UAE Corporate Tax requires every related-party and connected-person transaction to be at arm's length — with a disclosure form above thresholds, master/local files for large groups, and no size exemption at all for QFZPs.
Transfer pricing is the rule that related parties must deal with each other as strangers would. Under UAE Corporate Tax it stopped being a multinational curiosity and became a condition of everyone's return.
Who is caught
Related parties — common ownership or control (broadly 50%+), kinship to the fourth degree, significant influence. Connected persons — the owners, directors and officers of the business and their related parties. That second category is the UAE-specific surprise: the founder's salary, the family management fee and the shareholder loan all have to be justifiable at market value.
The documentation stack
| Layer | Who | What |
|---|---|---|
| Arm's-length rule | Everyone, from dirham one | Pricing must be defensible; keep analysis |
| Disclosure form | Above filing thresholds | Schedule of related-party dealings with the return |
| Master file + local file | MNE groups ≥ AED 3.15bn consolidated revenue, or businesses ≥ AED 200m | Formal OECD-style documentation |
| QFZP condition | Every QFZP, any size | Full compliance as a condition of the 0% rate |
Where the FTA will look
- Management and head-office charges — were services actually rendered, and priced at market?
- Intercompany and shareholder loans — interest-free or off-market terms invite imputation.
- IP royalties — payments to low-tax group companies holding brands or software.
- Substance-light profit booking — free-zone entities carrying group margin without the people and functions to earn it.
- Owner remuneration — connected-person payments dressed as deductible costs.
What compliance actually looks like
Unglamorous and effective: written intercompany agreements for every recurring flow; benchmarking proportionate to the size of the flow; the disclosure form reconciled to the accounts; and files built when transactions happen, not reconstructed under audit. For groups near the master-file thresholds, the OECD-format documentation is a project — start it before the first return that needs it.
How we help
Neo Legal designs intercompany arrangements, prepares the agreements and documentation, and defends pricing under FTA enquiry — integrated with our tax practice and the QFZP analysis where the 0% rate is at stake.
This article is general information as at July 2026 and is not legal advice. Thresholds and guidance evolve; obtain advice on your group's specific arrangements.
