Of all the schedules in the Corporate Tax return, the one on related parties and connected persons calls for the most judgement. With a public clarification on directors and officers issued in April 2026, and transfer pricing rules in force from the first day of Corporate Tax, the 2026 close is the right moment to settle the facts.
Two definitions, two tests
The Corporate Tax Law uses two overlapping concepts. Related Parties, defined in Article 35, are linked through family, an ownership interest of 50% or more, or control. Their transactions must meet the arm's length standard in Article 34.
Connected Persons, defined in Article 36, are the owners of the business who are natural persons, its directors and officers, and the Related Parties of each. A payment or benefit to a Connected Person is deductible only to the extent it corresponds to Market Value and is incurred wholly and exclusively for the business. Businesses listed on a recognised stock exchange, and those under the regulatory oversight of a competent UAE authority, are outside this particular rule.
Directors and officers, clarified
In April 2026, the Federal Tax Authority (FTA) published a public clarification, CTP010, on the meaning of director and officer. The 2025 return was the first prepared with that guidance available. For the 2026 close, the list of Connected Persons is worth rebuilding against it: who sits on the board, who holds the roles the clarification describes, and who is related to them.
Documentation that exists before it is requested
Article 55 allows the FTA to require a disclosure of transactions with Related Parties and Connected Persons, filed with the return. Where prescribed conditions are met, a master file and a local file must also be maintained. On request, that documentation is due within 30 days.
Adjustments, supported by the accounts
In July 2026, the FTA issued a public clarification on downward adjustments made in the return to comply with the Corporate Tax Law. A business does not need prior approval to make one, but it is expected to support it, including through a reconciliation between the financial statements and the figures reported. Any adjustment is easier to stand behind when the link to the accounts is clear.
Where the 2026 close can help
Much of this is simpler before the books close than after:
- 1.Intra-group charges. Price and invoice management fees, cost recharges and financing before year-end, with agreements in place.
- 2.Shared people. Where employees work for one entity but sit on another's payroll, document the arrangement and recharge it at arm's length.
- 3.Owners' and directors' remuneration. Benchmark it to Market Value and record the basis.
- 4.Year-end true-ups. Book them in the accounts, not only in the return.