What’s the main purpose of qualifying group relief?

The rule lets group companies transfer capital assets or liabilities without paying tax on gain or loss, so long as they follow all rules.

What does “no gain/no loss” mean in group relief?

It means the transfer is tax-neutral; the company doesn’t show a gain or loss on the transfer at that time.

Can a company change its mind after making the election?

No, the election is final unless FTA gives special approval to change it.

Can companies transfer tax losses under group relief?

No, tax losses must follow Article 38 rules, not group relief.

How does Mubarak Al Ketbi (MAK) Auditing help with group relief?

MAK Auditing helps you with every election step, checks compliance, keeps your records right, and makes sure you’re not “biting off more than you can chew.”

Consequences of Election for Group Relief UAE CT

Consequences of Election for Qualifying Group Relief UAE CT

The UAE introduced the corporate tax (CT) regime to make things fair for every business. The Federal Tax Authority (FTA) made a guide on qualifying group relief to help companies understand the rules about asset or liability transfers in a group. Mubarak Al Ketbi (MAK) Auditing explains what happens when a company makes an election for group relief and what results you must expect.

What Is the Election for Qualifying Group Relief?

Election for qualifying group relief means a transferor, the company moving assets or liabilities, chooses to use tax-neutral treatment for the transfer. The company receiving the assets or liabilities is called the transferee.

The transferor must elect group relief for the transfer.
Once the election is made, you can’t reverse it unless FTA says yes.
Group relief covers transfers of capital assets and liabilities inside the group for the tax period.

Main Consequences for the Transferor

Here’s what the transferor must know after the election:

The transferor moves assets or liabilities at net book value.
No gain or loss is counted at the time of the transfer.
Net book value is the cost minus depreciation, amortization, or other adjustments.
The transferor doesn’t pay tax now, but must keep records of all values and adjustments.

Main Consequences for the Transferee

Here’s what the transferee faces:

The transferee must adjust taxable income.
The transferee can’t claim depreciation, amortization, or value changes on assets or liabilities, unless it was a gain already recognized by the transferor for CT.
If assets or liabilities are sold later, the transferee must add back any amount not recognized for CT at the transferor level.

How Several Transfers Affect Net Book Value

If you transfer assets or liabilities again, the “no gain/no loss” rule applies each time. But when the asset is finally sold outside the group, any gain or loss skipped earlier is counted at that time.

How Asset Exchanges Work

If two companies exchange assets or liabilities, each transfer is treated as separate. The group relief is only given if at least one side makes the election. Both assets or liabilities must be on capital account.

If the exchange is not on capital account, group relief is not given.
Both transfers count as “no gain/no loss” for CT.

What About Tax Losses?

You can’t transfer tax losses through group relief. Tax loss transfers follow Article 38 of UAE CT law, not the group relief rule.

What If You Don’t Meet the Election Requirements?

If Article 26(1) doesn’t apply, your transfer isn’t covered by group relief.
If the transfer is between related parties, it must meet Arm’s Length Standard.
The gain or loss will be set by the market value.
If parties are not related, gain or loss is based on each company’s own accounts using their accounting standards.