax compliance costs.
✅ Better Cash Flow Management: Group entities can offset taxable profits and losses to reduce tax payments.

CT Grouping Process

1️⃣ Eligibility Assessment to determine if businesses qualify.
2️⃣ Application Submission for Corporate Tax grouping with the FTA.
3️⃣ FTA Approval and confirmation of tax grouping.
4️⃣ Ongoing Compliance Management, including tax return filing and audits.

CT Grouping Considerations

• Once formed, the tax group is treated as one entity for Corporate Tax purposes.

• All group members are jointly and severally liable for tax obligations.

• Exiting or adding members requires approval from the FTA.

What is VAT Grouping?

VAT Grouping enables two or more related businesses to register as a single VAT entity with the Federal Tax Authority (FTA), allowing intra-group transactions to be tax-exempt.

Eligibility for VAT Grouping

Businesses can apply for VAT grouping if they meet the following conditions:

✅ Each entity must be established in the UAE.
✅ Entities must have a legal relationship (common ownership or control).
✅ One entity must have control over the others (e.g., holding company structure).
✅ All entities must be VAT-registered before applying for VAT grouping.

Benefits of VAT Grouping

✅ Simplified VAT Compliance: Only one VAT return is filed for the entire group.
✅ Cash Flow Optimization: Reduces the burden of VAT payments on inter-company transactions.
✅ No VAT on Intra-Group Transactions: Transactions between group members are not subject to VAT.
✅ Reduced Administrative Costs: Less paperwork and compliance efforts.

VAT Grouping Process

1️⃣ Assessment of Eligibility and structuring the VAT group.
2️⃣ Preparation and Submission of VAT grouping application to the FTA.
3️⃣ FTA Review and Approval of the VAT group registration.
4️⃣ Ongoing Compliance Management, including VAT return filing and audits.

VAT Grouping Considerations

• A single VAT return must be filed for the group.

• All group members share joint and several liability for VAT obligations.

• Changes in ownership may require VAT de-grouping.