Article 41 – Case Scenarios Date Of Formation And Cessation Of A Tax Group

A Inc. was a member of a Tax group, wherein, P Inc. a holding company was representing the tax group. There are some unutilized losses of the tax group amounting to 5 lakhs AED which includes 25k AED of A Inc, which is unutilized till now. At present, A Inc wants to leave the tax group, suggest the treatment of unutilized losses as mentioned.

Solution:-  As per the provisions of Article 42, the unutilized losses as pertaining to the A Inc, shall not remain the part of the Tax group and no longer be able to set off the profits of the tax group. As, at the time, the A Inc, will leave the group, the portion of unutilized losses of A Inc, pertaining to the period of Pre-grouping, i.e., 25k AED shall not remain the pert of the tax group and cannot be set off against the profits of tax group, after the leaving of Tax group bu A Inc.

A Inc. is a newly made subsidiary of Y Inc.. Y Inc. was a parent company and covered under a Tax Group. In present case, A Inc., wants to become the member of the tax group, what procedure, it would have to follow:

Solution:-      In the present case, Article 41 shall be applicable and accordingly, the application has to be made to the Authority to become the member. The Authority shall decide the beginning of the date, from when, it would be considered as the part of Tax Group either it can be the date as specified in the application or at the discretion of the Authority.

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