With the introduction of the UAE Corporate Tax regime effective from June 1, 2023, one of the key considerations for business groups operating within the country is the treatment of intra-group transactions. Many companies in the UAE operate through multiple subsidiaries, branches, or holding companies, making internal dealings a common practice. To avoid unnecessary tax burdens and promote operational efficiency, the UAE Corporate Tax Law provides specific relief mechanisms for qualifying intra-group transactions. This blog explores in detail the scope, conditions, and practical implications of intra-group relief, along with the compliance requirements involved.
1. What Are Intra-group Transactions?
Intra-group transactions refer to the transfer of assets, liabilities, or business operations between entities that belong to the same corporate group. Common examples include:
- Transfer of machinery or intellectual property from one subsidiary to another
- Provision of management or administrative services within group companies
- Internal financing or intercompany loans
- Restructuring transactions like mergers, spin-offs, or share transfers
Without specific relief provisions, these transactions could trigger tax liabilities even though no actual economic gain is realized at the group level.
2. Intra-group Relief under UAE Corporate Tax
The UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022) offers intra-group relief for qualifying transactions. This allows companies to transfer assets or liabilities within a qualifying group without incurring an immediate tax liability, effectively deferring taxation until the asset is transferred outside the group.
This mechanism is essential to prevent double taxation and to encourage group restructuring and resource optimization within business families and conglomerates.
3. Conditions to Qualify for Intra-group Relief
To benefit from intra-group relief, the following conditions must generally be satisfied:
- Both transferor and transferee are UAE-resident juridical persons
- Both entities are members of the same group, meaning one owns at least 75% of the other, or both are at least 75% owned by a common parent
- The asset or liability must be transferred at net book value (no gain or loss recognized for tax purposes)
- Both entities must remain members of the group for at least two years following the transaction
Failure to meet these conditions may result in a clawback of the tax relief granted.
4. Key Exclusions and Limitations
Intra-group relief is not available in all situations. Some key exclusions include:
- Transfers involving non-resident entities
- Transactions involving immovable property located outside the UAE
- Transactions made at fair market value instead of net book value
- Entities engaged in exempt activities or operating within a different tax group
Moreover, companies must be cautious not to structure transactions solely for the purpose of tax avoidance, as such actions may fall afoul of the UAE’s General Anti-Avoidance Rules (GAAR).
5. Role of PEAK Business Consultancy Services
Structuring intra-group transactions while complying with corporate tax laws can be complex and requires detailed analysis. PEAK Business Consultancy Services specializes in helping UAE businesses plan, document, and execute intra-group transfers while ensuring compliance and tax optimization.
Whether you are restructuring, transferring assets, or consolidating operations, PEAK BCS offers expert guidance and full support throughout the process.
Learn more at https://www.peakbcs.com/.
6. Documentation Requirements
To successfully claim intra-group relief, businesses must maintain comprehensive documentation, including:
- Legal agreements documenting the transfer
- Ownership structure charts showing group relationships
- Financial records demonstrating net book value basis
- Board resolutions approving the transaction
- Tax computations showing deferred tax impact
This documentation must be retained for a minimum of seven years and be available for inspection by the Federal Tax Authority (FTA).
7. Interaction with Transfer Pricing Rules
Even though intra-group relief defers tax on certain transfers, businesses are still required to ensure that their intercompany transactions comply with UAE’s Transfer Pricing (TP) regulations. The pricing of services, goods, or financing arrangements within the group must follow the arm’s length principle, and appropriate documentation (Master File and Local File) must be maintained.
This ensures transparency and mitigates the risk of future audits and adjustments by the FTA.
8. Intra-group Restructuring and Mergers
In cases of corporate restructuring, including mergers and spin-offs, intra-group relief can be invaluable. It allows seamless consolidation or reorganization of group companies without triggering immediate tax obligations. However, special conditions and notification procedures must be followed for such restructuring to be considered eligible.
Advanced planning and legal vetting are critical to ensure these transactions align with UAE corporate and tax laws.
9. When Relief May Be Withdrawn
Intra-group relief is conditional, and the FTA has the authority to reverse the benefit if:
- The entities involved cease to be part of the same group within two years of the transaction
- The transfer was not executed at net book value
- There was a subsequent transfer of the asset outside the group without proper recognition of gain
In such cases, the deferred tax becomes payable, along with potential interest and penalties.
10. PEAK BCS: Your Intra-group Compliance Partner
PEAK Business Consultancy Services offers comprehensive support for all intra-group tax planning, documentation, and filing requirements. Their services include:
- Assessing eligibility for intra-group relief
- Structuring tax-efficient internal transactions
- Preparing and maintaining documentation for FTA audits
- Advising on interaction with Transfer Pricing and Economic Substance Regulations
With PEAK BCS by your side, you can navigate the complexities of UAE Corporate Tax law with confidence. Schedule a consultation at https://www.peakbcs.com/.
11. Conclusion
Intra-group relief under the UAE Corporate Tax regime provides an essential tool for business groups to manage their operations more efficiently without incurring unnecessary tax burdens. However, the relief is not automatic—it requires strict adherence to qualifying conditions, proper documentation, and long-term planning.
Professional guidance from firms like PEAK Business Consultancy Services ensures that you make the most of available reliefs while staying fully compliant with tax regulations.
Reach out to PEAK BCS today to secure your intra-group tax strategy and ensure that your business is ready for the demands of UAE Corporate Tax compliance. Visit https://www.peakbcs.com/.
