Answer:
Only UAE resident juridical persons can form or join a Tax Group. Foreign entities cannot be included in a Tax Group unless they are effectively managed and controlled in the UAE and therefore qualify as UAE residents under the Corporate Tax Law (Article 40 of Federal Decree-Law No. 47 of 2022)
Conditions to Form a Tax Group:
To create a Tax Group, the following key conditions shall be satisfied continuously during the relevant Tax Period:
- All members are juridical persons;
- All members are UAE resident persons (not tax residents of another country under a Double Taxation Agreement);
- The Parent Company owns at least 95% of the share capital, voting rights, and entitlement to profits and net assets of each Subsidiary;
- None of the members is an Exempt Person or a Qualifying Free Zone Person;
- All members use the same financial year and same accounting standards.
Example:
Company A owns 100% of Company C, which in turn owns 80% of Company B.
Even though Company A owns only 20% of Company B directly, it indirectly owns 80% th...