The Arm’s Length Principle in UAE
Learning Centre • Insights • The Arm’s Length Principle in UAE
Learning Centre • Insights • The Arm’s Length Principle in UAE
The Federal Tax Authority (“FTA”) has the power to reallocate income or expenses between related parties and connected persons to reflect the taxable income, which is determine through an analysis of whether the taxpayer has dealt at arm’s length.
Paragraph 3 of Article 34 of the CT Law provides that the taxpayers may determine the arm’s length result by applying one or a combination of a TP methods. Consistent with the OECD Guidelines, the TP methods prescribed are:
Paragraph 3 of Article 34 of the CT Law does not prescribe preference for the order in which TP methods is applied. The most appropriate method should be adopted based on the facts and circumstances of the case. Taxpayers may use other TP methods in case none of the TP methods above can be applied in determining the arm’s length.
Our global transfer pricing expertise includes analysis of arm’s length principles consistent with the OECD guidelines.
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.
