Group Relief & Restructuring Relief in UAE
The UAE government has brought in Corporate Tax to increase its revenue and follow international tax standards. Companies in UAE sometimes need to join together or change how they work. Because of this, the law gives Group Relief and Restructuring Relief to help businesses manage their taxes and stay competitive in the market.
Understanding Group Relief
Group Relief lets one company share its losses with another company in the same group. This rule helps the company with losses pay less tax, and the company getting the losses can use them to lower its own tax bill too. Businesses may sometimes need to change or move assets to stay strong. The government knows this and tries to make it easier by offering relief during such changes. When assets or debts move within the same group, companies won’t have to pay extra taxes on those moves if they follow the rules.
Benefits of Group Relief
- Lowers the total tax for companies in one group
- Makes it easier to reorganize or restructure
- Helps new or struggling companies keep up with others
Group Relief: Key Eligibility Criteria
To use group relief, companies must meet these rules:
- All companies must be UAE residents or have a permanent place of business in UAE.
- One company must own at least 75% of the votes and shares in the others.
- Losses shared must come from real business activity.
- Companies must keep and carry forward the losses.
Intra-Group Transfer of Assets and Debts
Sometimes, one group company may move assets or debts to another. If both are at least 75% owned by the same parent company, they can do this without paying extra tax, as long as:
- The moved asset or debt stays in the group for at least three years.
- The value is set by the company’s books, not by the market.
If these rules aren’t followed, the company will lose the tax break and might need to pay extra taxes later.
What is Restructuring Relief?
Restructuring Relief is another important tax break. When a business changes its structure—like merging with another, splitting up, or moving its assets—the government lets them delay paying taxes on gains from these changes. This helps businesses save money and focus on getting stronger.
When Can You Use Restructuring Relief?
The restructuring must follow these rules:
- The move must be legal in the UAE.
- The business must have a real base in UAE.
- The value for the transfer must come from the books, not the market.
- The companies involved must use the same accounting standards and have the same year-end.
- The transfer must have a good business reason, not just to avoid tax.
- The gain or loss must come from a real business.
What Happens if You Break the Rules?
If a company that used restructuring relief sells or gives away the business within three years, the original tax break can be “clawed back.” That means the company will have to pay tax on the first transfer after all.
Group Relief & Restructuring Relief: Summary
Group Relief and Restructuring Relief are very important for businesses in UAE that want to grow, move assets, or join with other companies. These rules can help companies save money, keep up with the competition, and make smart choices.
Here are some key points to remember:
- Group Relief lets companies in one group share and use losses.
- Restructuring Relief helps companies delay tax when they change how they do business.
- Both reliefs have strict rules about who can use them and when.
- Breaking the rules can mean you’ll lose the relief and owe extra taxes.
How Mubarak Al Ketbi (MAK) Auditing Can Help
Mubarak Al Ketbi (MAK) Auditing helps companies get the most from Group Relief and Restructuring Relief. Our experts know the law inside and out. We give you clear advice, help you file paperwork, and make sure you follow every rule. You don’t have to worry about making mistakes or missing out on tax benefits. We help you plan ahead, so your business stays on the right side of the law.
Remember, “Don’t put all your eggs in one basket”—plan your business moves carefully with help from experts!
- For more information, visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates - Or contact/WhatsApp: +971 50 276 2132
