Key takeaways
- A UAE corporate tax group lets a parent and its subsidiaries file one corporate tax return as a single taxpayer, but only if the parent holds at least 95% of each subsidiary's share capital, voting rights, and profits and net assets.
- A UAE corporate tax group pays off mainly when some group companies make losses while others make profits, or when they trade heavily with each other; a business with one company cannot form one.
- Every member of a UAE corporate tax group is jointly and severally liable for the group's corporate tax, unless the Federal Tax Authority (FTA) approves limiting that liability to named members.
- A corporate tax group application must reach the FTA before the end of the Tax Period it should start in, so a calendar-year company wanting group treatment for 2026 must apply before 31 December 2026.
- Exempt Persons and Qualifying Free Zone Persons cannot join a corporate tax group; free zone companies that are not Qualifying Free Zone Persons can.
What does a corporate tax group actually do?
Once the FTA approves a group, it treats the parent and its subsidiaries as one Taxable Person, represented by the parent. The parent consolidates the financial results, assets and liabilities of every member for the Tax Period and files a single return on the group's behalf.
The legal basis is Article 40 of Federal Decree-Law No. 47 of 2022, with the detailed rules in Ministerial Decision No. 301 of 2024, which applies to Tax Periods starting on or after 1 January 2025. Because the group is one taxpayer, transactions between members are eliminated when the group's income is worked out, and the group prepares consolidated financial statements.
Which companies can form a corporate tax group?
A parent can form a corporate tax group with subsidiaries that meet every condition below, and the conditions must hold throughout the Tax Period, not just on the day you apply.
| Condition | What the rule says | Source |
|---|---|---|
| Type of entity | Parent and subsidiaries must be juridical persons (companies), all UAE Resident Persons | Article 40(1), Decree-Law 47/2022 |
| Ownership | Parent holds at least 95% of the subsidiary's share capital, voting rights, and entitlement to profits and net assets | Article 40(1), Decree-Law 47/2022 |
| How ownership is measured | Against the subsidiary's nominal issued and paid-up capital | Article 2(2), Ministerial Decision 301/2024 |
| Excluded persons | Neither side can be an Exempt Person or a Qualifying Free Zone Person | Article 40(1), Decree-Law 47/2022 |
| Financial year and standards | Same Financial Year and same accounting standards | Article 40(1), Decree-Law 47/2022 |
| Tax residency | Must not be considered tax resident in another country under an applicable international agreement | Article 3(1), Ministerial Decision 301/2024 |
Checked 31 October 2026 against the Ministry of Finance consolidated text (13 January 2026 version).
A free zone company can therefore join only if it is not a Qualifying Free Zone Person, so a company relying on the 0% rate for qualifying income has to choose between that status and group membership. A member that becomes tax resident abroad is treated as leaving from the start of that Tax Period (Article 3(2), Ministerial Decision 301/2024).
When is a corporate tax group worth forming?
A corporate tax group is worth forming when its main benefit applies to your structure: netting profits against losses across companies, or simplifying filing for companies that invoice each other. If your group's companies are all profitable and rarely deal with each other, the benefit is small and the joint liability is a real cost.
Here is a hypothetical example, labelled as such and ignoring other adjustments. Say a parent owns 100% of Company A, which has AED 2,000,000 of taxable income, and 100% of Company B, which made a loss of AED 600,000 in the same year. As a group, taxable income is AED 1,400,000 and tax at 9% above the AED 375,000 band is AED 92,250. Filed separately, Company A pays AED 146,250 and Company B's loss is carried forward to offset only its own future income. The AED 54,000 difference is 9% of the AED 600,000 loss, used in the year it arose.
| Benefit | Trade-off |
|---|---|
| Losses of one member offset profits of another in the same period | The group is one taxpayer, so you likely get one AED 375,000 zero-rate band rather than one per company (our reading of the single-taxpayer rule; confirm with the FTA) |
| Transactions between members are eliminated | The group must prepare consolidated financial statements |
| One return, filed by the parent | Parent must file for the whole group; one mistake affects every member |
The zero-rate band is AED 375,000 of taxable income taxed at 0%, with 9% above it, set by Cabinet Decision No. 116 of 2022 (checked 31 October 2026).
What are the risks of forming a corporate tax group?
The main risk is joint and several liability: the parent and each subsidiary are liable for the group's corporate tax for every period in which they are members. The FTA can approve limiting that liability to one or more members for a Tax Period, but it is not automatic (Article 40(6) and (7)).
The FTA can also dissolve a group or change its parent at its discretion (Article 40). A subsidiary that leaves, or a group that ends, must prepare standalone financial statements on the group's accounting basis and elections, using the group's recorded values as opening balances (Article 13, Ministerial Decision 301/2024). And if a member moves an asset or liability to another member and either leaves within two years, the elimination relief can be reversed, subject to exceptions (Article 42(9)).
How do you apply, and by when?
You apply to the FTA through EmaraTax, and the application must be submitted before the end of the Tax Period in which the group is to be formed or the new member is to join (Article 5(1), Ministerial Decision 301/2024). Each company seeking to join must apply (Article 40(3)), and the group takes effect from the Tax Period stated in the application, or another date the FTA sets (Article 41).
