Loss Transfer & Group Relief
Group Relief (Articles 40-42)
A qualifying group can surrender losses between members.
Conditions for a Qualifying Group
- Both entities are resident juridical persons
- One entity owns at least 75% of the other
- Both have the same financial year
- Both use the same accounting standards
How Group Relief Works
- The surrendering entity transfers its current year loss
- The claimant entity offsets the loss against its taxable income
- The loss is used in the same tax period
Example
Company A (loss of AED 200,000)
Company B (profit of AED 500,000)
A surrenders loss to B.
B taxable income: AED 500,000 - AED 200,000 = AED 300,000
Tax Group
A tax group is treated as a single taxable person. Losses within the group are automatically offset without a formal surrender.
Conditions for Tax Group
- 75% common ownership
- Same financial year
- Same accounting standards
- Approval from the FTA