What is business restructuring relief under UAE CT?

It’s a rule that lets companies make big changes, like mergers or splitting up, without extra tax, if they meet all FTA rules.

Can freezone companies get business restructuring relief?

Only if they are not qualifying freezone persons; otherwise, the rule doesn’t let them get relief.

Do the two companies need the same financial year?

Yes, their financial years must end on the same date, even if their tax periods are not exactly the same.

What accounting rules must be followed?

Both must use the same accounting standard—either IFRS or IFRS for SMEs if allowed.

How does Mubarak Al Ketbi (MAK) Auditing help companies get this relief?

MAK Auditing checks every condition, prepares all the right paperwork, and makes sure you don’t miss any rules—so you’re not “caught between a rock and a hard place.”

Business Restructuring Relief UAE: Qualification Conditions

Main Conditions to Qualify for Business Restructuring Relief in UAE CT

The UAE started its corporate tax (CT) regime to give fair ground to all businesses. Every business must register for CT if the law says so. If you don’t register on time, you can get a penalty of AED 10,000. Businesses that register can use many reliefs and deductions, but they have to meet some rules first.

The FTA tries to help by giving guides about CT. One of the new guides explains how to qualify for business restructuring relief. Mubarak Al Ketbi (MAK) Auditing explains these conditions step by step, so you can see if your company qualifies.

Conditions to Qualify for Business Restructuring Relief

Every business must follow some strict rules to get this relief:

1. Legal Compliance

The company must follow every UAE law that controls business restructuring.
Even though CT law doesn’t have its own rule for this, all steps must fit UAE federal and emirate laws.
For example, if AB and CA merge, they must check Commercial Companies Act articles 285 to 293.

2. Only for Taxable Persons

The transferor (company giving the business) and the transferee (company getting the business) must be UAE residents.
If not UAE residents, they must have a real, permanent place of business in UAE.
This rule helps keep all profits and losses inside the CT system.

3. Not for Exempt or Qualifying Free Zone Persons

The transferor and the transferee must not be exempt persons or qualifying freezone persons.
Some freezone persons can still get the relief if they’re not qualifying freezone persons under the law.
If either company becomes exempt or qualifying freezone after the restructure, they can keep the relief, and the FTA won’t take it back.

4. Financial Year End Date

Both companies must end their financial year on the same date.
They don’t need the same tax period, but their year-end date has to match.
If they need to change this date, they must:
- Not have filed tax returns for that period,
- Keep the new tax period between 6 and 18 months,
- Not apply the change to the current or past tax year,
- Apply within six months after the original year-end date.

5. Accounting Standards Must Match

Both companies must use the same accounting standards.
UAE CT law says to use IFRS. If yearly revenue is under AED 50 million, they can use IFRS for SMEs.
Both must use the same—no mixing of full IFRS and IFRS for SMEs.

6. Valid Commercial Reason

The restructure must be for a real business reason, not just to save tax.
Companies must keep documents that show why they did the restructure.
The FTA checks all facts before approving relief.

If You Don’t Meet the Conditions

If you break even one rule, you can’t get relief.
The FTA can refuse relief or make you pay back any benefit you got.
It’s smart to double-check every condition before you apply.

Key Reminders When Planning for Relief

Always check laws for compliance.
Make sure both companies are taxable in UAE.
Check your free zone or exemption status.
Align your financial year-ends.
Match your accounting rules.
Keep full records of your business reason and proof for the restructure.

What Can Help? – Mubarak Al Ketbi (MAK) Auditing

Mubarak Al Ketbi (MAK) Auditing will walk you through every step if you want to get business restructuring relief. Our experts will:

Check your eligibility for every CT relief,
Align your accounting and financial periods,
Help with the FTA paperwork,
Advise you on what records to keep,
Train your team to stay 100% compliant.

For more information:

Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
Contact/WhatsApp: +971 50 276 2132

FAQs on Business Restructuring Relief UAE: Qualification Conditions

When can I claim a VAT adjustment for bad debt?

You can claim the adjustment if you’ve issued a proper tax invoice, paid VAT to FTA, written off the receivable in your books, waited six months from the supply date, and notified the customer.

What evidence must I keep for a bad debt VAT claim?

You must keep: • Tax invoices • Proof of VAT payment • Accounting records showing the write-off • Copies of communication with the customer

How do I report the VAT adjustment in my return?

Use the adjustment column in Box 1 of your VAT return for each relevant emirate. Enter the VAT amount you want to reclaim.

What if the customer pays after I’ve claimed bad debt relief?

If the customer later pays, you must declare the VAT for that payment in your next VAT return.

How can Mubarak Al Ketbi (MAK) Auditing help with bad debt VAT adjustments?

We check your eligibility, review your records, prepare your VAT return, and make sure you follow every law to reclaim your VAT with no headaches.