UAE Corporate Tax introduced robust transfer pricing (TP) rules aligned with OECD guidelines. In practice, this means all taxable businesses with related-party or connected-person transactions must ensure those dealings are at arm’s length. Article 55 of the UAE Corporate Tax Law explicitly requires any “Taxable Person” engaging in related-party or connected-person arrangements to file a Transfer Pricing Disclosure Form alongside its corporate tax return. In short, if your company has any intercompany dealings, you must prepare a TP disclosure – even if you are exempt or qualify for relief.
Identifying Related Parties and Connected Persons
Before filling out the form, identify everyone who qualifies under the UAE definitions. Key criteria:
Related Parties (Article 35)
These include individuals or companies with close relationships. Examples are family members up to 4th degree, companies with ≥50% direct or indirect ownership, or anyone controlling ≥50% of voting rights or board seats in the other entity. For instance, a parent-subsidiary, affiliates under common ownership, or a person who can receive ≥50% of another’s profits are related parties.
Connected Persons (Article 36)
These typically are individuals closely tied to the business. This covers anyone who directly or indirectly owns or controls the taxable company (e.g. its owner or major shareholder), as well as directors/officers of the company or partners in a partnership (and their immediate relatives). In effect, if an owner gives a benefit or payment to themselves or their family, that is a connected-person transaction.
Understanding these definitions is critical. Don’t rely on financial-statement disclosures or global TP policies – UAE rules may classify parties differently. In practice, perform a thorough review (ownership charts, management, family ties, etc.) to list all related parties and connected persons. Remember that any transaction with these parties should meet arm’s length standards, even if you are below the formal thresholds.
When to Prepare the TP Disclosure Form?
Once you’ve identified related/connected parties, determine if your transactions hit the disclosure triggers.
Related-Party Threshold
If your aggregate related-party transactions exceed AED 40 million, you must disclose them. At that point, break down transactions by category (e.g. goods, services, IP, interest, assets, liabilities, other) and report any category >AED 4 million. Note that even if below AED 40 million, the FTA expects all Related Party Transaction to be at arm’s length – so keep documentation ready and consider disclosure if material.
Connected-Person Threshold
If total payments/benefits to a connected person (plus that person’s related parties) exceed AED 500,000, you must complete the connected-person schedule. In practice, each payment or benefit above AED 500k must be detailed.
In all cases, the TP Disclosure Form is filed with the Corporate Tax Return (due 9 months after year-end). The form is integrated into the EmaraTax portal, so you fill it when preparing your return – it isn’t a separate paper form on its own. Even if your transactions are below the thresholds, it’s wise to be prepared: the FTA’s goal is transparency, and “gaps” may trigger questions or adjustments.
