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UAE Corporate Tax Fundamentals/Tax Losses & Carry-Forward
8 min

Tax Loss Carry-Forward Rules

How tax losses are carried forward indefinitely and offset against future income (75% cap).

Tax Losses & Carry-Forward (Article 37)

Indefinite Carry-Forward

Tax losses can be carried forward indefinitely — there is no time limit. This is a significant advantage compared to many other tax regimes.

75% Cap

In any given tax period, the total amount of loss utilised is capped at 75% of taxable income for that period. The remaining 25% is taxable.

Example

Taxable income before losses: AED 1,000,000
Brought-forward losses: AED 800,000

Loss utilisation (75% cap): AED 750,000
Taxable income after losses: AED 250,000
Carried-forward losses remaining: AED 50,000

Conditions

  1. Losses must have been properly computed and declared
  2. Ownership continuity (more than 50% direct/indirect ownership maintained)
  3. No change in the nature of business

Transfer of Losses on Acquisition

If a business is acquired, losses may transfer if the same or similar business continues for at least 2 years.

Key takeaways

  • Losses carry forward indefinitely
  • 75% cap on loss utilisation per period
  • Ownership continuity is required
Knowledge check

1. What percentage of taxable income can be offset by carried-forward losses?

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This lesson is general educational content, not individualized tax or legal advice. Always consult a qualified professional for your specific situation.