Loss carry-forward · group transfers · return evidence
A year with a loss can affect future Corporate tax—but only if the loss qualifies, is recorded and survives the ownership and relief rules. SAIF helps UAE businesses calculate, track and use Tax Losses correctly.
The short answer
Generally yes. An eligible Tax Loss is negative Taxable Income calculated under the UAE Corporate tax Law—not simply a negative figure in the accounting profit-and-loss statement. A Taxable Person can carry its own Tax Losses forward without a fixed expiry period, subject to the conditions for using them later.
In a future profitable Tax Period, the ordinary loss offset is limited to 75% of Taxable Income before loss relief. The oldest eligible losses are applied first. The taxpayer must use its available carried-forward losses to the fullest permitted extent, then carry any remaining balance onward. The FTA explains this in its June 2026 Corporate tax Losses bulletin.
Three questions are often confused: using your own earlier loss, transferring a loss to a separate related company, and applying as a Corporate tax Group. They have different ownership tests and reporting consequences.
A practical calculation
The limit applies to the amount of eligible loss offset against that period’s Taxable Income. It is not the Corporate tax rate.
FTA example · AED
Assume the company has AED 1,000,000 of Taxable Income before loss relief and AED 3,000,000 of eligible losses carried forward. It uses AED 750,000 this period—75% of the current Taxable Income. The remaining AED 2,250,000 is carried forward, subject to continued eligibility.
The Taxable Income after loss relief is AED 250,000. That figure is not automatically the tax payable; apply the relevant Corporate tax rates and any other applicable rules separately.
| Taxable Income before losses | AED 1,000,000 |
|---|---|
| Maximum offset, 75% | AED 750,000 |
| Taxable Income after loss offset | AED 250,000 |
| Opening eligible loss balance | AED 3,000,000 |
| Loss balance carried forward | AED 2,250,000 |
The actual calculation starts with adjusted accounting income, not turnover or cash balance. A loss from before Corporate tax took effect, before the person became a Taxable Person, or from exempt or excluded activity cannot be treated as an eligible Tax Loss.
First calculate, then claim
Booking a financial loss is a prompt to do the tax computation, not the end of it.
Start with financial statements prepared under the applicable accounting standard. Adjust for exempt income, non-deductible expenses, related-party items and other Corporate tax rules to arrive at Taxable Income or a Tax Loss.
Do not carry forward losses incurred before UAE Corporate tax began on 1 June 2023, before a person became a Taxable Person, or from an asset or activity whose income is exempt or otherwise ignored under the law.
The loss belongs to a specific Taxable Person and Tax Period. Preserve the submitted return, calculation and ownership history so later utilisation can be reconciled and the continuity test evidenced.
A company with no profit may still have to register, file its Corporate tax return and maintain records. Filing a loss return matters because the claimed carry-forward must be supportable in later periods.
Separate companies, separate test
Potentially, but this is not the same as forming a Tax Group. It requires the Article 38 conditions, including 75% common ownership for the required period.
They must be UAE Resident juridical persons. A natural person or a non-resident permanent establishment does not qualify for this transfer route.
At least 75% direct or indirect ownership by one company in the other, or by the same third person in both, for the required period from loss creation to its use.
The companies need the same Financial Year end and the same accounting standards. “Related” does not replace these tests.
Neither company may be an Exempt Person or a Qualifying Free Zone Person, even if a QFZP has some income taxed at 9%.
Eligible transferors and recipients can choose the amount transferred, but the recipient’s own and received losses together cannot ordinarily offset more than 75% of its Taxable Income for that Tax Period. It must use its own carried-forward losses first. The transferor also uses its own eligible carried-forward losses against its own Taxable Income before transferring a remainder.
Keep mirror-image schedules showing the loss origin, amount transferred, amount received and amount each company carries forward. The FTA return guide includes Tax Loss schedules for these entries.
Continuity matters
For a company’s own carried-forward losses, the law generally tests whether the same persons continue to hold at least 50% of ownership from the loss period until utilisation. Where ownership changes by more than 50%, use of the old losses can still be available if the business continues the same or a similar Business or Business Activity, subject to the statutory conditions and exceptions.
Assess both direct and indirect ownership, the effective transaction dates, the activities before and after an acquisition, assets used and how the business developed. A name change by itself is not the analysis; nor is a statement that “the company still trades” enough evidence.
Where losses are being transferred between two companies, the separate 75% common-ownership test must be met from the start of the Tax Period in which the loss arose until the end of the Tax Period in which the recipient uses it. A planned sale can therefore change more than one Tax Loss conclusion.
Relief elections need a forecast
When an eligible Resident Person elects Small Business Relief for a Tax Period, it is treated as having no Taxable Income for that period. The FTA loss bulletin says no Tax Loss arises in an SBR period. Losses from earlier non-SBR periods cannot be used or transferred in a period when SBR applies, but may remain available for a later eligible period when SBR does not apply.
That creates a real planning question for a loss-making small business: compare the current-year simplicity of an election with the possible value of a future Tax Loss. Check the current eligibility period and revenue conditions before filing. Do not assume an election can simply be reversed once the return has been submitted.
