Under the corporate tax the tax group that is formed by two or more taxable person that for the fulfilment for certain condition for treat them as taxable person for the corporate tax purpose. It is most advisable for the person that seek for the service in the tax consultants to seamlessly. The tax group and then to stay compliant for the tax standards and the regulation as well.
Conditions for forming a tax group in UAE
In article 40 of UAE corporate tax law that stipulates the conditions related with formation of tax group, reference that is made to resident person for the parent company that is applies for the group formation. In the conditions that for the formation of tax group though.
The resident person that shall be completely legal persons. The parent company that directly or indirectly should have 95% of the capital of subsidiary company or more subsidiary companies though. The parent company shall directly that have the right to profits and the net assets for the subsidiary company by 95% or through or more subsidiary companies though.
The parent company or the subsidiary company is a qualified existing person in free zone. In the fiscal year that should be the same for parent company and the subsidiary company though.
The accounting standards that is used in preparing the financial statements in the same for the parent company and the subsidiary company as well. Exception that to tax groups for the government entity.
The law stipulates that is not possible for the formation of tax group in case where the parent company or subsidiary company is person exempt from the corporate tax. The statute exclude government agencies for the provision according to corporate tax law for formation of tax group though.
Obligation of the parent company
The parent company that should comply with obligation that related with tax registration, tax return submission and tax payment.
The parent company and then subsidiaries or affiliates that shall with jointly and severally liable for corporate tax payable by tax group for the different tax period in which the member will be present of group.
The aforementioned joint and the liability that may limited for one or more members for the tax group, that is based on the approval for the authority.
Some basic conditions that is for termination of existing tax group
This must be on request for cancel a tax group that is submitted by parent company and then approved by relevant authority though. In event the parent company that no longer fulfills that the conditions stipulated in law regarding the formation of tax group.
Cases related to replacement of parent company in the tax group
This case should be affected with the request by parent company for the authority for replacing it with another company without any stoppage of tax group in any case.
In event the new parent company that fulfils the conditions stipulated in law regarding for the formation of tax group.
In the company event the previous parent company has ceased to the new parent company and subsidiary company that is having legal successor in everything that is present in rights and duties.
The authority that is certain cases and its discretion, dissolve the tax group or the change in parent company. According to information and the data that is has provided in the authority that notifies the group for such process.
Tax losses in case the tax group ends
All the tax that losses in the remaining with the parent company in the event that it will continues as taxable person.
In event the parent company that is no longer subject to tax though, the tax losses that may not be deducted from the other subsidiary company income that is achieved after the end of tax group.
How to calculate the taxable income for tax group?
Calculation for the taxable income shall that be conducted in consolidated in the financial statement prepared for the parent company that is present in the list that covers in the subsidiary company that is member for group for the relevant tax period. All transaction that takes place in between parent company and the other subsidiary company and the transaction in place between groups.
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