Updated: August 2026
By Alia Noor, FCMA, CGMA, MBA
UAE Registered Tax Agent | Associate Partner – Taxation & Compliance Advisory
Ahmad Alagbari Chartered Accountants
Businesses operating through multiple companies will frequently come across two terms under the UAE Corporate Tax regime: Qualifying Group and Tax Group.
Although both concepts apply to groups of companies, they are not the same and they serve different purposes.
A Qualifying Group can allow eligible transfers of assets and liabilities between group members to benefit from Qualifying Group Relief, while a Tax Group allows eligible companies to be treated as a single Taxable Person for Corporate Tax purposes.
Understanding this distinction is important when assessing the Corporate Tax position of a group.
1. What Is a Qualifying Group?
Under the UAE Corporate Tax Law, two Taxable Persons may be members of the same Qualifying Group where the prescribed conditions are satisfied.
Broadly, this requires:
- Both members to be juridical persons that are UAE Resident Persons, or Non-Resident Persons with a Permanent Establishment in the UAE;
- One member to have a direct or indirect ownership interest of at least 75% in the other, or a third person to have a direct or indirect ownership interest of at least 75% in both;
- Neither member to be an Exempt Person;
- Neither member to be a Qualifying Free Zone Person;
- Both members to have the same Financial Year; and
- Both members to prepare their Financial Statements using the same accounting standards.
The main relevance of being within a Qualifying Group is the potential availability of Qualifying Group Relief for certain intra-group transfers.
Where the relevant conditions are satisfied and the relief is elected, assets and liabilities held on capital account and recorded in the Transferor’s Financial Statements may generally be transferred between members of the Qualifying Group at their net book value for Corporate Tax purposes, so that no gain or loss arises at the time of transfer. The FTA guidance confirms that Qualifying Group Relief applies to assets and liabilities held on capital account and recorded in the Transferor's Financial Statements.
The relief is subject to specific conditions, including clawback provisions. In particular, the no gain or loss treatment may be clawed back where, within two years of the transfer, the relevant asset or liability is transferred outside the Qualifying Group, or the Transferor and Transferee cease to be members of the same Qualifying Group.
Importantly, members of a Qualifying Group remain separate Taxable Persons. Being part of a Qualifying Group does not mean that the entities file Corporate Tax as one company.
2. What Is a Tax Group?
A Tax Group operates differently.
Eligible Resident juridical persons can apply to the Federal Tax Authority to form a Tax Group. Once the application is approved, the members of the Tax Group are treated as a single Taxable Person for UAE Corporate Tax purposes.
Broadly, the Parent Company must, directly or indirectly through one or more Subsidiaries:
- Own at least 95% of the share capital of each Subsidiary;
- Hold at least 95% of the voting rights in each Subsidiary; and
- Be entitled to at least 95% of the profits and net assets of each Subsidiary.
In addition:
- The Parent Company and Subsidiaries must be Resident juridical persons;
- Neither the Parent Company nor Subsidiary can be an Exempt Person;
- Neither can be a Qualifying Free Zone Person;
- They must have the same Financial Year; and
- They must prepare their Financial Statements using the same accounting standards.
The conditions for forming or continuing a Tax Group must be met continuously throughout the relevant Tax Period.
Unlike Qualifying Group Relief, forming a Tax Group requires an application to and approval by the Federal Tax Authority.
3. The Fundamental Difference
The easiest way to understand the distinction is to look at what each concept is intended to achieve.
Therefore, a company should not assume that satisfying the conditions for a Qualifying Group automatically creates a Tax Group.
4. What Happens Within a Tax Group?
Once a Tax Group has been approved, the Parent Company represents the Tax Group for Corporate Tax purposes, and the members are treated as a single Taxable Person.
For determining the Taxable Income of the Tax Group, the Parent Company aggregates the financial results, assets and liabilities of the Tax Group members, while transactions between members are generally eliminated, subject to the applicable Corporate Tax provisions.
For Tax Periods commencing on or after 1 January 2025, a Tax Group is required to prepare and maintain audited special-purpose Financial Statements in the form of Aggregated Financial Statements (AFS) in accordance with the applicable requirements. The current FTA framework confirms this requirement for all Tax Groups for Tax Periods commencing on or after that date.
This is fundamentally different from a Qualifying Group, where the entities continue to be treated as separate Taxable Persons.
5. Is Qualifying Group Relief the Same as Business Restructuring Relief?
No. These are separate reliefs under the UAE Corporate Tax Law.
Qualifying Group Relief, under Article 26, applies to qualifying transfers of assets or liabilities between members of a Qualifying Group and may allow the transfer to take place on a no gain or loss basis for Corporate Tax purposes.
Business Restructuring Relief, under Article 27, applies to qualifying transfers of a Business or an independent part of a Business as part of a restructuring.
An independent part of a Business is a part that may be operated independently and separately from the other Business of the Taxable Person. Individual assets or liabilities do not, by themselves, necessarily constitute an independent part of a Business.
Being a member of a Qualifying Group does not, by itself, mean that a transaction qualifies for Business Restructuring Relief.
However, in certain circumstances, the same transaction may potentially fall within both Qualifying Group Relief and Business Restructuring Relief where the respective conditions are satisfied. The FTA guidance expressly recognises that a transaction can be eligible for both reliefs and explains the interaction of their respective conditions and clawback provisions.
6. Which Group Treatment Is Appropriate?
There is no single answer for every corporate group.
A business may need to consider factors such as:
- The ownership structure between group companies;
- Whether the entities satisfy the relevant eligibility requirements;
- Whether assets or liabilities are being transferred between group companies;
- Whether the entities should continue as separate Taxable Persons;
- Whether forming a Tax Group would be appropriate for the overall group structure; and
- The ongoing Corporate Tax and compliance consequences.
The important point is that Qualifying Group and Tax Group should not be treated as interchangeable terms.
A 75% group relationship may potentially satisfy the ownership requirement for Qualifying Group Relief, while a Tax Group generally requires the substantially higher 95% share capital, voting rights, profits and net assets tests, together with the other prescribed conditions and FTA approval.
Conclusion
Under UAE Corporate Tax, belonging to the same corporate group does not automatically mean that companies are treated as one Taxable Person.
A Qualifying Group primarily provides a framework under which eligible intra-group transfers may benefit from Corporate Tax relief while the entities remain separate Taxable Persons.
A Tax Group, on the other hand, allows eligible Parent and Subsidiary companies to be treated as a single Taxable Person following approval by the FTA.
In simple terms:
Qualifying Group = potential relief for qualifying intra-group transfers.
Tax Group = eligible group companies treated as a single Taxable Person.
Understanding which concept applies should therefore be one of the first considerations when reviewing the Corporate Tax position of a group of companies in the UAE.
Disclaimer
This article is for general informational and educational purposes only and does not constitute tax, legal, accounting or professional advice. The availability of Qualifying Group Relief and eligibility to form a Tax Group depend on the specific facts and circumstances of each business and the applicable conditions under UAE Corporate Tax legislation. Businesses should refer to the UAE Corporate Tax Law, applicable Cabinet and Ministerial Decisions and Federal Tax Authority guidance, and obtain professional advice where appropriate.
UAE Corporate Tax, Corporate Tax UAE, Qualifying Group, Qualifying Group Relief, Tax Group, UAE Tax, Federal Tax Authority, FTA, Corporate Tax, Tax Compliance, Tax Planning, Business Restructuring Relief, UAE Business,
Leave a Reply