The UAE Tax Group: Conditions, Deadlines and Traps in 2026

A Tax Group in the UAE is a regime under which a parent company and its subsidiaries are treated as a single taxable person for corporate tax purposes: one consolidated return is filed and the profits and losses of the members are offset against one another. The regime sits in Articles 40 to 42 of Federal Decree-Law No. 47 of 2022 and is fleshed out by Ministerial Decision No. 301 of 2024.

Ministerial Decision No. 301 of 2024 was issued on 9 December 2024, came into effect the day following its publication, and applies to Tax Periods commencing on or after 1 January 2025. It repealed Ministerial Decision No. 125 of 2023, which continues to apply to Tax Periods that commenced before 1 January 2025.

The two traps are joint and several liability and a hard filing deadline. The application to form a Tax Group, or to join an existing one, must reach the Federal Tax Authority before the end of the Tax Period in which the formation or joining is requested. Missing that deadline pushes the group to the following period in full: a Tax Group is not formed retrospectively.

What follows works from the primary texts: the seven conditions in Article 40, the additional residence condition that sits only in the Decision, the mechanics of eliminating intra-group transactions, the cap on losses accumulated before joining, the four scenarios that reintroduce an arm’s length calculation, and the consequences of a member leaving.

1. The Legal Framework and the Chain of Instruments

•     Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. Article 40 sets the conditions for forming a Tax Group, Article 41 the formation and cessation mechanics, and Article 42 the determination of the group’s taxable income.

•     Ministerial Decision No. 301 of 2024 on Tax Group. The instrument in force, issued by the Minister of State for Financial Affairs on 9 December 2024 and running to 16 articles. It applies to Tax Periods from 1 January 2025.

•     Ministerial Decision No. 125 of 2023. Repealed by Article 14 of Decision No. 301 of 2024, but it continues to apply to Tax Periods that commenced before 1 January 2025. Historic periods are assessed under it.

•     Corporate Tax Guide on Tax Groups (CTGTGR1). The Federal Tax Authority guide released in January 2024. It is explanatory and is read together with the Law and the Decision.

Repeal does not remove the old instrument from practice. Article 14 of Decision No. 301 of 2024 is unusual in construction: the earlier decision is repealed yet remains applicable to earlier periods. A company under audit for a period that commenced before 1 January 2025 is assessed against Decision No. 125 of 2023, not the current one. That matters when building a position on past periods.

2. The Eight Conditions for Forming a Tax Group

Article 40(1) of the Law contains eight paragraphs, (a) to (h), which the parent company and each subsidiary must satisfy together. The residence requirement sits not in that list but in the opening words of the clause: a Resident Person applies to form a Tax Group with one or more other Resident Persons.

Condition	Substance
Residence	The parent company and each subsidiary are juridical persons resident in the UAE. A foreign juridical person whose place of effective management is in the UAE also qualifies as a resident
Share capital	The parent company owns at least 95% of the share capital of each subsidiary, directly or indirectly through one or more subsidiaries
Voting rights	The parent company holds at least 95% of the voting rights in each subsidiary, directly or indirectly
Profits and net assets	The parent company is entitled to at least 95% of each subsidiary’s profits and net assets, directly or indirectly
No Exempt Persons	Neither the parent company nor any subsidiary is an Exempt Person
No QFZPs	Neither the parent company nor any subsidiary is a Qualifying Free Zone Person
Same financial year and standards	The parent company and the subsidiaries have the same financial year and prepare their financial statements using the same accounting standards

Article 2(1) of Ministerial Decision No. 301 of 2024 sets the compliance standard: the conditions in Article 40(1) of the Law must be met continuously throughout the relevant Tax Period, not merely at the date of application.

Article 2(2) of the Decision provides that, for the purposes of Article 40(1)(b) of the Law, share capital means the nominal issued and paid-up capital, or the Membership or Partnership Capital of each subsidiary, as applicable.

