Corporate Tax Restructuring: Protecting a $2.1B Group's UAE Tax Position

Client Profile

A UAE-based family-owned conglomerate operating across real estate, retail, and financial services with a group structure that had not been reviewed since 2015.

Business Challenge

The introduction of UAE corporate tax in June 2023 exposed significant vulnerabilities in the group's existing structure. Multiple entities held passive income that would be taxable at 9%, intercompany loans lacked arm's-length documentation, and two subsidiaries risked losing their free zone qualifying status due to non-qualifying income exceeding the de minimis threshold.

Strategic Solution

ILS Consultancy conducted a full group tax diagnostic across 23 entities, identifying AED 340 million in potentially taxable income. We designed a restructuring plan that separated qualifying and non-qualifying activities into distinct entities, established a documented transfer pricing framework for all intercompany transactions, and secured a formal ruling from the FTA confirming QFZP status for three core entities.

Outcome

The restructuring reduced the group's estimated annual corporate tax liability by 84% versus the pre-restructuring baseline. All three target entities retained their QFZP 0% rate. The documentation framework was accepted without challenge by the group's external auditors (Big Four).

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