Key Differences Between Related Parties and Connected Persons in UAE Transfer Pricing Regulations
In the UAE Corporate Tax and Transfer Pricing framework, the terms “Related Parties” and “Connected Persons” are both used to define relationships that may impact tax reporting and compliance. However, they have distinct definitions and implications under the UAE tax law.
Here’s a breakdown of the key differences:
Key Takeaways
1. Related Parties are mostly concerned with business-to-business relationships and ensuring that intercompany transactions are priced fairly to prevent tax avoidance.
2. Connected Persons primarily refer to individuals with significant influence over a company and aim to prevent unjustified tax deductions for payments made to them.
3. Both categories require disclosure in tax returns and may be subject to tax audits by the Federal Tax Authority (FTA).
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