FTA Revised Corporate Tax Guide on Tax Groups (CTGTGR1): Key Changes

The UAE Federal Tax Authority (FTA) has released the revised Corporate Tax Guide on Tax Groups (CTGTGR1), introducing important clarifications that affect existing and prospective UAE Tax Groups. One of the key changes relates to the preparation of aggregated financial statements, where the FTA has clarified the applicable framework and audit requirements. The updated guide also confirms that unincorporated partnerships cannot directly join a Tax Group, although entities treated as taxable persons in their own right may qualify if the ownership conditions are met.

The revised guidance provides greater certainty on the treatment of investment properties by allowing Tax Groups to elect tax depreciation, subject to prescribed timelines and conditions. It also clarifies the utilization of pre-grouping tax losses and net interest expenditure (NIE), including the application of the 75% limitation at the Tax Group level. In addition, the FTA has provided detailed guidance on the calculation and treatment of liquidation losses arising from participations.

Further updates address the interaction of Tax Groups with the Foreign Permanent Establishment (PE) and Participation Exemption regimes, outlining the relevant restrictions and qualifying conditions. Significantly, the guide confirms that foreign tax credits are now calculated at the Tax Group level rather than separately for individual group members. Businesses that currently operate under a Tax Group structure, or are considering forming one, should review these changes carefully to ensure compliance and identify potential tax planning opportunities under the UAE Corporate Tax regime.

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