A divergence on free zone companies worth recording. Some 2026 commentary asserts that a Qualifying Free Zone Person may join a Tax Group provided every member is a QFZP. The condition in Article 40(1) of the Law is framed without such a carve-out: neither the parent company nor a subsidiary may be a Qualifying Free Zone Person. Until confirmed against the statutory text, work from the general prohibition rather than a presumed exception. The practical consequence is the same on either reading: bringing a free zone company into a group costs it QFZP status and the 0% rate on qualifying income.

3. The Eighth Condition, Which Is Not in the Law

Article 3 of Ministerial Decision No. 301 of 2024 adds a condition absent from the Article 40 list: the parent company and the subsidiary must be Resident Persons that are not considered resident for tax purposes in another country or foreign territory under a relevant international agreement in force in the State.

Article 3(2) states the consequence: where a member of a Tax Group becomes resident for tax purposes in another country or foreign territory, that member is treated as leaving the Tax Group from the beginning of the Tax Period in which it acquired that residence. The exit is retrospective to the start of the period, not effective from the date of the event.

The documentary residency requirement has been removed. Compared with the earlier Decision No. 125 of 2023, Article 3 no longer carries documentation requirements for a foreign juridical person treated as a UAE resident. The substantive condition — that a member must not be treated as resident in another jurisdiction under an international agreement — remains; only the documentary obligation was dropped.

The Tax Period deserves separate attention. The group conditions are tested by reference to the Tax Period, and that period must be identical across all members. A company with a different financial year must change it before the application is filed: a retrospective change after filing does not solve the problem, because the same-financial-year condition must be met continuously.

4. The Authority’s Powers and the Government Entity Carve-Out

Article 40(3) of the Law requires the application to be made to the Federal Tax Authority by the parent company and by each subsidiary seeking to become a member of the group. An application filed by the parent alone does not meet the requirement.

Article 40(2) carves out an exception to the bar on Exempt Persons: notwithstanding paragraph (e) of Clause 1, one or more subsidiaries in which a Government Entity directly or indirectly owns at least a 95% ownership interest within the meaning of paragraphs (b), (c) and (d) of Clause 1 may form a Tax Group, subject to conditions prescribed by the Federal Tax Authority.

The Authority may dissolve the group on its own initiative. Article 40(13) gives the Federal Tax Authority a discretionary power: notwithstanding Clauses 11 and 12, it may at its discretion dissolve a Tax Group or change its parent company on the basis of information available to it, notifying the parent company of the action taken. The group’s existence therefore does not rest on the members’ actions alone.

Article 40(5) places compliance with all obligations under Chapters Fourteen, Sixteen and Seventeen of the Law on the parent company on behalf of the group. Article 40(8) nonetheless leaves the parent company and each subsidiary individually responsible for complying with Article 45 on withholding tax.

5. Deadlines: When to Apply and When to Notify

Deadline	Obligation	Basis
Before the end of the Tax Period	File the application with the Federal Tax Authority to form a Tax Group or to join an existing one, within the Tax Period in which formation or joining is requested	Article 5(1) of the Decision; Article 41(1) of the Law
Before the end of the relevant Tax Period	File the application referred to in Article 40(12) of the Law, on a change of parent company	Article 5(2) of the Decision
From the beginning of the relevant Tax Period	A new parent company must meet the conditions in Article 40(1) of the Law	Article 5(3) of the Decision
From the date of incorporation	A newly established juridical person may join an existing group — as a new subsidiary, or as a new parent company replacing the existing one	Article 5(5) of the Decision
From the effective date of the transfer	Where the parent company transfers its entire business to another member of the same group and ceases to exist, it is replaced by that member	Article 5(4) of the Decision
20 business days	Notify the Federal Tax Authority that a subsidiary has left the group, or that the group has ceased to exist for failure to meet the conditions, running from the date the conditions were no longer met	Article 12 of the Decision

A Tax Group is not formed retrospectively. The application is filed before the end of the Tax Period in which the group is to take effect. A company that spots the benefit of loss offsetting while preparing the return for a closed period cannot apply the regime to that period. The decision is taken during the period, not on its results.

