My business existed before Corporate Tax started — what actually carries forward into the new regime?

Businesses that existed before 1 June 2023 benefited from the "transitional rules" set out in Ministerial Decision No. 120 of 2023, designed so a company is not taxed on gains that had already built up during the period before Corporate Tax applied at all.

For immovable property, intangible assets, and financial assets or liabilities that a company already held before the start of its first tax period, there is an irrevocable election allowing it to exclude from tax any gain that accrued before the regime began — either by using the market value at the start of the first tax period as the new cost basis, or through a pro-rata calculation based on how long the asset was held before versus after the regime started (capped at 10 years for intangible assets, barring specific exceptional circumstances).

Losses incurred in financial years before the company came within the scope of Corporate Tax at all — that is, before its first tax period — are a different matter: they do not carry forward as a tax loss under the law. Carry-forward only applies to losses incurred in tax periods after the company becomes subject to the law, and only where 75% ownership continuity and the same business activity are maintained.

Choosing one election over another can genuinely change the tax base for years to come, which is why reviewing records and valuing assets carefully before the first return is filed is a real decision, not a procedural footnote. At RASEEKH, we help established businesses review their position and settle on the election that fits their circumstances before they commit to it.