UAE Corporate Tax loss relief lets a business carry forward Tax Losses indefinitely and offset them against future taxable income, capped at 75% of the taxable income of each period, under Federal Decree-Law No. 47 of 2022. Continuity-of-ownership or same-business conditions apply, and losses can be transferred within a qualifying group. Abdelhamid & Co (FTA TAN 30003958) advises businesses across Dubai, Sharjah and Ajman.
How UAE Corporate Tax Loss Relief Works
A Tax Loss arises when deductible expenditure exceeds taxable income in a Tax Period. The FTA Corporate Tax Guide allows that loss to be carried forward and set against the taxable income of later periods, reducing future tax. The offset in any one period cannot exceed 75% of that period's taxable income. Our Corporate Tax services track and apply losses for UAE businesses.
Tax Loss Relief — Key Rules
| Rule | Detail |
|---|---|
| Offset cap | 75% of taxable income per period |
| Carry-forward period | Indefinite, subject to conditions |
| Ownership continuity | 50%+ same ownership maintained |
| Same/similar business test | Applies if ownership changes by more than 50% |
| Group transfer | 95% common ownership, same financial year |
| Pre-CT / exempt losses | Not available |
The 75% Limitation Explained
The 75% cap means a business cannot wipe out its entire tax bill with brought-forward losses in a single year. For example, a Dubai company with AED 1,000,000 taxable income and AED 1,200,000 of carried-forward losses may offset only AED 750,000 (75%), leaving AED 250,000 taxable and AED 450,000 of losses to carry forward.
Conditions for Carrying Losses Forward
Losses can be carried forward only if there is continuity in the business. Either the same owners must continue to hold at least 50% of the company from the start of the loss period to the end of the period the loss is used, or — if ownership changes by more than 50% — the company must continue to carry on the same or a similar business. These conditions prevent loss-trading.
Transferring Tax Losses Within a Group
A Tax Loss can be transferred from one UAE company to another in the same group where there is at least 95% common ownership, both are resident, both share the same financial year, and neither is exempt or a Qualifying Free Zone Person benefiting from the 0% rate. We structure these transfers during a Corporate Tax compliance review.
Worked example: a Sharjah parent owns 100% of two subsidiaries. One has an unused AED 300,000 loss; the other has taxable income. The loss can be transferred to offset the profitable company's income, subject to the 75% cap.
Why Choose Abdelhamid & Co
As a Ministry of Economy licensed firm (LC0106-01) and FTA Tax Agent (TAAN 20033908), we maintain accurate loss schedules and apply relief correctly. We work bilingually across Dubai, Sharjah, Ajman and the UAE with fixed, transparent fees.
How much loss can I offset under UAE Corporate Tax?
Carried-forward Tax Losses can offset up to 75% of the taxable income of each period. Any remaining taxable income above that is taxed at 9%, and unused losses continue to carry forward, subject to the continuity conditions.
How long can UAE Corporate Tax losses be carried forward?
Tax Losses can be carried forward indefinitely, provided the ownership-continuity or same-business conditions are met. There is no fixed expiry, but the 75% annual offset cap continues to apply in each period.
Can Tax Losses be transferred between UAE companies?
Yes. Losses can be transferred within a group where there is at least 95% common ownership, both companies are UAE resident, share the same financial year, and neither is exempt or a Qualifying Free Zone Person on the 0% rate.
What conditions apply to carrying losses forward?
Either the same owners must keep at least 50% ownership from the loss period to the period of use, or, where ownership changes by more than 50%, the company must continue the same or a similar business. These rules prevent loss-trading.
Can pre-Corporate Tax losses be used in the UAE?
No. Losses incurred before Corporate Tax applied, or during a period when the income was exempt, cannot be carried forward. Only Tax Losses arising in periods subject to Corporate Tax qualify for relief.
Related Services
- Corporate Tax Return Filing — loss schedules at filing
- Small Business Relief — relief for revenue under AED 3 million
- Corporate Tax Registration — group registration support
See the Federal Tax Authority for official rules, or our Insights page for more.
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