The application is to form the group, not to have it recognised after the event. The Federal Tax Authority reviews the application and decides on it; until that decision the group is not treated as formed, so filing in the closing days of a Tax Period leaves little room to address any queries.

6. Who Can Be the Parent Company

Article 1 of the Decision defines the Parent Company as a Resident Person that can apply to the Federal Tax Authority to form a Tax Group with one or more subsidiaries under Article 40(1) of the Law. A Subsidiary is defined as a Resident Person in which the share capital, or the Membership or Partnership Capital as applicable, is held by a parent company.

A foreign juridical person whose place of effective management is in the UAE also qualifies as a resident for these purposes. Such a company may be either the parent or a subsidiary in a Tax Group — provided it is not treated as resident in another jurisdiction under a relevant international agreement in force.

The 95% threshold is tested on three measures at once, not on one. A structure in which the parent owns 100% of the capital but, under a shareholders’ agreement, holds only 80% of the votes or is entitled to 90% of the profits does not meet the conditions. All three measures must be tested — capital, votes, and entitlement to profits and net assets — taking indirect holdings through intermediate subsidiaries into account.

Membership and partnership capital

Article 1 of the Decision introduces the concept of Membership or Partnership Capital: the capital paid to a juridical person where the paid capital is divided into membership or partnership interests acquired by a person in order to become a member or partner and hold the corresponding rights. That opens the regime to entities without share capital in the classical sense.

7. What Exactly Is Eliminated Inside the Group

The core effect of the regime is the elimination of intra-group transactions in computing the group’s taxable income under Article 42(1) of the Law. Article 6 of the Decision widens that perimeter.

•     Transactions between two or more subsidiaries that are members of the same Tax Group, not only between the parent and a subsidiary.

•     Valuation adjustments and provisions in relation to transactions between two or more members of the same group.

•     Any change in the accounting value of the relevant assets and liabilities arising in consequence of an eliminated gain or loss.

A practical consequence of elimination: transactions between group members fall outside the arm’s length principle in Article 34 of the Law. Transactions between a group member and a free zone entity outside the group remain fully subject to transfer pricing rules.

The exception that gets forgotten

Article 4 of the Decision carves out an exception: transactions between members must not be eliminated insofar as a member recognised a deductible loss on them in a Tax Period before forming or joining the group, until that deductible loss is reversed in full. Where a transaction is therefore not eliminated, the group must include any income relating to it in determining its taxable income for the period in which that income arises, up to the amount of the deductible loss previously deducted.

8. Losses Accumulated Before Joining the Group

Article 7(1) of the Decision caps the use of a subsidiary’s pre-Grouping Tax Losses at the lower of two amounts: the taxable income of the Tax Group attributable to that subsidiary, and the Tax Loss that can be used to reduce the group’s taxable income in the relevant period under Article 37(2) of the Law.

Article 7(2) fixes the order: where the computation of the group’s taxable income produced a Tax Loss carried forward, available pre-Grouping Tax Losses must be offset against the group’s taxable income in a subsequent period before the group’s other carried forward losses can be used in that same period.

Article 7(3) leaves the choice to the parent company: where total available pre-Grouping Tax Losses exceed the capped amount, the parent company determines which subsidiary’s losses remain carried forward losses of the Tax Group.

Using less than the maximum possible forfeits the losses. Article 8(3) requires pre-Grouping Tax Losses to be used to offset the group’s taxable income to the fullest extent possible before any remainder can be carried forward. Article 8(4) adds the sanction: a member’s losses are forfeited where both the group did not calculate the taxable income attributable to that member and the amount used was less than could have been used under Article 37(2) of the Law.

