UAE Corporate Tax: Business owners have some thinking to do before signing up for ‘tax group’ status

UAE Corporate Tax: Business owners have some thinking to do before signing up for ‘tax group’ status

Dubai: Memo to entrepreneurs in the UAE with multiple businesses – should you be setting up a ‘parent company’ to group all the diverse businesses under it? Because it will be based on that entrepreneurs can decide whether apply for the status of ‘tax group’ with the UAE tax authorities, which on Tuesday issued guidelines on the norms under which such grouping can be formed. The main one relates to shareholding – the parent company must have at least 95 per cent in each of the other businesses and only then can they be grouped together. And the benefit from being part of a ‘tax group’? This is what the Ministry of Finance said on Tuesday – ‘Forming a tax group simplifies the calculation and reporting of taxable income by allowing the parent company to file a single tax return based on the aggregated taxable profit or loss of the group’. That’s the main point. There is also another factor that helps connected businesses to come under such a tax group. The Ministry says that ‘transactions between members of the tax group being generally disregarded’. Businesses forming part of a tax group can engage in transacting – be it a