This Decision clarifies the detailed rules for forming and operating a Tax Group under Articles 40, 41, and 42 of the Corporate Tax Law. It details the ownership and residency requirements for Parent and Subsidiary companies. It explains the treatment of pre-grouping transactions and tax losses, the application deadlines for forming or joining a group, rules for business restructuring within a group, and notification requirements upon a subsidiary leaving or the group ceasing. Note this Decision is repealed by MD 301 of 2024 for tax periods commencing on or after 1 January 2025.
Tax Group for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
Ministerial Decision No. 125 of 2023
Issued 22 May 2023 – (Effective the day after publishing in the Official Gazette)
[GTL Notes]
The Minister of State for Financial Affairs has decided:
Having reviewed the Constitution,
Federal Law No. 1 of 1972 on the Competencies of Ministries and Powers of the Ministers, and its amendments,
Federal Decree-Law No. 13 of 2016 on the Establishment of the Federal Tax Authority, and its amendments,
Federal Decree-Law No. 28 of 2022 on Tax Procedures,
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses,
Article 1 - Definitions
Words and expressions in this Decision shall have the same meanings specified in the Federal Decree-Law No. 47 of 2022 referred to above (”Corporate Tax Law“), and the following words and expressions shall have the meanings assigned against each, unless the context otherwise requires:
Parent Company
:
A Resident Person that can make an application to the Authority to form a Tax Group with one or more Subsidiaries in accordance with Clause (1) of Article 40 of the Corporate Tax Law.
Subsidiary
:
A Resident Person in which the share capital or Membership or Partnership Capital, as applicable, is held by a Parent Company, in accordance with Clause (1) of Article 40 of the Corporate Tax Law.
Membership or Partnership Capital
:
The capital paid to a juridical person where the paid capital is divided into membership or partnership interests by a Person in order to be a member or partner and have the rights of membership or partnership in that juridical person.
Article 2 - Ownership Requirements
For a Tax Group to be formed or continue to exist, the conditions specified under Clause (1) of Article 40 of the Corporate Tax Law must be met continuously throughout the relevant Tax Period.
For the purposes of paragraph (b) of Clause (1) of Article 40 of the Corporate Tax Law, share capital shall mean the nominal issued and paid-up share capital, or Membership or Partnership Capital of each Subsidiary, as applicable.
Article 3 - Resident Person
Continue Reading
Access Full Content
You're viewing a preview of this document. Please log in to unlock the complete content, annotations, and research tools.