Federal Tax Authority Releases Comprehensive Guide to Tax Groups Under UAE Corporate Tax Law

Dubai, UAE, January 8, 2024: UAE's  Federal Tax Authority (FTA) has released a detailed guide on Tax Groups within the UAE Corporate Tax Law, offering valuable insights for businesses operating in the region. This guide outlines the concept of Tax Groups, which allows two or more legally independent Resident Persons to be treated as a single Taxable Person for corporate tax purposes.

Simplifying Tax Compliance for Eligible Businesses:

By forming a Tax Group, eligible juridical Resident Persons can streamline their tax compliance through:

• Consolidated Taxable Income: Taxable income is calculated for the entire Tax Group, eliminating the need for individual calculations by each member.
• Single Tax Return: Only one Tax Return needs to be submitted for the entire Group, reducing administrative burden.
• Optimal Tax Efficiency: Tax Groups potentially offer advantages in optimizing tax liabilities through internal restructuring and utilization of group-wide financial arrangements.

Understanding Tax Group Formation and Requirements:

The guide comprehensively addresses key aspects of Tax Groups, including:

• Eligibility criteria: Defining which Resident Persons can form or join a Tax Group.
• Formation and termination process: Providing a roadmap for establishing and dissolving a Tax Group.
• Determining Taxable Income: Explaining the rules for calculating consolidated income for the Group.
• Compliance obligations: Outlining compliance requirements for Tax Groups.

It's important to note that forming a Tax Group is an optional choice available to eligible businesses. The guide emphasizes that the FTA must approve all applications, ensuring the Group adheres to the stipulated conditions and regulations.

This comprehensive guide serves as a valuable resource for businesses considering the formation of a Tax Group within the UAE Corporate Tax framework. By understanding the potential benefits and obligations, businesses can make informed decisions that optimize their tax efficiency and compliance in the UAE.