UAE Corporate Tax Groups (2026): Conditions, Benefits & the 95% Rule

Under Article 40 of Federal Decree-Law No. 47 of 2022, all of the following must be met:

Juridical persons. Every member must be a company or similar entity — natural persons cannot be members.

UAE residents. All members must be resident persons for corporate tax purposes.

95% ownership. The parent must hold at least 95% of the share capital of each subsidiary, at least 95% of the voting rights, and be entitled to at least 95% of profits and net assets. All three tests, not just ownership.

No exempt persons. Exempt persons cannot be members.

No Qualifying Free Zone Persons. A QFZP claiming the 0% free zone rate cannot be part of a tax group.

Same financial year. All members must share the same financial year end.

Same accounting standards. All members must prepare accounts on the same basis.

The application to form the group is made to the FTA and takes effect from the tax period specified in the approval.

One return instead of many. The parent files a single corporate tax return covering the whole group, which is the main administrative benefit for organisations running several entities.

Losses used across the group. A loss-making subsidiary's position can offset a profitable one within the group in the same period, rather than sitting unused on a separate balance sheet.

Intra-group transactions eliminated. Transactions between members are removed on aggregation, which also reduces the transfer pricing requirements → documentation burden between those entities.

One AED 375,000 threshold for the entire group. This is the calculation that decides most cases. Five standalone companies each get their own AED 375,000 at 0% — AED 1,875,000 of tax-free income across the structure. As a single tax group, that becomes one AED 375,000. If the entities are individually small and profitable, grouping can increase the total tax bill substantially.

Joint and several liability. Members are jointly and severally liable for the corporate tax payable by the group. One member's liability becomes everyone's problem.

Mandatory audited statements. Since Ministerial Decision No. 84 of 2025, every tax group must prepare and maintain audited special purpose aggregated financial statements regardless of revenue — where previously only groups above AED 50 million consolidated revenue were caught. FTA Decision No. 7 of 2025 requires these to be audited under a special purpose framework in line with International Standards on Auditing and submitted within 9 months of the tax period end /tax/guides/audited-financial-statements-uae-corporate-tax →.

Alignment work. Bringing every member onto the same financial year and accounting basis is real effort, and it has to happen before grouping, not after.

Grouping tends to make sense where the structure has several entities with meaningfully different results — losses in one, profits in another — or where administrative simplification across many dormant or small entities outweighs the threshold cost.

Grouping tends to cost money where each entity is individually profitable but modest, because each one is giving up its own AED 375,000 band. It is also unavailable, by definition, where a free zone member wants to keep its 0% qualifying income treatment /tax/guides/free-zone-corporate-tax-qualifying-income →.

Model both positions before applying. The audited aggregated statements requirement has also changed the arithmetic since 2025 — for small groups, the audit cost alone can outweigh the administrative saving.

A Qualifying Free Zone Person cannot be a tax group member while retaining QFZP status. A group containing a free zone company therefore forces a choice: the 0% qualifying income rate, or group membership. For most free zone entities with genuine qualifying income, keeping QFZP status is the stronger position.