What is the relief for transfers within a qualifying group?

Article 26 – Transfers Within a Qualifying Group 1. No gain or loss needs to be taken into account in determining the Taxable Income in relation to the transfer of one or more assets or liabilities between two Taxable Persons that are members of the same Qualifying Group. 2. Two Taxable Persons shall be treated as members of the same Qualifying Group where all of the following conditions are met: a. The Taxable Persons are juridical persons that are Resident Persons, or NonResident Persons that have a Permanent Establishment in the State. b. Either Taxable Person has a direct or indirect ownership interest of at least 75% (seventy-five percent) in the other Taxable Person, or a third Person has a direct or indirect ownership interest of at least 75% (seventy-five percent) in each of the Taxable Persons. c. None of the Persons are an Exempt Person. d. None of the Persons are a Qualifying Free Zone Person. e. The Financial Year of each of the Taxable Persons ends on the same date. f. Both Taxable Persons prepare their financial statements using the same accounting standards. 3. For the purposes of this Decree-Law, where a Taxable Person applies Clause 1 of this Article: a. the asset or liability shall be treated as being transferred at its net book value at the time of transfer so that neither a gain nor a loss arises; and Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 33 b. the value of any consideration paid or received against the transfer of the asset or liability shall equal the net book value of the transferred asset or liability. 4. 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. There is a subsequent transfer of the asset or liability outside of the Qualifying Group. b. The Taxable Persons cease to be members of the same Qualifying Group. 5. Where Clause 4 of this Article applies, the transfer of the asset or liability shall be treated as having taken place at Market Value at the date of the transfer for the purposes of determining the Taxable Income of both Taxable Persons for the relevant Tax Period.

6. Clawback of the Qualifying Group Relief Qualifying Group Relief does not apply where, within two years from the date of transfer, any of the following occurs: • there is a subsequent transfer of the asset or liability outside of the Qualifying Group, 80 or • the Transferor or Transferee cease to be members of the same Qualifying Group.81 Where any of the above circumstances occur, any gain or loss on transfer of an asset or liability not previously taken into account shall be taken into account for the purposes of calculating the Taxable Income of the Transferor and included in the Tax Return of the Transferor (or the Transferee, where the Transferor has ceased to be a Taxable Person)82 for the Tax Period in which the above circumstances occur.83 These circumstances are discussed in more detail in Section 6.1. The consequences of the clawback are discussed in detail in Section 6.2. 6.1. Circumstances where relief is clawed back 6.1.1. Subsequent transfer of the asset or liability outside the Qualifying Group For the purposes of considering whether there has been a transfer outside of the Qualifying Group, the relevant Qualifying Group is the one in respect of which the Transferor and the Transferee are both members. The determination of whether the subsequent transfer is within the same Qualifying Group, must be considered at the time of the subsequent transfer. The Qualifying Group Relief will be clawed back if, within two years of the transfer, there is a subsequent transfer of the asset or liability outside of the Qualifying Group.84 The reason for subsequent transfer outside of the Qualifying Group is not relevant. For example, the clawback can be triggered even if the Transferee ceases to exist upon liquidation or on merger and the relevant asset or liability is transferred outside of the Qualifying Group as a distribution of liquidation proceeds or as consideration for a merger transaction. 80 Article 26(4)(a) of the Corporate Tax Law. 81 Article 26(4)(b) of the Corporate Tax Law. 82 Article 5(2) of Ministerial Decision No. 132 of 2023. 83 Article 5(1) of Ministerial Decision No. 132 of 2023. 84 Article 26(4)(a) of the Corporate Tax Law. Corporate Tax Guide | Qualifying Group Relief | CTGQGR1 37