Page 7 - ICAI UAE TAX UPDATE_APRIL 2024

3.1 UAE TAX UPDATES

3.1.1 FTA Guide - Qualifying Group Relief

On April 3, 2024, the Federal Tax Authority (FTA) released • The guide also provides clarity on various aspects
a Corporate Tax Guide focusing on “Qualifying Group concerning Relief conditions. Specifically, it clarifies that
Relief” (Relief) to offer general insights into the Relief common ownership by a third party, who doesn’t need
provisions outlined in Article 26 of the Federal Decree- to be a Taxable Person, eliminating ambiguity regarding
Law No. 47 of 2022 on the Taxation of Corporations and the ownership condition.
Businesses (CT Law).
• However, it’s worth assessing whether a transferor and
While the guide is not legally binding, the guide aims to transferee can be considered members of a Qualifying
aid in comprehending the Relief provisions within the Group if there’s a common ownership of 75% by Exempt
CT Law. Persons and QFZP in both entities.

Following are the key takeaways that can be summarized • The guide elaborates on the tax implications in case
from the Corporate Tax Guide issued by the FTA: of transfer of assets and liabilities at net book value or
transfer of losses in the hands of the parties involved.
• “Qualifying Group Relief” provisions is to streamline
transfer of capital assets or liabilities between two • Explanation for treatment of exchange of assets and
Taxable Persons within a Qualifying Group, ensuring that liabilities is also provided in the guide.
no gain or loss is incurred for Corporate Tax purposes
(with the transfer being assessed at book value). This • A brief note on Business Restructuring Relief in relation
facilitates tax-neutral restructuring/transfers, thereby to Qualifying Group Relief is also included in the guide.
maintaining the overall ownership structure of assets or
liabilities within the group.

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