The same mechanism applies to pre-Grouping carried forward Net Interest Expenditure. Under Article 8(5) it must be used to the fullest extent possible, and under Article 8(6) it is forfeited on the same two-limbed condition — no attributable income calculation and less than full use.

9. The Four Scenarios Requiring a Member-Level Calculation

Article 8(1) of the Decision lists the cases in which a Tax Group must calculate the taxable income attributable to one or more of its members — in effect returning to a member-by-member computation inside a consolidated group.

1.  A member has unutilised pre-Grouping Tax Losses and the group opts to use them to offset the group’s taxable income for the relevant period.

2.  A new member joins an existing group that has unutilised Tax Losses.

3.  A member benefits from corporate tax incentives specified under Article 20(2)(g) of the Law.

4.  A member has unutilised carried forward Net Interest Expenditure under Article 30(4) of the Law and the group opts to use it in determining the group’s taxable income.

In those cases the group must calculate the taxable income attributable to each relevant member in accordance with Article 34 of the Law — that is, on an arm’s length basis — and disclose any information required by the Federal Tax Authority under Article 55(1) of the Law regarding transactions and arrangements between the relevant members and other group members, and between those members and their Related Parties and Connected Persons.

Consolidation does not switch transfer pricing off entirely. The general rule is that intra-group transactions are eliminated and the arm’s length principle does not apply to them. But once any of the four scenarios arises, the group must return to an Article 34 computation and disclose in the transfer pricing form. Unutilised pre-grouping losses or interest expenditure held by any member are enough on their own to switch the mechanism on.

10. Restructuring Inside the Group

Article 10 of the Decision governs transfers of business inside the group. Where a member transfers its entire business to another member of the same group and ceases to exist as a result, it is treated as remaining a member until the date it ceases to exist, and the group continues to exist.

Where the group comprises only two members and one transfers its entire business to the other and ceases to exist, the Tax Group is treated as ceasing to exist on the date the transfer takes effect.

Article 10(3) removes a formality: no election for Business Restructuring Relief under Article 27 of the Law is required in those situations.

Article 11 aligns intra-group transfers of assets and liabilities with Articles 26 and 27 of the Law: where a transfer would have met their conditions had the parties not been members of the same group, the associated income is treated as not having been taken into account for corporate tax purposes, as if the members had elected to apply Article 26(1) or Article 27(1).

11. What Happens to Losses on Exit and Cessation

Article 42(6) of the Law: where a subsidiary leaves, the Tax Group’s tax losses remain with the group — except for that subsidiary’s unutilised pre-Grouping Tax Losses, which leave with it.

Article 42(7) allocates losses on cessation along two paths. Where the parent company continues to be a taxable person, all tax losses remain with the parent. Where the parent ceases to be a taxable person, the group’s losses are not available to offset the future taxable income of individual subsidiaries — except for those subsidiaries’ own unutilised pre-Grouping Tax Losses.

Article 42(8) disapplies that outcome in one case: paragraph (b) of Clause 7 does not apply where the Tax Group continues under Article 40(12), that is where the parent company is replaced without the group being discontinued.

Article 42(4) closes the reverse manoeuvre: where a new subsidiary joins, the existing group’s unutilised tax losses cannot be used to offset the part of the group’s taxable income attributable to that new member.

A two-year clawback on intra-group asset transfers. Article 42(9) disapplies the consolidation rule where an asset or liability has been transferred between members and either the transferor or the transferee leaves the group within two years of the transfer — unless the associated income would have been exempt or not taken into account under other provisions of the Law. Under Article 42(10) any income not previously taken into account is brought in on the date the member leaves, with a corresponding adjustment to the cost base of the asset or liability.

Article 42(11) imposes a standalone obligation: a Tax Group must prepare consolidated financial statements in accordance with the accounting standards applied in the State.

