Frequently Asked Questions

1. What is the UAE Transfer Pricing Disclosure Form?
   It is a mandatory schedule part of the UAE Corporate Tax Return, used to disclose related party and connected person transactions, demonstrating alignment with the Arm’s Length Principle.
   
   
2. Who needs to file the Disclosure Form?
   All taxable persons with transactions involving Related Parties (Article 35) or Connected Persons (Article 36) that exceed the relevant thresholds must complete and submit the Disclosure Form.
   
   
3. What are the thresholds for having the obligation of submitting the Disclosure Form?
   Related Party schedule:
   
   • Primary threshold: Aggregate value of transactions with Related Parties exceeds AED 40 million.
   • Secondary threshold: provided that the primary threshold is met, if the aggregate value of each category of transactions exceeds AED 4 million, all transactions falling into that category must be disclosed.
   Connected Persons schedule:
   
   • Disclosure must be made for each Connected Person where the aggregate payment or benefit exceeds AED 500,000 per Connected Person (together with its related parties).
     
     
4. What details must be disclosed in the Related Party and Connected Person Schedule?
   
   • Name of the related party/connected person;
   • Transaction type (category of transaction);
   • Tax residency;
   • Corporate tax number (if available);
   • Gross amount – the actual amount of the transaction (in AED);
   • Transfer pricing method used;
   • Arm’s length value;
   • TP adjustment (if any).
     
     
5. How are the transactions categorized?
   FTA defines seven categories:
   
   1. Goods;
   2. Services;
   3. Intellectual Property;
   4. Assets;
   5. Liabilities;
   6. Interest; and
   7. Other.
      
      
6. How is a TP adjustment triggered?
   If the gross amount deviates from the arm's length value, the tax return automatically reflects an upward adjustment, if any. Downward adjustments are not automatic and require an FTA application.
   
   
7. What is the Connected Person Schedule?
   The second section of the disclosure form is the Connected Person Schedule. This section focuses on transactions with connected persons that exceed the AED 500,000 threshold. It requires similar information to the Related Party Transaction Schedule.
   
   
8. Is there flexibility in how the form is filed?
   Yes. It can be filled manually or via Excel file upload using the FTA’s specified template.
   
   
9. How is the Disclosure Form linked to TP documentation?
   Companies with transactions that exceed the thresholds must disclose the arm’s length value of those transactions in the relevant schedules. This disclosure obligation requires determination of the arm’s length value of transactions before completion of the Disclosure Form.
   Additionally, Qualifying Free Zone Persons¹ must confirm, among other things, that their related party transactions are carried out at arm’s length and that appropriate TP documentation has been prepared in accordance with Article 55.
   Therefore, while the disclosure form and the TP documentation are technically separate requirements, they are inherently linked.

   _{1. A Free Zone Person that meets the conditions of Article 18 of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and is subject to Corporate Tax under Clause 2 of Article 3 of this Decree-Law.}

10.  Are intra-group transactions within a Tax Group reportable?
    No. Article 42 allows elimination of intra-group transactions for tax purposes, subject to certain exemptions and limitations.
    
    
11. Are balance sheet items like loans and liabilities reportable?
    Yes. Balance sheet items such as loans, advances, receivables from related parties, and other similar balance sheet items must be disclosed in the Disclosure Form. The only exclusion explicitly provided under the law is for dividends received or paid between related parties.
    
    
12. Are domestic transactions subject to TP and disclosure?
    Yes. Both domestic and cross-border related party transactions must meet the arm’s length principle and be disclosed if the relevant thresholds are exceeded.
    
    
13. What are the risks of incorrect or incomplete information?
    It can lead to tax audits, tax adjustments, and penalties for under-reporting or non-compliance.
    
    
14. Where can I find the official guidance?
    Refer to:
    
    • Articles 34, 35, 36, 55 of the UAE Federal Decree Law no.47 of 2022 on the Taxation of Corporations and Businesses
    • FTA Transfer Pricing Guide | CTGTP1
    • Ministerial Decision 97 of 2023
    • OECD Transfer Pricing Guidelines (2022)
      
      
15. How often should thresholds be tested?
    Thresholds should be tested every fiscal year based on both book and arm’s length values.
    
    
16. How is the 'Other' transaction category interpreted?
    'Other' may include payments that don’t clearly fit in the rest six specified categories, e.g. recharge of expenses or compensation for business restructuring or rent.
    
    
17. Can netting off income and expenses avoid disclosure?
    No. FTA requires gross reporting. Each transaction must be reported without netting off.
    
    
18. Do non-resident related parties need to be reported?
    Yes. Both UAE and non-UAE related parties are within scope.
    
    
19. What if a TP method used is not one of the five OECD methods?
    You must select 'Other' and provide additional information explaining how the pricing was determined.
    
    
20. What are best practices for managing TP disclosure compliance?
    Automate intercompany tracking, maintain a TP calendar, review documentation annually, and ensure financial control team coordination.

OUR FIRM
Kinanis Tax Consultancy Middle East Limited (“the Firm”), is a company registered in the UAE and licensed by the DIFC to provide transfer pricing, related tax compliance and advisory services in the region.

The Firm belongs to the same group of companies with Kinanis LLC, Law Firm of Cyprus, which has been consulting international and local clients and offering consulting services since 1983. The firm, T.P. Alfa Services Limited of Cyprus, is also a company belonging to the group, specializing in Transfer Pricing. The group consists of more than 65 lawyers, accountants, tax consultants and other professionals.

The group has gradually evolved over the years, starting as a traditional Law Firm and transforming into an innovative, pioneering firm that combines exceptional expertise in corporate and tax, litigation, VAT, accounting, transfer pricing, financial services, employment, migration, company liquidation, and technology.

The group provides to its clients' businesses full support on a daily basis, as well as tailored solutions, always compatible with the latest global challenges and technological developments.

The group has as its vision and pride to become part of their clients’ story, having as flag, the motto "...Being part of your story is our pride..."

Kinanis Tax Consultancy Middle East Limited
DIFC,
Dubai,
United Arab Emirates
uae@kinanis.com

Kinanis LLC
Lawyers’ Limited Liability Company,
12 Egypt Street,
1097 – Nicosia
Cyprus
KinanisLLC@kinanis.com
www.kinanis.com