Qualifying Group Relief
Unlock tax-saving opportunities with Qualifying Group Relief. Simplify your business finances with expert guidance.
1. Overview of Qualifying Group Relief
Article 26 of the Corporate Tax Law permits tax-neutral transfers of assets or liabilities between Taxable Persons in the same Qualifying Group, subject to satisfaction of certain conditions. The relief is only available where both the Transferor and Transferee are members of the same Qualifying Group and the Transferor has elected for relief.
- Further it is most important to define Assets or Liabilities for Qualifying Group Relief.
- Assets held on capital account are typically long-term assets for future economic benefit, such as property, equipment, or intangible assets. If a long-term liability becomes a current liability (e.g., due within one year), it no longer qualifies as held on capital account.
- Liabilities on capital account are long-term liabilities that do not give rise to deductible expenditure.

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Want to learn more about Qualifying Group Relief? Download the complete guide now!
1.1 What is a transfer?
A transfer involves conveying the legal and economic ownership of an asset or liability from one person to another. Examples include Sale or exchange, relinquishment of rights, sale-and-leaseback, exercising options to buy or sell or transfers under universal title etc.
- Qualifying Group Relief does not apply when assets or liabilities are transferred due to liquidation, dissolution, or merger of an entity.
1.1.1 Consideration for transfer
1.2 Assets and liabilities eligible for Qualifying Group Relief
Qualifying Group Relief applies only to the transfer of assets or liabilities held on capital account and recorded on the Transferor’s balance sheet.
- "Assets held on capital account" are non-trade assets, eligible for depreciation, or classified under Accounting Standards as property, plant and equipment, investment property, intangible assets, or other non-current assets. Liabilities held on capital account" are non-deductible liabilities under the Corporate Tax Law or those classified as non-current liabilities under Accounting Standards. Assets or liabilities not held on capital account (e.g., inventory from regular business operations) do not qualify for the relief. The general Corporate Tax rules, including arm’s length standards, apply in such cases.

2. Conditions to be a member of a Qualifying Group
Transferor and Transferee are treated as members of the same Qualifying Group where required conditions are met. Before moving ahead, it is most important to define who is the Transferor and Transferee for Qualifying Group.
- Further it is most important to define Assets or Liabilities for Qualifying Group Relief.
Definition of Transferor and Transferee
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Transferor
A Taxable Person that transfers one or more assets or liabilities to another Taxable Person under the Corporate Tax Law.
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Transferee
A Taxable Person to which one or more assets or liabilities of the Transferor is transferred under the Corporate Tax Law.
Want to learn more about Qualifying Group Relief?
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Want to learn more about Qualifying Group Relief? Download the complete guide now!
2.2 Ownership condition
- Transferor holds at least 75% direct or indirect ownership in the Transferee.
- Transferee holds at least 75% direct or indirect ownership in the Transferor.
- A third Person holds at least 75% direct or indirect ownership in both Transferor and Transferee.
- Ownership Interest includes equity or similar interests (partnership interest) with rights to profits and liquidation proceeds.
- Ownership Interest must be classified as equity under the applicable Accounting Standards of the holder.
- Types of ownership interests include Ordinary shares, Preferred Shares, Redeemable Shares, Membership and Partner Interests and Islamic Financial Instruments. Debt instruments do not typically qualify unless treated as equity under accounting standards.
2.1.1 Holder of Ownership Interest
- The Taxable Person must control the ownership interest.
- The Taxable Person must have the right to the economic benefits of the ownership interest.
- A third Person holds at least 75% direct or indirect ownership in both Transferor and Transferee.
- Has power over the investee.
- Has rights to variable returns from the investee.
- Can influence returns via its power.
- Economic ownership requires at least 75% entitlement to benefits. Ownership held as an agent, nominee, or fiduciary does not count.
Want to learn more about Qualifying Group Relief?
Download the complete guide now!
Want to learn more about Qualifying Group Relief? Download the complete guide now!
Meet the Expert

Mubashir Islam, ACCA
Senior Manager • Tax and Financial Advisory • DeFi Regulatory Reporting
- mubashir@sscoglobal.com
- +971 50 262 0170
- mubashir@sscoglobal.com
- +971 50 262 0170

Sikandar Ali, ACA
Tax Compliance Manager • Regulatory Advisor- sikandar.ali@sscoglobal.com
- +971 50 262 0170
- sikandar.ali@sscoglobal.com
- +971 50 262 0170