Related parties and connected person in UAE
Learning Centre • Insights • Related parties and connected person in UAE
Learning Centre • Insights • Related parties and connected person in UAE
Article 35 of the CT Law defined ‘related parties’ as follows:
| Two or more legal entities |
Legal entity alone, or together with a related party, directly or indirectly owns a 50% or greater share in or controls the other legal entity |
| Two or more individuals |
Related to the fourth degree of kinship or affiliation, including by birth, marriage, adoption or guardianship |
| An individual and a legal entity |
Individual alone or together with a related party, directly or indirectly owns a 50% or greater share in, or controls the legal entity |
| Taxpayer |
Branch or permanent establishment |
| Unincorporated partnership |
All partners |
Article 36 of the CT law defined ‘connected persons’ as follows:
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For domestic TP adjustments, a corresponding adjustment may be made to the taxable income of the other related party by the FTA.
A transaction is considered to meet the arm's length principle when the results of the transaction between related parties are consistent with the results of a transaction between unrelated parties.
Country-by-country (CBC) reporting is part of a broader suite of international measures aimed at combating tax avoidance.
All taxpayers that entered into transactions or arrangements with their Related Parties and Connected Persons needs to prepare the Disclosure Form.
The Federal Tax Authority (“FTA”) has the power to reallocate income or expenses between related parties through an analysis of whether the taxpayer has dealt at arm’s length.
