Transfer Pricing and Connected Persons under the UAE Corporate Tax regime

The UAE (United Arab Emirates) Corporate Income Tax (CIT) law includes specific provisions regarding payments to Connected Persons. 

According to the law, payments, or benefits from UAE-based taxable entities to Connected Persons are deductible for corporate tax purposes only if they can be justified as being at Market Value. 

Some of the key topics that it covers include: 

• The definition of Connected Persons—which includes directors, officers, related parties, partners, and those with indirect ownership or control. 
• The various degrees of kinship considered for related parties and underscores the importance of the arm’s length principle. 
• The necessity for businesses to maintain thorough transfer pricing documentation and to adjust employment agreements based on benchmarking analyses to ensure compliance and mitigate the risk of penalties.

To provide clarity on this, we have developed a comprehensive article that delves into the CIT law's provisions.