Introduction

Group structures are common across the UAE business landscape, and the Corporate Tax Law provides opportunities for tax relief within qualifying groups. In addition, UAE businesses earning income abroad can claim foreign tax credits to avoid double taxation.

This blog explains how group relief, tax grouping, and foreign tax credits work under UAE law in 2025.

What is Group Relief?

Group relief allows one group entity to transfer tax losses to another, reducing overall tax liability.

Key conditions:

• Companies must be UAE-resident juridical persons
• One company must own at least 75% of the other (directly or indirectly)
• Financial years must be aligned
• Both entities must be subject to UAE Corporate Tax

Example:

• Company A has a taxable profit of AED 1 million
• Company B has a loss of AED 400,000
• Company A can reduce its taxable income to AED 600,000 and save AED 36,000 (9% of 400,000)

What is a Tax Group?

A Tax Group is treated as a single taxable person.

Requirements to form a Tax Group:

• 95% ownership by parent company
• Same financial year and accounting standards
• All entities must be registered with the FTA

Benefits:

• Single tax return
• Offsetting profits and losses
• Reduced administrative costs

Tax grouping is optional and requires FTA approval.

Foreign Tax Credit

If your UAE company pays tax in another country, you may claim a foreign tax credit to avoid double taxation.

Conditions:

• Income must also be taxable in UAE
• Credit is limited to UAE Corporate Tax payable on that income
• Documentation (foreign tax returns, proof of payment) must be retained

Final Thoughts

Group relief and tax credits are powerful tools to reduce your UAE Corporate Tax liability. Ensure eligibility, proper documentation, and clear group structures to fully benefit.

Need Help Forming a Tax Group or Claiming Relief?

At Think Biz Management Consultancies, we assist with:

• Loss transfer planning
• Tax group applications
• Cross-border tax credit claims

Get in touch today to legally reduce your UAE tax burden.

 

Contact us today for a free consultation.

Contact number: ‪+971 50 983 0334‬

Email ID: info@alphabets.ae