17 July 2026 · How To
How to Elect the Relief
Business restructuring relief under Article 27 is not automatic — the transferor and transferee must actively elect it, and the election is made and documented in connection with the corporate-tax return for the tax period in which the transfer takes place. Once elected, the business (or independent part) transfers at its tax written-down value, so no taxable gain or deductible loss arises on the transfer itself; the gain is deferred into the transferee's tax base rather than forgiven. Keep full documentation — the transfer agreement, valuations, and the commercial-reasons memo — because an unelected or undocumented transfer loses the treatment even if it otherwise qualified. If the business restructuring straddles two tax periods, the earlier period is usually the one that matters for the election, so confirm the completion date carefully before filing.
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The election
You must choose the relief — it does not apply by default just because a transfer meets the Article 27 conditions. The election lives on the return itself, so the restructuring and the corporate-tax filing have to be coordinated: a transfer completed in one tax period but never elected on that period's return risks losing the treatment entirely, with the transfer then taxed as a normal disposal.
- Elect Article 27 relief for the transfer.
- Document it with the corporate-tax return.
- Transfer at tax written-down value.
- No gain or loss arises on transfer.
- The election must be made for the period the transfer actually completes in.
- Missing the election window makes the transfer taxable at market value.
Records to keep
Evidence protects the relief long after the transfer completes, because the FTA can review the election well after the return is filed. A support file built at the time of the transaction, rather than reconstructed later, is far more persuasive if the relief is ever questioned.
- Transfer agreement and valuations.
- Commercial-reasons memo.
- Continuity of ownership evidence.
- Post-transfer monitoring for the clawback.
- Board minutes approving the restructuring, dated before completion.
- A record of the tax written-down value used, and how it was calculated.
Electing the relief on a real transfer
Take a business with a tax written-down value of AED 3.2 million and a market value of AED 7.5 million. Without an Article 27 election, the transfer is treated as a disposal at AED 7.5 million, crystallising a taxable gain of AED 4.3 million — up to AED 387,000 of corporate tax at 9%. With a valid election made and documented on the return for the period of the transfer, the business moves at its AED 3.2 million book value instead, no gain crystallises, and the transferee inherits the AED 3.2 million tax base going forward. The same arithmetic applies whether the underlying gain is larger or smaller — the tax saved by electing is simply the deferred gain multiplied by the 9% corporate tax rate, for now.
- The election determines whether the transfer is taxed at book value or market value.
- The transferee inherits the tax written-down value, not a stepped-up value.
- A deferred gain resurfaces later if the business is sold outside a relieved transaction.
- Model both the relieved and unrelieved outcomes before electing — relief is not automatically the cheaper route.
Compliance timeline for the election
The election is only as good as the filing it sits on. Coordinate the restructuring date with whoever prepares the corporate-tax return, confirm which tax period the transfer falls into, and make sure the supporting file — valuations, agreements and the commercial-reasons memo — is finalised before that return is submitted, not afterwards.
- Confirm the tax period the transfer falls into as soon as the deal date is set.
- Brief your corporate-tax filing team on the transfer before the return is prepared.
- Finalise valuations and the commercial-reasons memo before filing, not after.
- Retain the support file with your tax records for at least the statutory retention period.
- Reconcile the transfer completion date against your tax period end before assuming which return the election belongs on.
Related guides
Frequently Asked Questions
For making the Article 27 election correctly and keeping it standing up to review.
Is the relief automatic?
No. You must actively elect Article 27 relief and document it in connection with the corporate-tax return for the period in which the transfer takes place — a qualifying transfer that is never elected is simply taxed as a normal disposal.
At what value is the business transferred?
At its tax written-down value, so no gain or loss arises on the transfer itself. The transferee inherits that same tax base going forward, rather than a market-value step-up, which is why the gain is deferred rather than eliminated.
What records should I keep?
The transfer agreement, valuations, the commercial-reasons memo, board minutes approving the restructuring, and evidence of ownership continuity — ideally all dated before the transfer completes. Retain the file alongside your other tax records.
Which tax period does the election apply to?
The period in which the transfer actually takes place. If the deal completes in one period but is not elected on that period's return, the relief is at risk — the timing of the restructuring and the timing of the filing need to be coordinated.
Does electing relief always save tax?
Not necessarily. The relief defers the gain rather than cancelling it — the transferee inherits the lower tax written-down value, so a later unrelieved sale brings the gain back into charge. If the transferee expects to sell soon, a taxed transfer now with a stepped-up base can sometimes work out cheaper; model both routes before electing.
Can the election be made after the return has been filed?
This is a significant risk area — the election is meant to be made and documented in connection with the return for the period of the transfer, so leaving it until after filing can jeopardise the relief. Coordinate the transfer date and the filing well in advance rather than trying to elect retroactively.
What if the transferor and transferee disagree on the tax written-down value used?
Both parties should agree the tax written-down value, and the supporting calculation, before the transfer completes — a mismatch between the transferor's disposal figures and the transferee's opening tax base is one of the easier issues for the FTA to spot on review, so reconcile it upfront rather than after filing.
Can Exiloz make the election?
Yes. We confirm eligibility, prepare the election and the supporting documentation file, and coordinate the timing with your corporate-tax return so the transfer and the filing are aligned.
Elect it correctly
Exiloz makes and documents your Article 27 election, coordinated with your corporate-tax return, with a full support file behind it.