Page 8 - ICAI UAE TAX UPDATE_APRIL 2024

• The guide also sheds light on Qualifying group 2. Transferor and transferee are Taxable Persons:
compliance requirements.
The juridical person must qualify as a Taxable Person
• Transitional relief in respect of gains recognized on under the CT Law, which encompasses:
assets owned prior to the Taxable Person’s first Tax
Period could be available on the final taxable disposal of • Resident Persons: Entities incorporated, established,
the relevant capital asset, subject to certain conditions or recognized under UAE legislation, or entities
which is also further discussed in the guide. incorporated outside the UAE but effectively managed
and controlled within the UAE.
Who qualifies for the relief as Qualifying Group?
• Non-Resident Persons: Entities with a Permanent
Following are the conditions applicable for availing the Establishment in the UAE through which they conduct
‘Qualifying Group Relief’: business. Qualifying Group Relief can also apply if a
Person becomes a Taxable Person for the first time
1. Transferor and transferee are Juridical Persons: because of the transfer, because the assets or liabilities
transferred result in a Permanent Establishment in the
A legal entity with distinct legal personality, such as UAE for the Transferee.
private or public joint stock companies, limited liability
companies, and incorporated partnerships, is eligible Exceptions: Non-Resident Persons deriving UAE
to be a member of a Qualifying Group. Natural persons sourced income or having nexus in the UAE cannot be
or unincorporated partnerships lacking separate legal members of a Qualifying Group, despite being classified
personality are ineligible for the relief. Nevertheless, as Taxable Persons under the CT Law. Qualifying Group
relief may be accessible to a legal entity that acts as a Relief is not available for transfers between a Permanent
partner in an Unincorporated Partnership or is owned Establishment in the UAE and its head office outside the
by one. UAE.

3.Direct, indirect or common ownership of at least 75%:

The Transferor and Transferee shall be treated as
members of the same Qualifying Group if:

- the Transferor holds a direct or indirect ownership
interest of at least 75% in the Transferee, or

- the Transferee holds a direct or indirect ownership
interest of at least 75% in the Transferor, or

- a third Person holds a direct or indirect ownership
interest of at least 75% in the Transferor as well as the
Transferee.
A Taxable Person must exercise control over the

8 www.icaidubai.org

UA E TAX UP DATE NEWSLET TER ISSUE 01 - April 2024