UAE Corporate Tax Groups

Essential Timeline to Maximize Benefits

Under the UAE Corporate Tax Law, forming a Tax Group enables related companies to be treated as a single taxable entity, streamlining tax compliance and optimizing tax liabilities. It is very important to analyze the implications of forming a Tax Group and on making any changes to the Tax Group. Following a clear timeline is crucial to maximize the benefits of forming a Tax Group.

If a Tax Group is to be formed for the year 2025 or any changes to the existing tax group is to be made, application should be made to the FTA before 31 December 2025.

Steps	Description	Typical Timeline
1.Submit Application	Parent company (representative member) submits Tax Group formation application via FTA EMARA Tax portal.	Before end of Tax Period
2. FTA Initial Review	FTA reviews the application and supporting documents for compliance with eligibility criteria.	Within 20 business days
3. Request for Additional Info	If required, the FTA requests additional documents or clarifications.	Timeline paused until response
4. Applicant Response	Applicant submits the requested information or clarifications promptly.	Depends on applicant response
5. FTA Final Assessment	FTA completes assessment after receiving all information.	Up to 20 business days after info received
6. Approval Notification	FTA approves Tax Group formation and issues consolidated Tax Registration Number (TRN).	Upon approval
7. Post-Approval Filing	Tax Group files consolidated tax returns through parent company as a single taxable entity.	Per tax period filing deadlines

Important Timelines:-

As mentioned above, the due date to submit the application to the FTA to form a Tax Group is before the end of the relevant tax period.
Further, all the conditions required to form a Tax Group must be satisfied throughout the tax period i.e. from the beginning to the end of the tax period for which Tax Group is to be formed.
As the financial year 2024 was the first tax period, many groups in UAE were not able to form a tax group either because the due date to submit the application was missed or because the group was not satisfying all the conditions to form a tax group and certain restructuring in terms of shareholdings, etc. was done by various groups to satisfy the conditions to form a tax group.

In view of the above, it is important for all such groups intending to form a tax group for Corporate Tax purposes for the tax period 1 January 2025 to 31 December 2025 to make an application to the FTA before the end of the tax period i.e. before 31 December 2025.

Impact of Restructuring on Tax Group Formation and Timeline

Restructuring requires notification to the Federal Tax Authority (FTA) and possibly updated Tax Group registration to reflect changes.
A new or amended Tax Group application must be submitted before the end of the tax period in which the restructuring occurs to be effective.
The FTA typically reviews restructuring-related applications within 20 business days; complex cases may extend this.
The parent company continues to file consolidated returns post-restructuring on behalf of the Tax Group.

Accordingly, it is important to make application to FTA within the due date if any changes to the Tax Group is to be made like if a new subsidiary wishes to join the Tax group or an existing subsidiary wishes to leave the Tax group.

Further, it is also important to analyze other implications on changes in Tax group like reliefs available, impact on tax losses, etc.

Business Restructuring Relief (Article 27)

Eligible restructuring transactions between Tax Group members qualify for Business Restructuring Relief.
Transactions that meet qualifying criteria do not trigger immediate taxable gains or losses, allowing smooth reorganization without upfront tax charges.
Relief applies if ownership remains stable and the restructuring occurs for valid commercial reasons.

Managing Tax Losses and Group Continuity

If a Subsidiary joins a Tax Group, its existing unutilised Tax Losses become pre grouping Tax Losses that can only be offset against the Taxable Income of the Tax Group insofar as this income is attributable to the relevant Subsidiary.
Existing unutilised Tax Losses of an existing Tax Group cannot be used against the Taxable Income of a Subsidiary that has joined the existing Tax Group after the Tax Losses were incurred.
Losses arising after joining the Tax Group can be offset against Tax group income.
If a member leaves the group, pre-group losses remain with that member, while losses generated during membership stay with the group unless the group dissolves.
This ensures continuity and efficient tax loss management amid restructurings.

Conclusion

The UAE Corporate Tax Law provides clear provisions for Tax Groups, facilitating simplified compliance and tax efficiency. During business restructuring, the law’s relief mechanisms protect companies from immediate tax consequences, fostering operational flexibility. However, it is important to analyze the implications of forming a tax group or making any changes in the existing tax group along with the applicable time lines within which applications should be made to FTA.

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