12. A Member Leaving and the Group Ceasing

Article 13 of the Decision governs the accounts on exit. Each subsidiary leaving the group, or the former parent of the group, must prepare its standalone financial statements on the same accounting basis and elections as applied by the Tax Group, and must adopt the values of the relevant assets and liabilities as recorded by the group as the opening values in those standalone statements.

The requirement to carry over the group’s elections is new in Decision No. 301 of 2024: the earlier instrument referred only to the accounting basis and asset values. In practice this means a departing company cannot revisit the group’s accounting policy when moving to standalone reporting.

Article 1 of the Decision defines Financial Statements for the first time: a complete set of statements as specified under the accounting standards applied by the taxable person, including but not limited to the statement of income, the statement of other comprehensive income, the balance sheet, the statement of changes in equity and the cash flow statement.

13. What the Regime Gives and What It Takes

What it gives

•     Offsetting of profits and losses. One member’s loss reduces another’s profit in the same period, and tax is paid on the net consolidated position.

•     One return instead of several. The parent company files a single consolidated return and settles the group’s liability.

•     Relief from transfer pricing on internal transactions. Intra-group dealings are eliminated and, as a general rule, need no arm’s length substantiation.

•     Simplified restructuring. Transfers of business between members require no Business Restructuring Relief election.

What it takes

•     Joint and several liability — with a qualification. Under Article 40(6) the parent company and each subsidiary are jointly and severally liable for the group’s corporate tax for the periods of their membership. Article 40(7) nonetheless allows that liability for a given Tax Period to be limited to one or more members of the group, following approval by the Federal Tax Authority.

•     QFZP status. A free zone company joining the group loses Qualifying Free Zone Person status and the 0% rate on qualifying income.

•     Freedom of accounting policy. A single financial year and identical standards are mandatory for all members, and the group’s elections survive a member’s exit.

•     Some flexibility on losses. Losses accumulated before joining are double-capped and forfeited if not used to the fullest extent possible.

14. Interaction with Other Regimes in the Law

A Tax Group does not sit in isolation: it intersects with four other mechanisms in the corporate tax law, each with its own logic.

•     Qualifying Group Relief (Article 26) and transfer of tax losses (Article 38). Article 9 of the Decision lays down a special rule for determining ownership interest for the purposes of Article 26(2)(b) and Article 38(1)(c) of the Law: the direct and indirect ownership interest held by members of the same Tax Group must be determined on the basis of aggregating the assets and liabilities of the parent company and each subsidiary under Article 42(1). The group is treated as a single whole when computing ownership for those two regimes as well.

•     Business Restructuring Relief (Article 27). No election is needed at all for transfers of business inside the group — Article 10(3) of the Decision removes the formality. Article 11 then treats intra-group transfers of assets and liabilities as though the relief had been elected, had the parties not been members of the same group.

•     Qualifying Free Zone Person (Article 18). The regimes are mutually exclusive: membership of a Tax Group costs QFZP status and the 0% rate on qualifying income. The economics must be computed as the difference between the offsetting gain and the relief forfeited.

•     Small Business Relief (Article 21). It does not combine with membership of a Tax Group. A company claiming the small business relief cannot simultaneously be a group member.

15. Tax Group Versus Standalone Companies

Parameter	Tax Group	Standalone companies
Return	One consolidated return filed by the parent company	A separate return for each company
Members’ losses	Offset within the period against other members’ profits	Carried forward within the company that incurred them
Internal transactions	Eliminated; the arm’s length principle generally does not apply	Fully within the transfer pricing rules
Liability for the tax	Joint and several across members for the periods of membership	Each company answers only for itself
The AED 375,000 zero-rate band	Applied once to the group’s consolidated taxable income	Applied to each company separately
QFZP status	Lost on joining the group	Retained where the conditions are met
Financial year and accounting standards	Must be identical across all members	Set by each company independently
Restructuring inside the perimeter	Business transfers between members without a Business Restructuring Relief election	An Article 27 election is required where the conditions are met
Exit from the regime	Notification within 20 business days; standalone statements carrying the group’s accounting elections	Not applicable

