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Qualifying group relief

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

How does UAE qualifying group relief work?

Assets moved within a 75% Qualifying Group pass at net book value with no gain or loss, unless they or a party leave within 2 years.

Per Federal Decree-Law No. 47 of 2022, Article 26, Transfers Within a Qualifying Group

No gain or loss need be taken into account in determining Taxable Income on the transfer of assets or liabilities between two Taxable Persons that are members of the same Qualifying Group. The asset or liability is treated as transferred at its net book value and the consideration as equal to that value. The relief is withdrawn if, within a published period from the date of the transfer, the asset or liability is transferred outside the Qualifying Group or the Taxable Persons cease to be members of it — in which case the transfer is treated as having taken place at Market Value at its date.

Head (c) of Article 20(2). Where it applies, the transfer is tax-neutral and the transferee inherits the net book value. Where the withdrawing event occurs inside the published period, the original transfer is retrospectively at Market Value for both Persons.

The relief, its conditions, and the clawback

26(2) — every one of these must be met

  • (a) The Taxable Persons are juridical persons that are Resident Persons, or Non-Resident Persons that have a Permanent Establishment in the State
  • (b) Either Person has a direct or indirect ownership interest of at least the published minimum in the other, or a third Person has that interest in each of them
  • (c) Neither Person is an Exempt Person
  • (d) Neither Person is a Qualifying Free Zone Person
  • (e) The Financial Year of each Person ends on the same date
  • (f) Both Persons prepare their financial statements using the same accounting standards

26(3) — what applying the relief does

  • (a) The asset or liability is treated as transferred at its net book value at the time of transfer, so neither a gain nor a loss arises
  • (b) The value of any consideration paid or received is treated as equal to that net book value

26(4)–(5) — the relief is provisional

This is the part worth planning around, and the reason a bare 'relief available' answer is not enough.

  • (a) A subsequent transfer of the asset or liability outside the Qualifying Group, within the published period, withdraws the relief
  • (b) So does the Taxable Persons ceasing to be members of the same Qualifying Group within that period
  • Where either occurs, the original transfer is treated as having taken place at Market Value at its date, for the purposes of determining the Taxable Income of both Persons for the relevant Tax Period

Ministerial Decision No. 132 of 2023

  • Article 3: the relief is an election by the transferor, made in the Tax Return for the period of the transfer; it is irrevocable without the Authority's agreement, and once made it applies to all the transferor's transfers of capital-account assets and liabilities that meet Article 26
  • Article 4: an exchange of assets is two transfers, each relieved if either party has elected
  • Article 5: on a clawback the gain or loss is the transferor's, in the Tax Period of the event — the transferee's where the transferor has ceased to be a Taxable Person; a partial onward transfer claws back proportionately; the transferee reverses its book-value adjustments
  • Article 2: ownership counts equity-classified interests of every class, measured on paid-up capital

Order of testing

  1. 1

    Inputs requiring your determination

    Any input a person must decide and has not decided stops the computation. Where a withdrawing event has occurred, the Market Value is asked for only then — it is a figure nobody needs while the relief holds.

  2. 2

    Each condition of Article 26(2), in the article's order

    The first condition not met is reported and no further condition is tested. All six are required, so the useful answer is which one failed.

  3. 3

    Withdrawal of the relief within the published period

    Article 26(4). Where the asset leaves the group or the Persons cease to be members within the period, Article 26(5) puts the original transfer at Market Value and the difference from net book value is taken into account for both Persons.

  4. 4

    Every condition of Article 26(2)

    Where all six are met and no withdrawing event has occurred, no gain or loss is taken into account — and the result still names the period, because the relief remains provisional.

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.

An intra-group transfer at net book value

Two wholly owned UAE subsidiaries with the same year end and standards transfer a machine with a net book value of AED 2,400,000 between them. Nothing has since left the group.

Computed

Every condition of Article 26(2) is met as computed, so no gain or loss need be taken into account on the transfer if the transferor elects for the relief in its Tax Return for the period of the transfer. Ministerial Decision No. 132 of 2023 Article 3 makes that election irrevocable, and once made it applies to ALL of the transferor's transfers of capital-account assets and liabilities that meet Article 26 — it cannot be chosen transfer by transfer. Article 26(3) treats the asset or liability as transferred at its net book value of AED 2,400,000 and the consideration as equal to that value. The relief remains provisional — Article 26(4) withdraws it if, within 2 years of the transfer, the asset or liability is transferred outside the Qualifying Group or the Taxable Persons cease to be members of it, in which case Article 26(5) treats the transfer as having been at Market Value. Based on the figures you supplied.

