The streamlining of corporate tax compliance and limiting the administrative burden is a smart option that companies are willing to pursue as the UAE corporate tax framework keeps changing in the course of 2025. The formation of a tax group is one of such opportunities which is a section of the UAE Corporate Tax Law that grants the right to two or more eligible entities of conducting a course of action as a single taxable person.
We provide strategic tax advisory services at Singiri & Co where we assist our clients in a complex group structuring, corporate tax registration and compliance procedures. In case your organisation is functioning with numerous entities in the UAE, the tax grouping system might assist you in effecting the decline of compliance fees, consolidation of reporting and generation of tax effectiveness.
What Is a Tax Group under UAE Corporate Tax Law?
According to the Federal Decree-Law No. 47 of 2022, Tax Group is understood as two or more Resident Persons (companies) in respect to which two or more Resident Persons are considered a single taxable entity with regard to corporate taxation. The framework shall have Parent Company and one or more than one Subsidiaries under the following conditions:
Criteria of Tax Group Formation Eligibility
All of the terms below should be fulfilled to constitute a corporate tax group:
- All of the entities are supposed to be juridical persons, and they should reside in the UAE
- And the Parent Company should possess:
- 95 per cent of share capital
- 95 percent of the voting right
- The net assets and profits of every Subsidiary were included at 95 percent.
- The entities cannot be:
- Exempt Persons in the Corporate Tax Law
- Qualifying Free Zone Persons
- Every entity should:
- Same financial year
- Make use of the same level of accounting (IFRS or IFRS-SMEs)
Application & Compliance Procedures
- Subsidiaries and Parent Company shall together ask the Federal Tax Authority (FTA)
- Upon its approval the group is regarded as a single taxable person
- Payment, filing and correspondence with the FTA in relation to taxes are done with the FTA by the Parent Company on behalf of the group
Compliance & Liability
- The corporate tax is jointly and severally liable by all the members except when authorized by the FTA
- Members are expected to observe Withholding Tax (Article 45) and keep complete records
- The Parent Company will do the registration, returns and payments (Chapters 14, 16 and 17)
Adding or Removing Subsidiaries
- The FTA approval allows the introduction of new entities
- A Subsidiary may be dropped out of the group on the condition that it does not meet requisite or mutual request
- It is possible to change the Parent Company, without breaking up the group provided FTA approves it
Note: It provides that the FTA will have discretionary powers to dissolve or restructure the group of tax in case any threat of non-compliance is detected.
Why Should We Use Singiri & Co. in Service of Tax Group Advisory?
Under our Payroll and Corporate tax consultants, we can assist you practically in:
- Determining the qualification of groups and developing
- Application of tax group to FTA
- The compliance and financial reporting monitoring
- Illuminating joint liability and reporting criteria
Our expertise in UAE tax environment and changes means that your tax grouping strategy is both legal and efficient and ready to sustain the ongoing changes.
Speak with Our Corporate Tax Experts Today
Are you willing to group your taxes? Get in touch with Singiri & Co. to have customized advice.
