Before completing an acquisition in the UAE or GCC, buyers need to understand the target's full tax exposure — not just reported profits. We conduct independent tax due diligence covering UAE CT, VAT, transfer pricing, and cross-border tax risks that directly affect deal price or structure.
In brief: Tax due diligence quantifies a target's UAE Corporate Tax, VAT, and transfer pricing exposures before you sign. In a share deal you inherit the company's full tax history, so these exposures directly change price, deal structure, and the warranties in your SPA. We deliver tax DD integrated with financial due diligence, led by a Chartered Accountant and CFA Charterholder, at a fixed fee agreed upfront.
Tax Due Diligence Integrated with Financial Due Diligence
Tax due diligence in the UAE now covers significantly more ground than before UAE CT. A target with clean financials can still have material tax exposures that change deal pricing, structure, or the warranties required in the SPA.
UAE Corporate Tax
UAE CT Exposure Review
We assess the target's CT registration status, FTA filing position, deferred tax liabilities, and any unresolved CT exposures — including free zone qualifying income issues, group structure complications, and prior year underpayments.
CT registration status and compliance history
Deferred tax liability computation
Free zone QFZI status risk assessment
Prior year CT exposure quantification
Post-acquisition CT structuring implications
VAT & Indirect Tax
VAT Compliance Review
VAT exposures can be significant — particularly for businesses with complex supply chains, property transactions, or historic under-registration. We review the target's VAT compliance position and quantify any outstanding liabilities.
VAT registration history and compliance review
Output tax accuracy review by revenue stream
Input tax recovery rate assessment
FTA correspondence and audit history review
Outstanding VAT liabilities quantification
Transfer Pricing
Transfer Pricing Risk Assessment
Targets with related-party transactions — intercompany services, royalties, loans — carry transfer pricing risk under UAE CT. We review the arm's-length nature of related-party pricing and assess the documentation available to support the positions taken.
Related-party transaction mapping and review
Arm's-length pricing assessment
TP documentation adequacy review
Intercompany agreement analysis
Transfer pricing adjustment risk quantification
Deal Structuring
Tax Warranties & SPA Support
Our tax due diligence findings directly inform the tax warranties and indemnities required in the SPA. We work alongside legal counsel to ensure the tax risk identified in the due diligence is properly allocated between buyer and seller.
Tax risk summary for SPA warranty schedule
Tax indemnity structuring advice
Price adjustment recommendations
Escrow and retention structuring for tax risk
Post-closing tax integration planning
What We Find
The Exposures That Surface Most in UAE Tax Due Diligence
Across UAE mid-market deals, the same categories of tax exposure appear again and again. Each one is quantifiable, and each has a standard protection mechanism in the SPA.
Exposure
Why It Arises
Typical Deal Protection
Free zone QFZP failure
Free zone entity earning non-qualifying mainland income while filing at 0%
Price adjustment for recomputed 9% CT, plus specific indemnity
Late or missing CT registration
Owner-managed targets that missed FTA registration deadlines and penalties
Seller settles pre-close; evidence as a condition precedent
VAT under-declaration
Misclassified zero-rated or exempt supplies, unbilled intercompany charges
Quantified exposure held in escrow through the FTA look-back window
Transfer pricing gaps
Related-party management fees, loans, and royalties with no arm's length support
Tax indemnity plus post-close TP documentation remediation plan
Payroll and EOSB items
End-of-service liabilities understated; WPS mismatches with reported salaries
Debt-like treatment in the equity bridge, reducing headline price
Cross-border withholding
Dividends, interest, or royalties paid abroad without treaty analysis
Exposure quantified per jurisdiction; structure fixed before close
FAQ
Tax Due Diligence UAE Frequently Asked Questions
What is tax due diligence and why does it matter in UAE acquisitions?+
Tax due diligence is an independent review of a target company's tax position before you acquire it. Since the UAE introduced 9% Corporate Tax, and given established VAT obligations, a UAE target can carry material undisclosed exposures: unregistered or late CT filings, free zone entities that fail qualifying income tests, VAT under-declarations, and related-party transactions without transfer pricing support. In a share deal you inherit all of these, so quantifying them before signing directly affects price, structure, and SPA warranties.
What does UAE tax due diligence cover?+
A full scope covers: UAE CT registration and filing status, deferred tax computation, free zone Qualifying Free Zone Person (QFZP) risk, prior-year exposure quantification, VAT registration history and output/input tax accuracy, FTA correspondence and audit history, transfer pricing on related-party transactions, and cross-border withholding tax exposure. Findings feed directly into the SPA tax warranty and indemnity schedule.
Is tax DD different for a share deal versus an asset deal?+
Yes, materially. In a share deal the buyer inherits the company's entire tax history, so historic CT, VAT, and transfer pricing exposures transfer with the shares and must be protected against through warranties, indemnities, or price adjustments. In an asset deal most historic liabilities stay with the seller, but VAT on the transfer itself, transfer-of-going-concern treatment, and the reset of asset tax bases need structuring. The share-versus-asset decision is often driven by the tax DD findings.
How long does tax due diligence take and what does it cost?+
Standalone, 2 to 4 weeks for a UAE mid-market target. Integrated with financial due diligence, which is how we usually deliver it, it runs in parallel within the same 4 to 8 week window. Fees are fixed and agreed upfront, scaled to entity count and years under review. A combined FDD plus tax DD scope is more cost-efficient than commissioning the two separately.
What happens if tax due diligence finds a problem?+
A finding rarely kills a deal; it changes its shape. Quantified exposures typically lead to a price reduction, a specific tax indemnity in the SPA, an escrow or holdback sized to the exposure, or a restructured transaction. We quantify each exposure, recommend the right protection, and support your counsel in negotiating the tax schedule of the SPA.