Cross-border structures, considered from every side

Most restructurings raise the same family of questions, whichever countries are involved. We work through them with the group and its advisers in each jurisdiction.

• Tax treaties: which treaty applies, who is entitled to it and how its anti-abuse provisions are read
• Permanent establishment: whether people, premises or agents create a taxable presence in another country
• Place of effective management: where key decisions are really taken, and what that means for residence
• Withholding tax: dividends, interest, royalties and service fees, and the relief available
• Capital gains and exit: the tax on moving shares, assets or a business out of a country
• Holding and financing structures: substance, beneficial ownership and the flow of funds
• Family and promoter groups: succession, residence and ownership across borders

Chapter IX of the OECD Transfer Pricing Guidelines deals with business restructurings. It asks four practical questions. What exactly moved? Does the entity now bearing a risk control it and have the capacity to absorb it? Was something of value transferred? Is the new arrangement priced at arm's length going forward?

We answer those questions before the step plan is final, so the documentation describes a restructuring the group actually carried out.

Moving intangibles is where most restructuring disputes start. Legal ownership alone does not earn the return. The return follows the people who develop, enhance, maintain, protect and exploit the asset, and the entity that funds and controls the risk.

We value what leaves, design the licence or transfer that replaces it, and set the remuneration of the entities left behind.

The departing country often taxes the transfer itself. That can be a capital gain on the asset, an exit charge, or compensation for ending an existing arrangement. Indemnification for a terminated distributor or manufacturer is a frequent audit question.

We quantify the exit cost early, because it often decides whether the restructuring is worth doing at all.

A UAE principal or regional hub earns residual profit only if it holds the decision-makers who control the risks it claims. Contracts that place risk in Dubai while the people sit elsewhere do not hold up.

Article 14.1(a) of Cabinet Decision No. 142 of 2024 applies Article 50 (General Anti-abuse Rule) of Federal Decree-Law No. 47 of 2022 to the UAE minimum tax. A structure without commercial substance is exposed on both taxes.

Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses provides a separate regime for a Qualifying Free Zone Person. Its benefits depend on conditions that include substance and the type of income, and the status can be lost.

For a group in scope of the UAE minimum tax, a low rate on free-zone income does not end the analysis. Article 5.1.1 of Cabinet Decision No. 142 of 2024 measures one effective tax rate for all UAE Constituent Entities together. Article 5.2.1 charges the gap up to the Minimum Rate, which Article 18.1 sets at 15%.

Cabinet Decision No. 142 of 2024 has its own rules for reorganisations. We model them alongside the corporate tax position.

• Article 6.3.1: on a transfer of assets and liabilities, the seller includes the gain or loss and the buyer uses its own carrying value.
• Article 6.3.2: if the transfer is part of a Pillar Two Reorganisation, the gain or loss is excluded and the buyer takes over the seller's carrying values. Article 6.3.3 adjusts this where Non-qualifying Gain or Loss arises.
• Article 6.2.1: rules for an entity that joins or leaves a group during the year, including historical carrying values.
• Article 6.1.1: special revenue-threshold rules for mergers and demergers.
• Articles 5.3.1 to 5.3.4: the Substance-based Income Exclusion reduces the profit exposed to top-up tax. It is built from carve-outs for UAE payroll and UAE tangible assets, so moving people or assets into or out of the UAE changes the result.