Workings

Net book value at the time of transferArticle 26(3)(a)
AED 2,400,000
Deemed considerationArticle 26(3)(b) — equal to the net book value of what was transferred
AED 2,400,000
Gain or loss to be taken into accountArticle 26(1) — none, the transfer being at net book value
AED 0

Decided by the every condition of article 26(2)

The asset sold out of the group inside the period

The same machine is sold to a third party eighteen months later. Its Market Value at the original transfer date was AED 3,100,000.

Computed

The relief does not apply as computed: Article 26(4)(a) — a subsequent transfer of the asset or liability outside the Qualifying Group, within the published period of 2 years from the date of transfer. Article 26(5) treats the transfer as having taken place at Market Value of AED 3,100,000 at its date, against a net book value of AED 2,400,000 — a difference of AED 700,000, based on the figures you supplied. Ministerial Decision No. 132 of 2023 Article 5 places that gain or loss in the TRANSFEROR's Taxable Income for the Tax Period in which the event occurs — not the period of the transfer — or in the transferee's where the transferor has ceased to be a Taxable Person; the transferee takes the asset or liability at Market Value and reverses any depreciation or other adjustment made on the book-value basis. A subsequent transfer of only part of it claws back proportionately.

Workings

Net book value at the time of transferArticle 26(3)(a) — as supplied
AED 2,400,000
Market Value at the date of transferArticle 26(5) — as supplied
AED 3,100,000
Gain or loss to be taken into accountArticle 26(5); MD 132 of 2023 Article 5 — the transferor's, in the period of the event
AED 700,000

Decided by the withdrawal of the relief within the published period

The transferee sold out of the group inside the period

The two companies cease to be members of the same Qualifying Group within the period, with the asset's Market Value at the transfer date being below its book value.

Computed

The relief does not apply as computed: Article 26(4)(b) — the Taxable Persons ceased to be members of the same Qualifying Group, within the published period of 2 years from the date of transfer. Article 26(5) treats the transfer as having taken place at Market Value of AED 1,900,000 at its date, against a net book value of AED 2,400,000 — a difference of (AED 500,000), based on the figures you supplied. Ministerial Decision No. 132 of 2023 Article 5 places that gain or loss in the TRANSFEROR's Taxable Income for the Tax Period in which the event occurs — not the period of the transfer — or in the transferee's where the transferor has ceased to be a Taxable Person; the transferee takes the asset or liability at Market Value and reverses any depreciation or other adjustment made on the book-value basis. A subsequent transfer of only part of it claws back proportionately.

Workings

Net book value at the time of transferArticle 26(3)(a) — as supplied
AED 2,400,000
Market Value at the date of transferArticle 26(5) — as supplied
AED 1,900,000
Gain or loss to be taken into accountArticle 26(5); MD 132 of 2023 Article 5 — the transferor's, in the period of the event
(AED 500,000)

Decided by the withdrawal of the relief within the published period

Ownership below the published minimum

The same transfer between companies with a common ownership interest of only 60%.

Computed

The relief is not available as computed: Article 26(2)(b) requires that the ownership interest meets the published minimum, and that condition is not met on the facts you supplied. Article 26(2) requires all six of its conditions, so no further condition is reported, and the transfer falls to be dealt with under the provisions that would otherwise apply. The interest held is 60% against a published minimum of 75% for FY2026.

Decided by the condition 26(2)(b)

One of them is a Qualifying Free Zone Person

A wholly owned pair where the transferee is a Qualifying Free Zone Person, which condition (d) excludes outright.

Computed

The relief is not available as computed: Article 26(2)(d) requires that neither Person is a Qualifying Free Zone Person, and that condition is not met on the facts you supplied. Article 26(2) requires all six of its conditions, so no further condition is reported, and the transfer falls to be dealt with under the provisions that would otherwise apply.

Decided by the condition 26(2)(d)

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

8 inputs still need your determination:

  • Both Taxable Persons are juridical persons that are Resident Persons, or Non-Resident Persons with a Permanent Establishment in the State?
  • What direct or indirect ownership interest does one Taxable Person hold in the other, or a third Person hold in each of them?
  • Neither Person is an Exempt Person?
  • Neither Person is a Qualifying Free Zone Person?
  • The Financial Year of each Person ends on the same date?
  • Both Persons prepare their financial statements using the same accounting standards?
  • What is the net book value of the asset or liability at the time of transfer?
  • Within the published period from the date of transfer, has the asset or liability been transferred outside the Qualifying Group, or have the Taxable Persons ceased to be members of it?

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.qualifying_group_min_ownership
75% · reviewed 2026-09-28 · source
uae.qualifying_group_clawback_years
count 2 · 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

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Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader