We have a parent and two subsidiaries — is it worth forming one Tax Group?

Article 40 of the Corporate Tax Law allows two or more companies meeting certain conditions to form a Tax Group and be treated as a single taxable person. The key conditions: the parent must hold at least 95% of the capital, voting rights, and profit entitlement in each subsidiary (directly or indirectly), all members must be UAE tax residents (not a foreign person), they must share the same financial year and use the same accounting standards, and none of them can be an exempt person or a Qualifying Free Zone Person benefiting from the 0% rate.

The main advantage is that the group files a single tax return instead of separate ones, and losses at one subsidiary can offset profits at another member within the same group — which simplifies tax administration considerably. On the other hand, the group is treated as one single taxable person, and the parent company remains jointly and severally liable for every member's tax obligations, meaning a tax risk at just one subsidiary carries consequences for the whole group.

RASEEKH works with group owners to assess whether forming a Tax Group is actually beneficial given their ownership structure and the profit/loss mix across companies, prepares the registration application and supporting documentation, and is clear upfront about the joint liability that comes with the decision.