Tax Sharing Agreement Template for the United Arab Emirates

A Tax Sharing Agreement is a crucial legal document that allocates tax responsibilities, liabilities, and benefits among related entities within a corporate group operating in the United Arab Emirates. With the implementation of Corporate Tax through Federal Decree-Law No. 47 of 2022, these agreements have become essential for ensuring compliance while optimising tax efficiency across group structures.

When do you need this document?

You need a Tax Sharing Agreement when your business operates through multiple entities in the UAE, whether across different emirates, free zones, or between mainland and free zone structures. This document becomes particularly important if you have parent companies, subsidiaries, joint ventures, or special purpose vehicles that may have interconnected tax obligations. Companies with complex group structures, including those with entities in Dubai International Financial Centre, Abu Dhabi Global Market, or other UAE free zones, require these agreements to clarify how Corporate Tax and VAT liabilities will be shared. The agreement is also essential when establishing new group entities or restructuring existing corporate arrangements to ensure tax compliance from the outset.

Key legal considerations

Your Tax Sharing Agreement must clearly define each party's responsibilities for tax calculations, payments, and compliance obligations under UAE law. The document should establish mechanisms for allocating Corporate Tax liabilities based on each entity's contribution to group profits and specify how VAT obligations will be handled where applicable. You need to include provisions for indemnification between group members, ensuring that one entity can seek compensation if it pays tax obligations on behalf of another. The agreement should address transfer pricing considerations, particularly important given the UAE's alignment with OECD guidelines, and establish clear procedures for handling tax disputes or audits by the Federal Tax Authority. Documentation requirements, record-keeping obligations, and reporting procedures must be clearly outlined to ensure ongoing compliance with UAE tax administration requirements.

Legal requirements in United Arab Emirates

Under Federal Decree-Law No. 47 of 2022, your Tax Sharing Agreement must comply with UAE Corporate Tax Law provisions, particularly those relating to group taxation and consolidation. The document must align with Cabinet Decision No. 85 of 2022, which provides detailed implementation regulations for corporate tax compliance. You must ensure the agreement complies with Federal Decree-Law No. 8 of 2017 regarding VAT obligations where group entities are subject to VAT registration and reporting requirements. The agreement should incorporate provisions from the UAE Commercial Transactions Law (Federal Law No. 32 of 2021) regarding contract validity and enforceability. Tax Procedures Law (Federal Decree-Law No. 7 of 2017) requirements for tax administration and dispute resolution should also be reflected in your agreement terms.