Tax & compliance
Tax groups and how they work
One return for several companies, losses offset across the group, and intra-group transactions eliminated. The 95% ownership test is stricter than most structures satisfy.
The rule
What the law actually requires.
A tax group lets a UAE parent and its qualifying subsidiaries be treated as a single taxable person: one return, one AED 375,000 zero-rate band, losses of one member offsetting profits of another, and intra-group transactions eliminated on consolidation. The principal condition is ownership — the parent must hold at least 95% of the share capital, voting rights and entitlement to profits and net assets of each subsidiary, directly or indirectly. All members must be resident, share the same financial year and use the same accounting standards.
The 95% test excludes more structures than people expect. A joint venture where a partner holds ten per cent, a company with an employee share scheme, a subsidiary with a minority investor from an earlier funding round — none of these can join. Neither can a Qualifying Free Zone Person, which rules out grouping a free zone operating company with a mainland one, precisely the structure many businesses have. And group membership brings joint and several liability for the group's tax, which means the parent is exposed to the tax position of every subsidiary in it. That is usually acceptable and it should be a decision rather than a surprise.
Thresholds and deadlines
- Ownership
- 95% of capital, voting rights, profits and net assets
- Residence
- All members must be resident taxable persons
- Financial year
- Must be common across the group
- QFZP
- A Qualifying Free Zone Person cannot be a group member
- Benefit
- Loss offset, one zero-rate band, intra-group elimination
- Liability
- Joint and several across the group
The compliance calendar
What to do
The filing, step by step.
- Test the ownership precisely95% of capital and voting rights and profit entitlement and net assets. A shortfall on any limb fails the test.
- Check for free zone membersA Qualifying Free Zone Person cannot join. Grouping may mean giving up a qualifying position.
- Align financial years firstA common year end is a condition, and changing one is a separate process with its own approval.
- Weigh the loss offset against joint liabilityThe benefit is real, and so is exposure to every member's tax position.
- Apply to the FTA and keep consolidated recordsThe group files one return, which means group-level accounting rather than five separate sets stapled together.
Related
Questions
95% of share capital, voting rights and entitlement to profits and net assets, held directly or indirectly by the parent.
Not while it is a Qualifying Free Zone Person. Joining would mean giving up that status.
Yes. A common financial year is a condition, so aligning year ends usually comes first.
Group members are jointly and severally liable for the group's corporate tax. That is a real exposure and should be weighed deliberately.
One question
Where does your company stand right now?
Then the thing to verify is qualifying status rather than the rate. Qualifying Free Zone Person is a set of conditions tested every year — substance, qualifying income, the de minimis threshold, audited accounts — and failing any one of them costs the 0% rate for that year and the four that follow.
The QFZP conditions in fullOr just ask usThen Small Business Relief has probably been carrying you, and it ends for tax periods after 31 December 2026. There is no announced extension. The first return without it is the one that surprises people, and the planning has to happen before the period starts rather than at filing.
What happens when the relief endsOr just ask usThen deal with that first. Registration is mandatory for loss-making and dormant companies too, the penalty for missing the window is AED 10,000, and it has been issued to companies with no revenue at all. It is the most avoidable fine in the system.
Deadlines and penaltiesOr just ask us