UAE GLOSSARY
Related Party
A Related Party is a person connected to another person through the ownership, control, family, partnership, trust, foundation, branch or other relationships specified by the UAE Corporate Tax Law.
IN PLAIN ENGLISH
What this term means in practice
Related Party is a statutory relationship test. It can connect companies within a group, an owner and company, relatives, partners, trustees or foundations, and a head office with its Permanent Establishment. Domestic transactions can be related-party transactions even when no money crosses a border.
Once the relationship exists, transactions and arrangements must reflect arm's-length conditions. Documentation, return disclosures, Local or Master Files and Connected Person rules are separate questions with their own scope and thresholds.
01 · WHY IT MATTERS
The operational consequence behind the definition
Related-party identification is the first control in transfer pricing. If the register is incomplete, management fees, loans, guarantees, IP, goods, leases, restructurings, owner payments and asset transfers can be priced or disclosed incorrectly.
The ownership chart is not enough. Legal rights, voting, appointments, influence and actual control can matter. The register should be refreshed when ownership, directors, family interests, partnerships or operating relationships change.
02 · KEY ELEMENTS
The points that must be tested
Ownership
Trace direct and indirect ownership using the exact statutory percentages and aggregation rules.
Control
Review voting, appointment, economic rights and other means by which one person can influence another.
Natural persons and relatives
Apply the law's precise family relationships rather than an informal definition.
Entities and arrangements
Map companies, partnerships, trusts, foundations, branches and Permanent Establishments.
Controlled transaction
Inventory every provision or transfer of goods, services, finance, IP, assets or benefits.
Separate compliance tests
Distinguish arm's length, return disclosure, Local/Master File and Connected Person requirements.
03 · DO NOT CONFUSE
Similar words can lead to different legal or tax outcomes
Connected Person
Specified owners, directors or officers and their Related Parties can fall under additional payment and deduction rules.
Group company
A commercial group label does not replace the statutory ownership or control analysis.
Customer or supplier
Commercial importance alone does not necessarily create a Related Party relationship under Corporate Tax.
04 · PRACTICAL EXAMPLE
Founder-owned companies share staff and cash
One owner controls a UAE service company and a foreign trading company that exchange services and maintain an interest-free balance.
Confirm the statutory relationships, delineate each service and financing transaction, apply arm's-length pricing and determine documentation and disclosure separately.
Ownership, control, roles, agreements, functions, balance terms, currencies, countries and period determine the treatment.
Illustrative only. This is not a client result, legal conclusion or automatic tax treatment.
| Concept | Operational meaning | Do not assume |
|---|---|---|
| Related Party | Relationship category defined by Corporate Tax law. | Do not limit it to foreign group companies. |
| Connected Person | Specified owner, director or officer payment category. | Do not treat it as identical to every Related Party. |
| Controlled transaction | Transaction or arrangement between relevant persons. | The relationship does not prove the price is arm's length. |
05 · FREQUENTLY ASKED QUESTIONS
Questions that change the analysis
01Are related-party rules only cross-border?＋
No. Domestic UAE transactions can also fall within the arm's-length principle.
02Does common ownership always create the relationship?＋
Apply the current statutory ownership and control tests to the full chain. Informal labels are not enough.
03Are relatives included?＋
Specified relationships between natural persons are included under the law. The exact statutory definition must be used.
04Do thresholds switch off transfer pricing?＋
No. Thresholds can affect particular disclosure or file requirements, while the arm's-length rule has broader scope.
05What transactions should be mapped?＋
Goods, services, recharges, finance, guarantees, IP, leases, assets, business transfers, owner payments and PE dealings should be considered.
06How often should the register be refreshed?＋
At least for each reporting period and whenever ownership, control, directors, family relationships, entities or transactions change.
06 · OFFICIAL SOURCES
Sources used for this definition
Last reviewed 12 August 2026. Reviewed by MP Elites. The current legislation, decision, authority guidance and facts for the relevant period control over this glossary summary.
- 01
Federal Decree-Law No. 47 of 2022 on Corporate and Business Tax ↗
Primary Corporate Tax definitions and rules for Related Parties, distributions, residence, transfer pricing and records.
- 02
FTA Transfer Pricing Guide ↗
Official explanation of Related Parties, control, controlled transactions, arm's-length analysis and documentation.
- 03
Cabinet Resolution No. 109 of 2023 Regulating Real Beneficiary Procedures ↗
Current federal rules for identifying the Real Beneficiary, ownership and control tracing, registers and nominee disclosures, excluding financial free zones from this resolution's scope.
FROM DEFINITION TO DECISION
Explore the complete Related Party guide.
The glossary explains the term. The related guide maps the decisions, evidence and dependencies needed for a real UAE structure or compliance position.