The zero-rate band is the parameter most often left out of the benefit calculation. The conclusion follows from two provisions read together. Article 40(4) states expressly that a Tax Group is treated as a single taxable person represented by the parent company. Article 3(1)(a) applies the 0% rate to the portion of taxable income not exceeding an amount set by Cabinet decision. Outside a group the band therefore applies to each company; inside a group it applies once to the whole consolidated income. For a structure of several profitable companies that is a loss in its own right, to be set against the gain from offsetting.

16. Common Mistakes

Mistake 1. Applying after the Tax Period has ended

The application to form or join is filed before the end of the Tax Period in which the regime is to take effect. The cost: the regime applies only from the following period, and offsetting for the closed period is unavailable even though the economic loss has already arisen.

Mistake 2. Testing the conditions at the application date rather than continuously

Article 2(1) of the Decision requires continuous compliance with Article 40(1) throughout the Tax Period. The cost: a holding falling below 95% even briefly during the period puts the group’s status for the whole period in question.

Mistake 3. Not tracking a member acquiring residence elsewhere

Under Article 3 of the Decision, a member that becomes tax resident in another country under an international agreement is treated as leaving from the beginning of that period. The cost: the exit is retrospective to the start of the period, so the computation and return for the whole period rest on the wrong group composition.

Mistake 4. Using pre-Grouping Tax Losses at less than the maximum

Articles 8(3) and 8(4) require maximum use and forfeit the losses where the group also failed to calculate the income attributable to that member. The cost: the losses are lost outright rather than carried forward.

Mistake 5. Bringing a free zone company into the group without pricing the loss of status

A Qualifying Free Zone Person cannot be a member, and joining costs the 0% rate on qualifying income. The cost: the gain from loss offsetting can be smaller than the forfeited relief, so the decision cancels its own economics.

Mistake 6. Missing the 20-business-day notification

Article 12 of the Decision requires notice to the Federal Tax Authority within 20 business days of the date the conditions ceased to be met, on a subsidiary leaving or the group ceasing. The cost: consolidated filings continue on a composition that no longer reflects reality.

A practical test of the benefit: the regime pays off where the aggregate losses of some members in the period are comparable to the profits of others. Where every company in the group is profitable, consolidation usually worsens the position — because the AED 375,000 band applies only once and joint and several liability arrives with no losses to offset.

A second test is the stability of the ownership structure. The 95% threshold is tested continuously, so a planned investor entry, a management option programme or the sale of a minority stake can break the group mid-period with consequences for the whole period. The regime suits structures with stable ownership rather than those expecting dilution in the coming years.

17. Who the Regime Suits

Good fit

•     Groups holding loss-making and profitable companies at the same time. In-period offsetting is the regime’s core economic point.

•     Structures with heavy intra-group turnover. Elimination removes the need to substantiate internal dealings on an arm’s length basis.

•     Groups with uniform accounting policy. A single financial year and identical standards are already in place, so entry requires no rebuild of the accounts.

•     Projects planning internal restructuring. Transfers of business between members need no Business Restructuring Relief election.

Poor fit

•     Structures with free zone companies on the 0% rate. Joining costs QFZP status on qualifying income.

•     Groups with minority partners. The 95% threshold across capital, votes and profit entitlement excludes dispersed ownership.

•     Companies applying Small Business Relief. Article 21(2) lists the provisions disapplied where the relief is elected: Chapters Seven, Eight, Nine and Eleven, and Article 55. Chapter Twelve on Tax Groups is not on that list, so a conclusion of full incompatibility does not follow directly from Article 21 and must be checked against the ministerial decision setting the conditions for the relief.

•     Groups where one member carries material tax exposure. Joint and several liability spreads the obligation to every member for the periods of membership.

