UAE Law and Practice Contributed by: Marios Palesis, Theodora Charalambous and Giorgos Kinanis, Kinanis Tax Consultancy Middle East Limited
• where the taxpayer’s revenue is AED200 million or more in the relevant tax period. A separate guide issued by the FTA on tax returns introduced thresholds for the completion and submis - sion of the disclosure form as part of the tax return. Taxpayers must disclose those related-party transac - tions whose aggregate value per category exceeds AED4 million where the aggregate value of all the transactions exceeds AED40 million. Taxpayers must also separately disclose all transactions with connect - ed persons where the aggregate value of the pay - ment or benefit exceeds AED500,000 per connected person. Country-by-country reporting was introduced in the UAE earlier than the transfer pricing rules, as part of the UAE’s commitment to Base Erosion and Profit Shifting (BEPS) Action 13. The most recent development came in the form of the Guide on Advance Pricing Agreements, issued by the FTA in December of 2025. While the Corporate Tax Law provides for the mechanism of APAs, it does not set out a procedure for entering into one, and the Guide seeks to provide clarity and guidance in that respect. 2. Definition of Control/Related Parties 2.1 Application of Transfer Pricing Rules The UAE’s transfer pricing rules apply to transactions or arrangements between related parties or connect - ed persons (defined in the following). In accordance with the OECD Transfer Pricing Guidelines, the Cor - porate Tax Law requires that such transactions are conducted on an arm’s length basis (ie, on terms that would have been agreed between independent parties in comparable circumstances). “Related parties” are defined in Article 35 of the Cor - porate Tax Law as follows. • Two or more natural persons who are related within the fourth degree of kinship or affiliation, including by way of adoption or guardianship. • A natural person and a juridical person where:
(a) the natural person or one or more related parties of the natural person are shareholders in the juridical person, and the natural per - son, alone or together with its related parties, directly or indirectly owns a 50% or greater ownership interest in the juridical person; or (b) the natural person, alone or together with its related parties, directly or indirectly controls the juridical person. • Two or more juridical persons where: (a) one juridical person, alone or together with its related parties, directly or indirectly owns a 50% or greater ownership interest in the other juridical person; (b) one juridical person, alone or together with its related parties, directly or indirectly controls the other juridical person; or (c) any person, alone or together with its related parties, directly or indirectly owns a 50% or greater ownership interest in or controls two or more juridical persons. • A person and its permanent establishment (wheth - er domestic or foreign). • Two or more persons that are partners in the same unincorporated partnership. • A person who is the trustee, founder, settlor or beneficiary of a trust or foundation, and its related parties. Control means the ability of a person, whether in their own right or by agreement or otherwise, to influence another person, including: • the ability to exercise 50% or more of the voting rights of another person; • the ability to determine the composition of 50% or more of the board of directors of another person; • the ability to receive 50% or more of the profits of another person; or • the ability to determine, or exercise significant influence over, the conduct of the business and affairs of another person. As shown in the foregoing, for the definition of related parties, the UAE has a 50% ownership/control test with respect to juridical persons (companies or other legal entities), and a broad relationship test for natural
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