Definition

Tax Loss Carry Forward allows UAE businesses to use accumulated tax losses from one financial year to offset taxable income in future years, reducing their Corporate Tax liability. This provision helps companies stabilize cash flow and encourages long‑term investment.

Key Points

• Permitted under Federal Decree‑Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
• Tax losses can be carried forward indefinitely, provided continuity of ownership and business activity is maintained.
• The offset is limited to 75% of taxable income in a given period.
• Losses cannot be carried forward if they arose before 1 June 2023 (the effective date of Corporate Tax), or from exempt income.
• Groups under tax consolidation can share tax losses between eligible entities.

Practical Example

A UAE manufacturing company incurs AED 500,000 in tax losses in 2024. In 2025, it earns AED 800,000 in taxable profit. The company can offset AED 600,000 (75%) of its profit with prior losses, reducing its taxable income to AED 200,000.

Why It Matters

Tax Loss Carry Forward helps businesses recover from early‑stage losses, plan long‑term tax strategies, and optimize corporate tax efficiency under the UAE tax regime.