18. Step-by-Step

5.  Test the residence of every proposed member and confirm that none is treated as resident elsewhere under an international agreement.

6.  Compute the parent’s position on all three measures at once — capital, voting rights, and entitlement to profits and net assets — taking indirect holdings through intermediate subsidiaries into account.

7.  Confirm that no member is an Exempt Person or a Qualifying Free Zone Person, and price the loss of QFZP status where a free zone company is proposed for inclusion.

8.  Align the financial year and accounting standards of all members before filing the application.

9.  Inventory each member’s pre-grouping losses and carried forward net interest expenditure: they drive the need for a member-level calculation.

10.     Screen intra-group transactions for previously recognised deductible losses: those transactions are not eliminated until the loss is reversed in full.

11.     File the application with the Federal Tax Authority before the end of the Tax Period in which the regime is to take effect.

12.     Set up continuous monitoring of the conditions through the period, not only at the application date.

13.     Plan the use of pre-Grouping Tax Losses to the fullest extent possible and record the parent company’s choice of whose losses are carried forward.

14.     Prepare for transfer pricing disclosure whenever any of the four Article 8 scenarios arises.

15.     Establish a process to notify the Federal Tax Authority within 20 business days of a member leaving or the group ceasing.

16.     Document the group’s accounting elections: a departing member must carry them, and the group’s asset and liability values, into its standalone statements.

19. Frequently Asked Questions

What ownership threshold is needed to form a UAE Tax Group?

At least 95% on three measures simultaneously: the share capital of each subsidiary, the voting rights in it, and the entitlement to its profits and net assets. The holding may be direct or indirect through one or more subsidiaries.

By when must the application to form a Tax Group be filed?

Before the end of the Tax Period in which the formation or joining is requested, under Article 5(1) of Ministerial Decision No. 301 of 2024. A group cannot be formed retrospectively once the period has closed.

Can a free zone company be part of a UAE Tax Group?

Article 40(1) of the Law requires that neither the parent company nor a subsidiary be a Qualifying Free Zone Person. Bringing a free zone company into a group costs it QFZP status and the 0% rate on qualifying income.

Which decision applies to Tax Periods before 2025?

Ministerial Decision No. 125 of 2023. Article 14 of Decision No. 301 of 2024 repealed it but expressly preserved its application to Tax Periods that commenced before 1 January 2025.

Do transfer pricing requirements survive inside a Tax Group?

As a general rule intra-group transactions are eliminated and the arm’s length principle does not apply to them. In the four cases listed in Article 8(1) of the Decision, however, the group must calculate the taxable income attributable to the relevant members under Article 34 of the Law and disclose the information to the Federal Tax Authority.

How quickly must a member leaving the group be notified?

Within 20 business days from the date the conditions ceased to be met, whether a subsidiary leaves or the group ceases to exist. The basis is Article 12 of Ministerial Decision No. 301 of 2024.

What happens to losses accumulated before joining the group?

They may be offset against the group’s taxable income up to the lower of the group’s income attributable to that subsidiary and the amount permitted under Article 37(2) of the Law. Where they are used at less than the maximum and no attributable income calculation is made, they are forfeited.

20. Key Takeaways

•     The instrument in force is Ministerial Decision No. 301 of 2024, issued 9 December 2024 and applying to Tax Periods from 1 January 2025.

•     Ministerial Decision No. 125 of 2023 is repealed but continues to apply to periods that commenced before 1 January 2025.

•     The threshold is 95% simultaneously across capital, voting rights and entitlement to profits and net assets, directly or indirectly.

•     The conditions must be met continuously throughout the Tax Period, not only at the application date.

•     Joint and several liability under Article 40(6) can be limited to one or more members for a given period, following approval by the Federal Tax Authority under Article 40(7).

•     Under Article 40(13) the Authority may dissolve the group or change the parent company on its own initiative.

