UAE: Guidance on tax groups, including transfer pricing rules applicable to groups

New guidance effective January 1, 2025

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January 15, 2025

The Ministry of Finance (MoF) issued Ministerial Decision No. 301 of 2024 on tax groups, which replaces Ministerial Decision No. 125 of 2023, for tax periods beginning on or after January 1, 2025.

Key amendments include:

  • The requirement for foreign companies that are considered UAE tax residents and are part of a UAE tax group to submit documentary evidence proving tax residency was eliminated.
  • The tax group is required to calculate taxable income attributable to one or more of its members on an arm’s length basis in the following scenarios and also report the same in the transfer pricing disclosure form:
    • A member of the tax group has unutilized pre-grouping tax losses and the tax group opts to use such losses to offset the taxable income of the tax group
    • A new member joins an existing tax group, and that existing tax group has unutilized tax losses (new addition)
    • A member of the tax group benefits from any corporate tax incentives
    • A member of the tax group has unutilized “pre-grouping carried forward net interest expenditure” and the tax group opts to use such expenditure in determining the taxable income of the tax group

The earlier requirement of having the transactions at arm’s length when one of the members is claiming a foreign tax credit has been removed. It is further provided that all unutilized pre-grouping tax losses and pre-grouping carried forward net interest expenditure must be utilized to the maximum possible extent against the taxable income of the tax group before being carried forward to subsequent tax periods.

Read a January 2025 report prepared by the KPMG member firm in the UAE

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