5 conditions for creating eligible groups for corporate tax purposes in the UAE

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Abu Dhabi – Mubasher: The UAE Ministry of Finance announced the provision of facilities available for transfer between a group of companies residing in the country.

In a clarification related to the “corporate tax” law, the Ministry indicated that companies that are part of a qualified group can transfer assets and liabilities between them according to the net book value, that is, they can transfer in a tax-neutral manner.

The Ministry stated that there are five conditions that must be met by companies when establishing qualified groups, including that their members be legal persons residing in the UAE or non-resident legal persons who have a permanent establishment in the country.

and either of the members of the tax group owns 75% or more of the ownership interest in the other entity, or that a third party owns 75% or more of the ownership interest in each.

She added that among the conditions, none of the members of the group shall be an exempt person, and that none of the members of the group shall be a qualified person residing in the free zone, and that the members of the group prepare their financial statements using the same accounting standards, and that they have the same fiscal year..

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The Ministry of Finance indicated that the corporate tax system will allow legal and commercial mergers, the establishment of derivative companies, and other transfer and restructuring operations that meet specific conditions to be carried out without achieving any gains or losses for corporate tax purposes..

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It is noteworthy that the UAE issued a decree during the month of December 2022 By Federal Law No. (47) of 2022 regarding corporate and business tax, as of its first fiscal year starting on or after June 1, 2023.

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