Comparing a Tax Group with a Qualifying Group

The choice between forming a tax group and operating as a qualifying group changes how companies register, report, transfer assets and use losses. The comparison below preserves the substance of PB First’s original briefing in a format designed for reference.

Issue	Tax group	Qualifying group
Tax registration	A single tax registration saves registration time and expense.	Each company is registered separately.
Tax return and payments	One return merges the assets, liabilities, income and expenditure of every member, and one tax amount is paid.	Each company prepares and files its own return and pays its own liability, resulting in multiple returns and payments.
Thresholds	The group has one AED 375,000 zero-rate threshold. Interest relief is limited to 30% of EBITDA or AED 12 million, whichever is higher. This can result in more tax than separate filing.	Each member has its own AED 375,000 zero-rate threshold and interest-relief limit of 30% of EBITDA or AED 12 million, whichever is higher.
Intra-group transfers of assets and liabilities	Members can transfer both capital and trading assets and liabilities within the tax group on a tax-neutral basis.	Tax-neutral treatment requires at least 75% common ownership and applies only to capital assets and liabilities. Unrealised gains on transfers of trading assets may therefore become taxable.
Current-year tax losses	A current-year loss of the parent or a member is fully deducted against the group’s available taxable profits.	A loss may be transferred to a company with at least 75% common ownership, but the deduction cannot exceed 75% of the receiving company’s taxable income before the loss.
Prior-year tax losses	A prior-year loss may be deducted against group profits up to 75% of available taxable income, subject to the same-shareholder test across the loss year, profit year and intervening years.	A prior-year loss may be transferred to another qualifying-group company up to 75% of its available taxable income, subject to the same-shareholder test.
Foreign tax credits	Consolidation can make a foreign tax credit less likely to be wasted where the company receiving foreign income would otherwise be loss-making. The reverse can also arise, and removing a company from a tax group is not simple.	A credit may be wasted if the company receiving the foreign income is loss-making, because other qualifying-group members cannot transfer profits to that company.