How UAE Corporate Tax Impacts Cross-Border M&A in Dubai
Dubai stands as a top business place in the world. Many companies in Dubai join mergers or buy businesses in other countries. These actions are called cross-border mergers and acquisitions (M&A). Business owners must check a company’s value before any deal. This value tells owners the worth of a company.
UAE made a big change by starting the Federal Corporate Tax (CT). This law affects every company that works with foreign partners. Companies in Dubai must understand how CT changes business plans, money work, and every step in a cross-border deal.
How UAE Corporate Tax Impacts Cross-Border M&A Deals
Cross-border M&A means one company in the UAE joins with or buys another company outside the UAE. The new CT law in UAE changes these deals at many stages:
- Due Diligence Gets More Complex:
The buyer checks the target company’s money records and tax rules. This careful check is called due diligence. The new CT law asks buyers to confirm if the target company has paid its tax, followed rules, and kept good records. The buyer wants proof that the company managed all its taxes right. If the target company is in a Free Zone, buyers check if it gets the 0% tax rate after buying. This step adds more work. - Transfer Pricing Between Related Companies:
The way companies plan the deal affects how much tax they must pay. The UAE CT law includes “Participation Exemption.” This can help companies avoid tax on some share sales or dividend income if rules are met. CT rules also allow “Business Restructuring Relief.” Companies can move assets or change group structures before and after M&A and sometimes skip paying extra CT, but only under set conditions. - Deal Structure Planning:
Companies in Dubai often work with their branches in other countries. The buyer must check if the target company used transfer pricing rules right in past deals. After merging, the new group must follow all cross-border rules. Any mistake here can mean tax fines or new tax bills. - Using Past Losses for Tax Savings:
Sometimes, the company being bought lost money in past years. UAE CT law lets companies use past losses to lower new tax bills. But there are rules, especially if the company changes owners during M&A. Buyers must check if they can use these old losses.
Companies must keep these points in mind during every cross-border M&A deal. Extra effects of the CT law may appear, so expert advice can help avoid costly errors. Good planning helps companies gain benefits and follow all tax rules.
What Are the Main Steps in Cross-Border M&A Deals?
Every cross-border M&A deal in Dubai needs careful steps:
- Do company value checks.
- Review every tax record.
- Plan for tax relief options.
- Confirm transfer pricing is correct.
- Check if past losses can be used.
These steps protect your company from risks and help follow the new CT law.
Why Is Expert Tax Help Important for Cross-Border M&A?
Cross-border M&A deals get tricky with new tax rules. Companies must:
- Avoid tax penalties.
- Maximize tax savings.
- Ensure every document is correct.
- Understand special Free Zone or CT rules.
Working with skilled tax experts saves your company from trouble and helps you plan better deals.
How Mubarak Al Ketbi Can Help Your Business
Mubarak Al Ketbi Chartered Accountants gives expert tax support in Dubai. Our team helps your business follow the UAE CT law. We guide you in each step of a cross-border M&A deal. Our tax experts help with due diligence, tax planning, and using every possible benefit.
You can trust us to stand by your side every step of the way. When the going gets tough, the tough get going!
For more information:
- Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud, Dubai – UAE
- Contact/WhatsApp: +971 50 276 2132
