UAE, 26 June, 2026: The Federal Tax Authority (FTA) has provided guidance on the treatment of Tax Losses under the UAE Corporate Tax Law.

A Tax Loss arises when deductible expenses exceed taxable income during a Tax Period. Businesses can generally carry forward Tax Losses indefinitely and offset them against future Taxable Income, subject to a maximum utilisation limit of 75% of Taxable Income in a Tax Period.

Key points include:

• Tax Losses incurred before Corporate Tax implementation, before becoming a Taxable Person, or from exempt activities are not considered Tax Losses.
• Carry forward of Tax Losses may be restricted after a change in ownership exceeding 50%, unless the business activity remains substantially the same.
• Tax Loss transfers between Taxable Persons are allowed if specific conditions are met, including ownership, residency, accounting standards, and business requirements.
• Businesses opting for Small Business Relief (SBR) cannot generate or utilise Tax Losses during the period in which SBR is applied.

Understanding these rules is essential for businesses to effectively manage Corporate Tax compliance and future tax planning.

Source: tax.gov.ae