- Confirm the 95% test, the shared Financial Year and accounting standard, and that no member is an Exempt Person, a Qualifying Free Zone Person or tax resident elsewhere.
- Submit the application on EmaraTax before the end of the Tax Period; follow the portal steps in the FTA's Tax Groups Corporate Tax Guide.
- Wait for the FTA to approve the application and confirm the Tax Period from which the group takes effect.
- File one return for the group, due within nine months of the end of the Tax Period (Article 53(1), Decree-Law 47/2022), and keep records for seven years after the Tax Period ends (Article 56(1)).
| Event | Rule | Source |
|---|---|---|
| Form group or add a subsidiary | Apply before the end of the Tax Period | Article 5(1), MD 301/2024 |
| Member stops meeting the conditions | Group must notify the FTA within 20 business days | Article 12, MD 301/2024 |
| Calendar-year company, 2026 Tax Period | Application due before 31 December 2026; return due by 30 September 2027 | Derived from Articles 5(1) and 53(1) |
If you'd rather not track these dates by hand, the free UAE compliance calendar lists the deadlines for your company.
How is a tax group different from a VAT group or a qualifying group?
A corporate tax group, a VAT group and a qualifying group are three separate arrangements with separate rules, applications and thresholds, and joining one does not put you in another.
| Arrangement | Ownership test | What it does | Source |
|---|---|---|---|
| Corporate tax group | At least 95% | Treats members as one corporate Taxable Person | Article 40, Decree-Law 47/2022 |
| Qualifying group | At least 75% common ownership | Lets members move assets and liabilities between them without a gain or loss | Article 26, Decree-Law 47/2022 |
| VAT group | Members must be related parties | Registers legal persons under one VAT TRN | FTA VAT group registration page |
The FTA estimates about 20 business days to process a complete VAT group application, made from the representative member's EmaraTax account (FTA service page, checked 31 October 2026).
95%: the minimum share capital, voting rights and profit and net asset entitlement a parent must hold in a subsidiary to form a UAE corporate tax group. Source: Article 40(1), Federal Decree-Law No. 47 of 2022 as amended, checked 31 October 2026.
What most guides don't tell you
- A tax group is not the only way to use group losses. At 75% ownership or more, Article 38 can let one company's loss offset another's income without a tax group, so the 95% test only matters if you want consolidated filing.
- Group losses do not travel to new members. Unused losses of an existing group cannot offset the income of a subsidiary that joins later (Article 42(4)), so adding a profitable company to a loss-making group shelters nothing.
- Small Business Relief and grouping need a separate check. Small Business Relief covers revenue up to AED 3,000,000 for Tax Periods ending on or before 31 December 2029 (Ministerial Decision No. 131 of 2026, announced 7 August 2026), and Qualifying Free Zone Persons and multinational group constituents are excluded. We could not confirm from an official source how the revenue test works for a tax group member, so check with the FTA before electing it.
- Approval does not freeze the conditions. The conditions must hold continuously throughout each Tax Period (Article 2(1), Ministerial Decision 301/2024), and a member that stops meeting them leaves from the Tax Period in which they failed (Article 41, Decree-Law 47/2022). A holding that slips from 95% to 94% mid-period therefore affects the whole period.
Which deadlines apply to your company?
Group applications, filing dates and member exits each carry their own deadline, and missing the application date costs you a full Tax Period of group treatment. Qawi offers a free calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file: get your UAE compliance calendar.
Frequently asked questions
Can I carry forward tax losses in the UAE?
Yes: a Tax Loss can be offset against the Taxable Income of later Tax Periods, but the loss used in any period cannot exceed 75% of that period's Taxable Income before loss relief (Article 37, Decree-Law 47/2022). A Cabinet decision can set a different percentage or exceptions, so check the current position before relying on it.
How do tax loss transfers between group companies work?
A tax loss can offset another Taxable Person's income if either company holds at least 75% of the other from the start of the loss period through the end of the period it is used, both are resident juridical persons, neither is an Exempt Person or Qualifying Free Zone Person, and they share a Financial Year and accounting standards (Article 38). A tax group achieves a similar result through consolidation instead, at a 95% ownership level.
How is taxable income calculated from accounting profit?
Taxable Income starts from the Accounting Income for the Tax Period and is then adjusted for items such as unrealised gains and losses, exempt income, reliefs, deductions and related-party transactions (Article 20(2), Decree-Law 47/2022). For a tax group, the parent consolidates the results, assets and liabilities of every member first (Article 42(1)).
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Federal Decree-Law No. 47 of 2022 and its amendments, consolidated text (Ministry of Finance, 13 January 2026)
- Ministerial Decision No. 301 of 2024 on Tax Group (Ministry of Finance)
- Cabinet Decision No. 116 of 2022 on the annual Taxable Income subject to Corporate Tax (Ministry of Finance)
- Ministerial Decision No. 73 of 2023 on Small Business Relief (Ministry of Finance)
- Ministerial Decision No. 131 of 2026 amending Ministerial Decision No. 73 of 2023 (Ministry of Finance)
- Ministry of Finance announcement on the Small Business Relief extension, 7 August 2026
- FTA: Tax Group Registration (VAT) service page
Last checked: 31 October 2026
This is general information, not tax or legal advice for your specific situation.