•     The Decision adds a condition absent from the Law: a member must not be treated as resident in another jurisdiction under an international agreement.

•     A member acquiring residence elsewhere is treated as leaving from the beginning of that Tax Period.

•     The application is filed before the end of the Tax Period in which the regime is to take effect.

•     Notification of a member leaving or the group ceasing is due within 20 business days.

•     Pre-grouping losses are double-capped and forfeited where used at less than the maximum without a member-level calculation.

•     The four Article 8 scenarios return the group to an arm’s length calculation and transfer pricing disclosure.

•     A Qualifying Free Zone Person cannot be a member; joining costs the 0% rate on qualifying income.

21. Summary 

A UAE Tax Group is a regime under which a parent company and its subsidiaries are treated as a single taxable person for corporate tax purposes, filing one consolidated return with profits and losses offset among members. It sits in Articles 40, 41 and 42 of Federal Decree-Law No. 47 of 2022 and is fleshed out by Ministerial Decision No. 301 of 2024, issued on 9 December 2024 and applying to Tax Periods commencing on or after 1 January 2025; Article 14 of that Decision repealed Ministerial Decision No. 125 of 2023 while preserving its application to periods that commenced before 1 January 2025. The Article 40(1) conditions are: the parent company and each subsidiary are juridical persons resident in the UAE; the parent company owns at least 95% of the share capital, holds at least 95% of the voting rights and is entitled to at least 95% of the profits and net assets of each subsidiary, directly or indirectly; no member is an Exempt Person or a Qualifying Free Zone Person; and all members share the same financial year and accounting standards. Article 2(1) of the Decision requires continuous compliance throughout the Tax Period, and Article 2(2) defines share capital as the nominal issued and paid-up capital or the Membership or Partnership Capital. Article 3 adds a condition absent from the Law: a member must not be considered resident for tax purposes in another country under a relevant international agreement, and a member acquiring such residence is treated as leaving from the beginning of that Tax Period. The application to form or join is filed with the Federal Tax Authority before the end of the Tax Period in which it is requested. Intra-group transactions are eliminated under Article 42(1) of the Law, with the perimeter extending to transactions between subsidiaries, valuation adjustments and provisions, and consequent changes in the accounting value of assets and liabilities; transactions are not eliminated insofar as a member previously recognised a deductible loss on them before joining. Pre-Grouping Tax Losses are capped at the lower of the group’s taxable income attributable to that subsidiary and the amount permitted under Article 37(2) of the Law, must be used to the fullest extent possible, and are forfeited where used at less than the maximum without a member-level calculation. The four scenarios in Article 8(1) require the group to compute income attributable to members under Article 34 and to disclose under Article 55(1). A subsidiary leaving or the group ceasing must be notified to the Federal Tax Authority within 20 business days. On exit, a member prepares standalone financial statements on the same accounting basis and elections as the group, adopting the group’s recorded asset and liability values as opening values.

22. Sources

Tier 1 — primary sources

•     UAE Ministry of Finance — Ministerial Decision No. 301 of 2024 on Tax Group (official text, PDF)

•     UAE Ministry of Finance — Ministerial Decision No. 302 of 2024 on the Participation Exemption (cross-refers to Article 10 of Decision No. 301 of 2024)

Tier 2 — professional commentary

•     PwC Middle East — Ministerial Decision No. 301 of 2024: Tax Group

•     KPMG — New Ministerial Decision on Tax Groups

•     KPMG — UAE: Guidance on tax groups, including transfer pricing rules applicable to groups

•     DLA Piper — UAE Ministerial Decision introduces changes for Tax Groups

•     PwC Tax Summaries — United Arab Emirates: Group taxation

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Disclaimer

This material is provided for informational purposes only and does not constitute legal, tax, financial, investment or consulting advice. Before making any decision, obtain individual professional advice reflecting your specific circumstances, jurisdiction, company status and current regulatory requirements. Information is current as of August 2026.