UAE corporate tax law requires related party transactions to be conducted on an arm's length basis — meaning the pricing must reflect what unconnected parties would agree to in the same circumstances. Transactions that are priced artificially low or high to shift profits between related entities are treated as tax avoidance. All significant related party transactions must be disclosed in the corporate tax return. Businesses with complex group structures — common in the UAE, where founders often hold multiple entities across different jurisdictions — should maintain formal transfer pricing documentation.
Watch out: A transaction between entities under common ownership or control — such as a UAE company and its parent, subsidiary, or sister company.
See also: Tax Group, Corporate Tax Return, Taxable Income
