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Limitation on loss carry forward

Applies
FY2024 onwards
Reviewed
Rule
UAE-CT-LOSSLIM-2024.1
By

Can UAE tax losses carry forward after an ownership change?

Only with 50% continuous ownership, or if the same or a similar business continues after the change. Listed companies are exempt.

Per Federal Decree-Law No. 47 of 2022, Article 39, Limitation on Tax Losses Carried Forward

A Tax Loss can be carried forward and utilised only where the same Person or Persons continuously owned at least a published ownership interest in the Taxable Person from the beginning of the Tax Period in which the loss was incurred to the end of the Tax Period in which it is offset — or, following a change in ownership of more than that interest, where the Taxable Person continued to conduct the same or a similar Business or Business Activity. The limitation does not apply to a Taxable Person whose shares are listed on a Recognised Stock Exchange.

A gate, not an amount. It decides whether the loss that Article 37 would otherwise offset survives to be offset at all — so a failure here removes the loss rather than reducing the relief.

The gate, its alternative, and who is outside it

39(3) — outside the limitation entirely

A Taxable Person whose shares are listed on a Recognised Stock Exchange. Tested first: asking a listed company for its continuous ownership interest is asking for a figure nobody can produce, and reporting a failure on it would report a test the article does not apply.

39(1) — one of these two

  • (a) From the beginning of the Tax Period in which the loss is incurred to the end of the Tax Period in which it is offset, the same Person or Persons continuously owned at least the published ownership interest in the Taxable Person
  • (b) Following a change in ownership of more than that interest, the Taxable Person continued to conduct the same or a similar Business or Business Activity

39(2) — factors relevant to the same-or-similar test

The article names them as relevant. It does not weight them, and it does not say how many must hold — so the conclusion is a judgement the reader makes, and this rule records which factors supported it rather than deriving one from the tally.

  • (a) The Taxable Person uses some or all of the same assets as before the ownership change
  • (b) The Taxable Person has not made significant changes to the core identity or operations of its Business since the ownership change
  • (c) Where there have been changes, these result from the development or exploitation of assets, services, processes, products or methods that existed before the ownership change

Order of testing

  1. 1

    Inputs requiring your determination

    Any input a person must decide and has not decided stops the computation. A listed Person is asked nothing further, and the same-or-similar question is put only once continuity has broken.

  2. 2

    Shares listed on a Recognised Stock Exchange

    Article 39(3). Outside Clause 1 entirely, so neither condition is tested.

  3. 3

    Continuous ownership

    Article 39(1)(a). Where the same Person or Persons held at least the published interest continuously across both periods, the loss survives and the second limb is not reached.

  4. 4

    Same or similar Business following the ownership change

    Article 39(1)(b), reached only where continuity has broken. The conclusion is the reader's determination; the rule reports which Article 39(2) factors were recorded as supporting it.

  5. 5

    Neither condition of Article 39(1) met

    Continuity broken and the Business not continued: the loss cannot be carried forward and utilised.

Examples

Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.

Stable ownership throughout

A family-owned company whose shareholders have not changed since before the loss arose.

Computed

The loss may be carried forward and utilised as computed, subject to Article 37(2): the same Person or Persons continuously owned 100%, which is at least the published minimum of 50% for FY2026, so Article 39(1)(a) is satisfied and the same-or-similar Business condition is not reached.

Decided by the continuous ownership

Sold to new owners, same business carried on

A trading company sold in full to a new investor, which kept the premises, the staff and the trade. The person determines that the same Business continued, and records all three Article 39(2) factors.

Computed

The loss may be carried forward and utilised as computed, subject to Article 37(2): continuous ownership of 0% is below the published minimum of 50% for FY2026, but you have determined that the same or a similar Business or Business Activity continued following the change, which Article 39(1)(b) requires. Recorded as supporting it: Article 39(2)(a), the Person uses some or all of the same assets as before the ownership change; Article 39(2)(b), the Person has not made significant changes to the core identity or operations of its Business; Article 39(2)(c), the Person where there have been changes, they result from developing or exploiting assets, services, processes, products or methods that existed before the ownership change. Whether that determination holds is yours, not this rule's.

Decided by the same or similar business following the ownership change

Sold, and repurposed into something else

The same sale, but the buyer wound down the original trade and used the entity for an unrelated activity.

Computed

The loss may not be carried forward and utilised as computed: continuous ownership of 0% is below the published minimum of 50% for FY2026, and you have determined that the same or a similar Business or Business Activity did not continue following the change. Article 39(1) requires one or the other.

Decided by the neither condition of article 39(1) met

A listed company

A Taxable Person whose shares trade on a Recognised Stock Exchange, where the ownership base changes daily and Article 39(3) applies.

Computed

The Article 39(1) limitation does not apply as computed: Article 39(3) takes a Taxable Person whose shares are listed on a Recognised Stock Exchange outside it, so neither the ownership continuity condition nor the same-or-similar Business condition is tested. Whether the loss can be utilised in the period is decided by Article 37.

Decided by the shares listed on a recognised stock exchange

Try it

Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.

Not computed yet

1 input still need your determination:

  • Are the Taxable Person's shares listed on a Recognised Stock Exchange?

Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.

Thresholds

uae.loss_carry_forward_min_ownership
50% · reviewed 2026-09-28 · source

Threshold values are published separately from the rule and carried with a citation. Where none has been published for the period being computed, the rule reports that rather than applying a default.

Sources

Share this rule

Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader