For many businesses, related-party transactions have become a more important area of tax review under the UAE Corporate Tax framework. This is especially relevant where businesses have intercompany loans, management charges, service arrangements, common ownership structures, or cross-border group transactions.
The Federal Tax Authority has issued dedicated transfer pricing guidance, and the broader Corporate Tax framework makes clear that related-party and connected person transactions must be approached with proper attention. Even where full transfer pricing documentation may not be required in every case, the arm’s length principle remains relevant.
The practical issue for many businesses is that related-party transactions were historically recorded without being treated as a separate governance or tax risk area. Under the current framework, that approach may no longer be sufficient. Businesses should understand what related-party transactions exist, how they are priced, whether they are supported by agreements or documentation, and whether the accounting records clearly reflect the commercial substance.
This does not mean every business requires a highly complex transfer pricing structure. It does mean management should have visibility over intercompany arrangements and should not assume that informal or legacy practices are automatically acceptable for tax purposes. Weak documentation often creates problems later, particularly when explanations are needed after the fact.
A sensible first step is to identify related parties, map relevant transactions, assess materiality, and review whether the current support is adequate. From there, businesses can determine whether they need policy review, documentation support, or more detailed advisory input.
The key point is simple: related-party transactions should be reviewed proactively. Businesses that address them early are in a much stronger position to manage tax risk and support their position with confidence.
