Page 9 - ICAI UAE TAX UPDATE_APRIL 2024

ownership interest and be entitled to its economic Business Relief are ineligible to claim this Relief.
benefits according to the applicable Accounting
Standards. The ownership interest (as any equity or 5. Financial Year and Accounting Standard:
similar interest like a partnership interest that carries
rights to the profits and liquidation proceeds of the All entities within the Qualifying Group must have their
Taxable Person) is determined based on paid-up capital financial year end on the same date, ensuring uniformity
and is aggregated if held in various types of instruments. in the group’s financial timeline. They must follow the
The third party (common shareholder) holding 75% same Accounting Standards.
common shareholding in two taxable persons does not
need to be a taxable person themselves. A Taxable Person can request the FTA to alter its financial
year’s end date to synchronize with other Qualifying
The percentage of ownership must be calculated as Group members, provided:
(X/Y) *100 where,
X = Paid-up capital of ownership interests held by, or the -Such person has not yet filed the Tax Return for the Tax
equity interest contributions made by the Transferor or Period it is applying to change.
Transferee or a third Person, as applicable
-the Tax Period is not extended to last more than 18
Y = Total paid-up capital of the Taxable Person or the months or not reduced to last less than 6 months.
total equity interest contributions made to the Taxable
Person, as applicable -where the Taxable Person filed an application to shorten
a Tax Period, the application is not in respect of a prior or
Direct and indirect ownership interests held by members current Tax Period
of the same Tax Group are determined by consolidating -the application is made before the lapse of 6 months
the ownership interests of the Parent Company and from the end of the original Tax Period
each Subsidiary within the Tax Group. The ownership
condition is fulfilled if the required indirect holding is
through an Exempt Person or a QFZP.

4. Exempt Person and Qualifying Free Zone Person
(‘QFZP’):

Relief is applicable to Taxable Persons, with Exempt
Persons and QFZP being excluded. However, Free
Zone entities that do not meet these criteria can still be
included in a Qualifying Group. Where a member of a
Qualifying Group becomes an Exempt Person or a QFZP
in a subsequent Tax Period, that Person will cease to be a
member of the Qualifying Group from the date on which
the condition is no longer met.

Furthermore, Resident Persons who choose Small

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