Ministerial Decision No. 301 of 2024: Tax Group

Key highlights

• MD 301 applies to Tax Periods commencing on or after 1 January 2025. This decision also repeals MD 125 of 2023, but with MD 125 continuing to apply to Tax Periods that commenced before 1 January 2025. 

• Article 1 ‘Definitions’ is updated to include the term "Financial Statements" which is explicitly defined as a complete set of statements including income, comprehensive income, balance sheet, changes in equity, and cash flow statement. 

• Article 3 ‘Resident Person’ has been updated to remove references to documentation requirements for a foreign juridical person that is considered a Resident Person or UAE juridical persons with place of effective management abroad. 

• Article 5 ‘Date of Formation of or Joining a Tax Group’ emphasizes the need for applications to be made before the end of the relevant Tax Period. 

• Article 7 ‘Relief for Pre-Grouping Tax Losses’ has been slightly updated to emphasize the need to use pre-Grouping Tax Losses to the fullest extent possible before carrying forward any remainder. 

• Article 8 ‘Arm’s Length Principle and Transfer Pricing Documentation Requirements and the Calculation of the Taxable Income of a Tax Group’ has been updated to include the following provisions: 

  • The Tax Group must calculate the taxable income attributable to its members if a new member joins and the group has unused tax losses. 

  • Note that the requirement to calculate the taxable income attributable to Tax Group members “if a member has earned income for which the Tax Group can claim a Foreign Tax Credit” has been removed.   

  • Pre-grouping tax losses must fully offset the Tax Group's taxable income for the period before being carried forward to future periods.

  • Pre-grouping carried forward Net Interest Expenditure (“NIE”) must fully offset the Tax Group's taxable income before carrying forward to future periods.

• Carried forward NIE is forfeited if:

  • The Tax Group fails to calculate taxable income for the relevant member, and

  • Less NIE is utilized than could have been applied to determine taxable income.