English text status

English translation published by the NBR in its bilingual Regulations file (marked unofficial). The Arabic text published in the Official Gazette remains the legal reference in the event of any discrepancy.

Practical summary

This Article allocates adjustments after a member leaves a Tax Group. An adjustment connected with a Supply, receipt or Import made during membership is treated as the former member's adjustment rather than the Group's, unless it concerns an intra-Group transaction. Capital Asset adjustments for assets acquired during membership also follow the member.

Who should read this?

Former Group members, Group representatives and Return and Capital Asset teams.

Why does it matter?

Leaving does not erase events during membership or leave every later correction with the Group. The original transaction, asset and membership dates must be traced to allocate the adjustment correctly.

Post-exit adjustmentsIntra-Group exceptionCapital Asset follows member

Current text

A. Any adjustment relating to a Supply, receipt or import made by any member of the group while still a member of the Tax Group shall be considered as an adjustment made by the Taxable Person and not from the Tax Group, provided that the adjustment is not related to transactions between members of the Tax Group. B. The value of the adjustment of Capital Assets acquired by a member during his term as a group member shall be considered as an adjustment made by him rather than by the Tax Group.

Manage a member's exit adjustment

  1. 1

    Record the member's joining and exit dates.

  2. 2

    Identify the original Supply, receipt or Import.

  3. 3

    Determine whether it involved an external party or another Group member.

  4. 4

    Allocate the later adjustment to the former member rather than assuming it remains with the Group.

  5. 5

    Keep a separate register of Capital Assets acquired during membership and their remaining adjustments.

Connected provisions

Direct legislative link

Regulations — Article (38)

Tax Group consequences

It explains membership, internal transactions and liability before exit is considered.

Open connected Article
Thematic link

Law — Article (47)

Capital Assets

The post-exit asset adjustment connects to the Capital Asset input-tax adjustment rules.

Open connected Article

Official guides and tools

Official text

VAT Executive Regulations

Article (41)

Official guide

VAT Registration Guide — Version 1.10

Tax Group and registration

Connected Madar tools

Connected Madar tools

VAT Return Centre

Check return deadlines, calculate net VAT from entered amounts, and identify a correction route.

Illustrative example by Madar

Credit Note after a member exits

If a correction arises after a company leaves for an external transaction made during its membership, it is not automatically left with the Group merely because the original transaction occurred while the Group existed. The Article allocates it to the former member, subject to the intra-Group exception.

Questions to help you apply it

  • When did the original transaction occur and when did the member leave?
  • Was the transaction external or intra-Group?
  • Does the adjustment concern a Capital Asset acquired during membership?
  • Which Person and period should report it?