Is a business restructuring tax-free under Corporate Tax?

Article 10 – Business Restructuring 1. For the purposes of Clause (3) of Article (41) of the Corporate Tax Law, the following shall apply: a. Where a member of the Tax Group transfers its entire Business to another member of the same Tax Group and the first mentioned member ceases to exist as a result of that transfer, this member shall be considered to remain a member of the Tax Group until the date it ceases to exist and the Tax Group shall continue to exist. b. Where the Tax Group is comprised of only two members, and one member transfers its entire Business to the other member and the first mentioned member ceases to exist as a result of that transfer, the Tax Group shall be considered to cease to exist on the date that the transfer is effective. 2. For the purposes of Article (40) of the Corporate Tax Law, where a member of a Tax Group transfers its entire Business or an independent part of its Business to a newly established juridical person, and this new juridical person joins the existing Tax Group under Clause (5) of Article (5) of this Decision from the date of its establishment, the transfer shall be considered as having taken place within the Tax Group. 3. No election for Business Restructuring Relief under Article (27) of the Corporate Tax Law shall be required for the situations described in Clauses (1) and (2) of this Article. Ministerial Decision No. 301 of 2024 – As published by the Ministry of Finance 7

Article 27 – Business Restructuring Relief 1. No gain or loss needs to be taken into account in determining Taxable Income in any of the following circumstances: a. A Taxable Person transfers its entire Business or an independent part of its Business to another Person who is a Taxable Person or will become a Taxable Person as a result of the transfer in exchange for shares or other ownership interests of the Taxable Person that is the transferee. b. One or more Taxable Persons transfer their entire Business to another Person who is a Taxable Person or will become a Taxable Person as a result of the transfer in exchange for shares or other ownership interests of the Taxable Person that is the transferee, and the Taxable Person or Taxable Persons that are the transferor cease to exist as a result of the transfer. 2. Clause 1 of this Article applies where all of the following conditions are met: a. The transfer is undertaken in accordance with, and meets all the conditions imposed by, the applicable legislation of the State. b. The Taxable Persons are Resident Persons, or Non-Resident Persons that have a Permanent Establishment in the State. c. None of the Persons are an Exempt Person. d. None of the Persons are a Qualifying Free Zone Person. Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 34 e. The Financial Year of each of the Taxable Persons ends on the same date. f. The Taxable Persons prepare their financial statements using the same accounting standards. g. The transfer under Clause 1 of this Article is undertaken for valid commercial or other non-fiscal reasons which reflect economic reality. 3. For the purposes of this Decree-Law, where a Taxable Person applies Clause 1 of this Article, all of the following must be observed: a. The assets and liabilities transferred shall be treated as being transferred at their net book value at the time of transfer so that neither a gain nor a loss arises. b. The value of the shares or ownership interests received under paragraph (a) of Clause 1 of this Article shall not exceed the net book value of the assets transferred and liabilities assumed, less the value of any other form of consideration received. c. The value of the shares or ownership interests received under paragraph (b) of Clause 1 of this Article shall not exceed the book value of the shares or ownership interests surrendered, less the value of any other form of consideration received. d. Any unutilised Tax Losses incurred by the Taxable Person that is the transferor prior to the Tax Period in which the transfer under Clause 1 of this Article completes may become carried forward Tax Losses of the Taxable Person that is the transferee, subject to conditions to be prescribed by the Minister. 4. The provisions of this Article shall apply, as the context requires, where, in the case of a transfer under Clause 1 of this Article: a. shares or ownership interests are received by a Person other than the Taxable Person that is the transferor; b. shares or ownership interests are issued or granted by a Person other than the Taxable Person that is the transferee; or c. no shares or ownership interests are received by the Taxable Person who is a partner in an Unincorporated Partnership that is treated as a Taxable Person under Clause 9 of Article 16 of this Decree-Law. 5. Where a Taxable Person transfers an independent part of its Business, paragraph (d) of Clause 3 of this Article shall apply only to those unutilised Tax Losses that Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 35 can be reasonably attributed to the independent part of the Business being transferred. 6. The provision of Clause 1 of this Article shall not apply where, within (2) two years from the date of the transfer, any of the following occurs: a. The shares or other ownership interests in the Taxable Person that is the transferor or the transferee are sold, transferred or otherwise disposed of, in whole or part, to a Person that is not a member of the Qualifying Group to which the relevant Taxable Persons belong. b. There is a subsequent transfer or disposal of the Business or the independent part of the Businesses transferred under Clause 1 of this Article. 7. Where Clause 6 of this Article applies, the transfer of the Business or the independent part of the Business shall be treated as having taken place at Market Value at the date of the transfer. Chapter Nine – Deductions

