A tax group is a group of companies that are taxed collectively. Under the U.A.E.’s tax laws, companies can form a group or join an existing group to file a single tax return for all the members of the group.
There are some requirements that need to be fulfilled to create a tax group or become a part of an existing tax group. All members of a permanent or temporary group, including representatives, are considered a single entity and pool their income and expenses together for filling purposes.
Intercompany transactions are “out of scope”.
How to join a Tax Group?
To form or join a tax group, companies must have to fulfill certain documents and requirements. A request to register a Tax Group shall be made by the representative member of that Tax Group.
The members should be related parties to each other and For the purposes of Tax Group provisions, the definition of Related Parties shall relate to any two legal persons in instances such as:
a. One Person or more acting in a partnership and having any of the following:
1) Voting interests in each of those legal Persons of 50% or more;
2) Market value interest in each of those legal Persons of 50% or more;
3) Control of each of those legal Persons by any other means.
b. Each of the Persons is a Related Party with a Third Person.
The benefits of Group Tax in the UAE :
- Inter companies’ transactions are out of scope.
- Better Cash flow management
- Simplified accounting for VAT
- Controlled environment
- Monitored compliance with taxation laws