Guide to Registration and Deregistration of Corporate Tax in UAE

This article provides useful information about corporation tax registration and deregistration. Read on to simplify your company tax compliance journey.

Registration–(Article 51)

• All Taxable persons
• Exempt entities, if involve in other business activities which are not exempt
• Unincorporated partnership (if elected)
• Family Foundations (if involve in other business activities)

Tax Groups–(Conditions: Article 40)

• Only Resident Legal entities;
• The Parent Company owns at least 95% (ninety-five percent) of the share capital of the Subsidiary,
• The Parent Company holds at least 95% of Voting rights
• Parent entity must hold 95% interest (directly or indirectly) in Subsidiary
• Should not be qualifying Zone Company
• Same Financial Year
• Prepare Financial using same Accounting Standards (i.e. IFRS or GAAP)

If a Government Entity have one or more subsidiaries where hold 95% or more ownership interest, it can form a Tax Group, subject to further conditions

Tax Groups–(Article 40)

Parent Company will be responsible to

• File the tax returns
• Settle the tax liabilities
• Comply with the UAE CT law
• Communicate with tax Authorities;
• Can make application for the alternative parent company without dissolving the tax group if:
  a) The new Parent Company meets the tax group conditions as parent company;
  b) The former Parent Company ceases to exist and the new Parent Company or a Subsidiary is its universal legal successor.
• Date of formation will be the beginning of the tax period as mentioned on the tax group application.

De-Registration–(Article 52)

Cessation of Business or Business Activity by

• Dissolution;
• Liquidation;
• Any other form and manner and within the timeline prescribed by the Authority
• Deregistration will be effective after payment of all tax liabilities
• Member of a Tax Group shall be treated as leaving that Tax Group from the beginning of the Tax Period specified in the application submitted to the Authority, or from the beginning of any other Tax Period determined by the Authority

FAQ

How to calculate the Taxable Income of a Tax Group?

To determine the Taxable Income of a Tax Group, the parent company must prepare consolidated financial accounts covering each subsidiary that is a member of the Tax Group for the relevant Tax Period. Transactions between the parent company and each group member and transactions between the group members would be eliminated for the purposes of calculating the Taxable Income of the Tax Group.

What are Tax Groups, and when can they be formed?

To form a Tax Group, both the parent company and its subsidiaries must be resident juridical persons, have the same Financial Year and prepare their financial statements using the same accounting standards. Additionally, to form a Tax Group, the parent company must:

• own at least 95% of the share capital of the subsidiary;
• hold at least 95% of the voting rights in the subsidiary; and
• is entitled to at least 95% of the subsidiary’s profits and net assets. The ownership, rights and entitlement can be held either directly or indirectly through subsidiaries, but a Tax Group cannot include an Exempt Person or Qualifying Free Zone Person.

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