Article 10 – Business Restructuring 1. For the purposes of Clause (3) of Article (41) of the Corporate Tax Law the following shall apply: a. Where a member of the Tax Group transfers its entire Business to another member of the same Tax Group and the first mentioned member ceases to exist as a result of that transfer, this member shall be deemed to remain a member of the Tax Group until the date it ceases to exist and the Tax Group shall continue to exist. b. Where the Tax Group is comprised of only two members, and one member Ministerial Decision No. 125 of 2023 – As published by Ministry of Finance 6 transfers its entire Business to the other member and the first mentioned member ceases to exist as a result of that transfer, the Tax Group shall be considered to cease to exist on the date that the transfer is effective. 2. For the purposes of Article (40) of the Corporate Tax Law, where a member of a Tax Group transfers its entire Business or an independent part of its Business to a newly established juridical person, and this new juridical person joins the existing Tax Group under Clause (5) of Article (5) of this Decision from the date of its establishment, the transfer shall be considered as having taken place within the Tax Group. 3. No election for Business Restructuring Relief under Article (27) of the Corporate Tax Law shall be required for the situations described in Clauses (1) and (2) of this Article.

3. Business Restructuring Relief: general aspects The Corporate Tax Law eliminates the Corporate Tax impact of certain transactions undertaken as part of the restructuring or reorganisation of a Business. 1 Ordinarily, Business restructuring transactions such as mergers or demergers could result in a taxable gain or loss, even where the ultimate ownership of the Business or Taxable Person does not change, or the original owners of the Business or Taxable Person retain an ownership in the restructured Business. In order not to hamper restructuring transactions undertaken for valid commercial or other non-fiscal reasons, the Business Restructuring Relief in Article 27 of the Corporate Tax Law allows certain types of restructuring transactions to take place in a tax neutral manner. Business Restructuring Relief is available only if the relevant conditions are met (see Section 4) and the Transferor has elected for the relief to apply (see Section 7.1). Further, the relief would be clawed back if, within two years, the Transferee ultimately disposes of the transferred Business, or the ownership of the Transferor or Transferee changes (see Section 6). 3.1. Overview of transactions covered in scope of Business Restructuring Relief Business Restructuring Relief applies to two categories of transactions. The first category is where there is a transfer of an entire Business or an independent part of the Business from one Taxable Person to another. This is covered by Article 27(1)(a) of the Corporate Tax Law. The second category is where there is a transfer of an entire Business from one or more Taxable Persons to another, and the Transferor then ceases to exist. This is covered by Article 27(1)(b) of the Corporate Tax Law. An overview of the two categories is given in the table below. As each category has specific conditions attached, they are discussed separately in this guide. Topic Transferor Section 4 Transferee Section 4) Restructuring transactions in scope of Article 27(1)(a) (Refer A Taxable Person Restructuring transactions in scope of Article 27(1)(b) One or more Taxable Persons who cease to exist as a result of the transfer. (Refer Another Taxable Person or a Person who will become a Taxable Person as a result of the transfer 1 Article 27 of the Corporate Tax Law. Corporate Tax Guide | Business Restructuring Relief | CTGBRR1 11