What is qualifying group relief in UAE CT?

It’s a rule that lets group companies transfer assets or liabilities to each other without paying tax if they follow all the FTA’s conditions.

Who can be part of a qualifying group?

Only companies (not individuals) that are taxable persons, meet the 75% ownership rule, and aren’t exempt or qualifying free zone persons.

What assets or liabilities can be transferred?

Only those held on the transferor’s capital account. Transfers outside the capital account don’t qualify.

What happens if a company leaves the group or sells the asset?

If a transferor or transferee leaves the group within two years, or if the asset is sold again, the FTA may claw back the tax relief.

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

MAK Auditing checks your eligibility, sets up your group, helps with elections, and keeps your company on the right track—so you never let the grass grow under your feet.

Qualifying Group Relief UAE CT: Main Conditions & Rules

Summary on Qualifying Group Relief Conditions Under UAE Corporate Tax

The UAE launched the Corporate Tax (CT) regime in June 2023, changing how companies in the UAE plan and report taxes. Many people think this brings extra challenges, but the regime also gives companies a chance to save tax. Qualifying group relief is one of these helpful opportunities.

Mubarak Al Ketbi (MAK) Auditing explains the main rules you need to know about group relief and how your company can benefit from this option.

What Is a Qualifying Group?

A qualifying group is a special group made for business and tax purposes. In this group, companies can transfer assets and liabilities to each other without paying tax right away.

The company giving the asset is called the transferor.
The company getting the asset is called the transferee.
The transferor must elect to use group relief for every transfer.
Both companies must be part of the same qualifying group.
The asset or liability must be in the transferor’s capital account.

If you transfer the asset or liability again within two years, or if the transferor or transferee leaves the group, the FTA can claw back the relief and you may need to pay tax.

Qualifying Group Relief: Main Conditions

There are a few simple but important conditions for this relief:

1. Juridical Persons Only

Both the transferor and transferee must be juridical persons—this means companies with their own legal identity, like LLCs.
Individuals or unincorporated partnerships can’t use this relief.
However, a person who is a partner in an unincorporated partnership can sometimes still qualify.

2. Taxable Persons

The transferor and transferee must be taxable persons.
For residents: They must be set up, recognized, or managed in the UAE, or be foreign companies controlled from the UAE.
For non-residents: They must have a permanent establishment in the UAE.
Non-resident companies with UAE income but no permanent base don’t qualify.

3. Ownership Interest (Minimum 75%)

There must be at least a 75% direct, indirect, or common ownership between the transferor and transferee.
This means one company owns at least 75% of the other, or a third party owns at least 75% of both.
The person with control should also get the economic benefit.
This rule still works if an exempt person or a qualifying free zone person holds the shares in between.

4. Not Exempt or QFZP

Neither company can be an exempt person or a qualifying free zone person (QFZP).
Free zone companies that aren’t QFZPs can join a qualifying group.

5. Same Financial Year and Accounting Standards

Every member of the group must end their financial year on the same date.
Both transferor and transferee must use the same accounting standards for their financial statements.
If the dates don’t match, a company can ask the FTA to change its financial year, but only if certain rules are followed.

Key Points to Remember

Group relief only covers capital account transfers.
Both companies must be in the same group and meet the 75% rule.
Neither company can be an exempt person or QFZP.
Keep financial years and accounting standards the same.

Always check rules before doing transfers

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

If you want to use group relief, you should get expert help to meet every rule. Mubarak Al Ketbi (MAK) Auditing can:

Check if your company can join or create a qualifying group,
Help file elections with the FTA,
Make sure you follow accounting and ownership rules,
Advise you on transfers and compliance,
Keep your company “ahead of the game” with every tax opportunity.

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 Qualifying Group Relief UAE CT: Main Conditions & Rules

Do individuals pay corporate tax on salary?

No. Salary stays outside CT. A person pays CT only on business income when the person runs a licensed business and crosses the turnover threshold.

Can a free zone company sell to the mainland and keep 0%?

It depends on the activity, the role in the supply chain, and the de-minimis rules. Non-qualifying mainland income generally faces 9%.

Do small firms need audited accounts?

Some firms may use IFRS for SMEs, but certain categories, including many free zone persons seeking QFZP status or entities above revenue thresholds, need audited statements.

What records must a taxpayer keep?

Keep ledgers, invoices, contracts, bank statements, TP files, and working papers for the statutory period. Keep scans and hard copies when needed.

When is the CT return due?

The return and payment are due within nine months after the end of the tax period. Add the date to your calendar with early reminders.