A free-zone company’s QFZP status is a separate tax regime; the FTA says a QFZP cannot transfer a Tax Loss under the Article 38 route, even if some income is subject to 9%.
SAIF’s review scope
Our work can be a one-off review of a filed position or part of the annual Corporate tax return engagement. The scope is agreed before the work starts.
Start with accounting income, then make Corporate tax adjustments. A commercial loss, negative bank balance or VAT credit is not automatically a Corporate tax Loss.
Identify the legal person and Tax Period that incurred it. A related company’s loss is not your own carry-forward; a transfer has a separate eligibility test.
Check the current Taxable Income, the 75% ceiling, oldest-first ordering, any ownership or business change and Small Business Relief election.
Carry forward a year-by-year schedule to the return, showing opening balance, losses created, used, transferred and closing balance with supporting records.
A reconciled schedule traces opening losses, newly created losses, utilisation, transfers and closing losses by year and legal person. It should tie to the relevant tax returns and show why a loss is eligible, which restrictions were tested and who reviewed the position.
SAIF can connect the analysis with Corporate tax advisory, return preparation, Tax Group planning and compliance review. None of those services guarantees an FTA acceptance or a particular tax saving.
Common business questions
These answers reflect current official guidance; the actual result depends on the Taxable Person, its Tax Periods and any later law or FTA update.
Ask about your loss schedule →Generally yes, if it is an eligible Tax Loss computed under the Corporate tax Law and the continuity conditions are met. There is no fixed expiry period, but utilisation in each later Tax Period is generally capped at 75% of Taxable Income before loss relief.
No. Start with the accounting result and apply Corporate tax adjustments. For example, expenditure that is not deductible and exempt income can change the Tax Loss calculation. Retain the computation, not just the profit-and-loss statement.
No. The FTA says losses from before Corporate tax took effect on 1 June 2023, before a person became a Taxable Person, or from exempt or otherwise excluded activities do not qualify as Tax Losses for this relief.
Own and eligible transferred losses together generally cannot reduce more than 75% of the current Tax Period’s Taxable Income before loss relief. The remaining loss may be carried forward if the conditions continue to be met. This is a limit on loss offset, not a 75% Corporate tax rate.
The FTA’s June 2026 bulletin says an available carried-forward loss must be used to the fullest permitted extent before a remainder is carried forward. The oldest losses are used first. Review specific circumstances before altering a filed schedule.
Ordinary UAE Corporate tax loss relief is a carry-forward to later Tax Periods, not a general carry-back to prior periods. A refund or amendment question requires a separate review of the original return and tax procedures.
Yes, a Taxable Person required to file must submit its return even if it has no taxable profit or tax payable. The return and supporting computation help establish the loss carried forward.
Not automatically. If more than 50% ownership changes, use of earlier losses generally requires continuation of the same or a similar Business or Business Activity, subject to the statutory exceptions. Trace direct and indirect ownership and the actual operations.
Potentially. Separate UAE Resident juridical persons can transfer eligible Tax Losses if the 75% common-ownership, aligned Financial Year, common accounting-standard and tax-status tests are met for the required time. This is not automatic merely because they share directors.
No. The 75% ownership rule for transferring a Tax Loss between separate Taxable Persons is distinct from the Corporate tax Group test, which generally requires at least 95% of share capital, voting rights, profit entitlement and net-asset entitlement, plus other conditions and FTA approval.
No. The FTA’s 2026 bulletin says a Qualifying Free Zone Person cannot be a party to this Tax Loss transfer, even if it has income subject to the 9% Corporate tax rate. Assess its qualifying status and income separately.
The FTA says a Taxable Person first utilises its own carried-forward Tax Losses before using Tax Losses received from another Taxable Person. A transferor must also first use its own available losses against its own Taxable Income for the relevant period.
It can transfer to more than one eligible company, but every relationship and timing condition must be met. The total loss received and used by each recipient remains subject to its 75% Taxable Income ceiling. Maintain one reconciled schedule across transferor and recipients.
For a Tax Period in which Small Business Relief applies, the resident Taxable Person is treated as having no Taxable Income and cannot create a Tax Loss for that period. Losses from periods when relief did not apply cannot be used or transferred in the relief period, but may remain available for a later eligible period.
Not necessarily. The ordinary 0% taxable-income band, Small Business Relief and a Qualifying Free Zone Person position are different concepts. Calculate Taxable Income and the applicable relief or rate before concluding whether a Tax Loss arose.
Do not assume they transfer to owners or survive deregistration. The FTA bulletin identifies deregistration among circumstances in which losses may be forfeited. A closure, sale, restructuring or exit from a Tax Group needs a specific review of the law and final-period return.
Provide the Corporate tax TRN, Tax Periods and filed returns, financial statements, tax computations, loss schedules, ownership history, related-company structure, any Small Business Relief elections and details of material changes to the business. We can then agree the review and filing scope.
Checked 12 October 2026. Read the law and the latest FTA bulletin before relying on a prior-year treatment.
Protect the evidence
Tell us the Tax Periods, entities, approximate losses, filed returns and any ownership changes. We will define a proportionate review and the next filing step.
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