Regular readers of this column will know that UAE corporate tax legislation is best thought of as a multidimensional jigsaw puzzle. This is because the pieces are coming from different regulatory authorities: the Cabinet of Ministers, the Ministry of Finance and the Federal Tax Authority.
Clarifications are likely to come from the FTA, which has the responsibility of enforcing the regime and court decisions that further interpret the law within the broader UAE legal framework. The legislative pieces we have are more than enough to keep us working late to ensure our understanding and implementation are in line.
Today, I want to demonstrate a working example of what this means in practice. In doing so, I will take transfer pricing as the supporting tool.
If there is just one element of this area that should cause you to stop and consider where you as a business owner or partial shareholder will be affected, it is your status within the operational business.
Trade licences unfortunately convince many owners that they are employees. This is because a great many of them title the nominated person in charge as Manager. It is completely understandable that a person reading this would assume that makes them an employee. No, it does not. It is just a formal aspect of the documentation.
In the services sector, salaries are typically one of the largest cost lines and have a material impact on your bottom line. Only the contracted charge for salary and associated costs in total will be deductible against taxable profits. All other monies drawn by a shareholder are dividends. These are not tax deductible. If you are unsure, get support.
Let us put some jigsaw pieces on the table. There are three we are primarily concerned with. Additionally, there are two others, which while they do not belong in the UAE picture, have a real influence on how it works.
There is the UAE corporate tax law of 2022, Cabinet Decision 44 of 2020 and Ministerial Decision 97 of 2023. Add the OECD transfer pricing guidelines, a tome worthy in length and complexity of Tolstoy and the UAE transfer pricing guide of 2023.
Keep in mind that the latter has a caveat that limits its usefulness by calling the document indicative.
In a purchase or sale of a good or service, there is a buyer and a seller. Sometimes the same or elements of the same parties might be involved on both sides. This then becomes a related party transaction.
If you are both the buyer and the seller, you’re in a position to impact how the deal is constructed. Tax authorities take a great interest in these where a person might use this to his advantage, ensuring that tax due is minimised between the buying and selling entity.
Ensuring equity for the taxman, the sale must be done at arm’s length. This means that the nature of the transaction is the same as if there was no relation between the buyer and the seller.
Keep in mind that an employee on a labour contract is selling their services to their employer. It is not a one-off purchase, but continuing for the period in which both are content to operate in this manner. Therefore, if the seller of services is also an owner of the business, then everything must be done at arm’s length. There are rules.
The payment made must reflect what the general marketplace would normally pay for similar services. There are reasonable bands of value and various scales of measurement are calculable. What we desperately need to know, months into the second year of corporate tax, is guidance as to what scales might be acceptable.
In the UAE we have been, until recently, more concerned with cross-border transactions. No more. Domestic considerations have now taken precedence, especially considering the expertise of local authorities in determining how your business should handle such transactions.
A relationship can be assumed to be based on family ties extending up to four degrees. It's not a straightforward one-to-one measure, but rather a shared ownership involving two or more people. In fact, ownership isn't a mandatory criterion; individuals may be appointed to have control even if they do not hold any ownership interest.
With reference to the above, you might be forgiven for thinking this relates purely to standard juridical entities, such as trading companies in goods or services. However, it also includes unincorporated partnerships, trusts and foundations.
In essence, our pieces tell us that adherence to the arm's length principle is imperative when engaging in transactions with related parties. It is essential to maintain proper documentation to substantiate compliance with this principle.
David Daly is a partner at the Gulf Tax Accounting Group in the UAE
FIGHT%20CARD
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KILLING OF QASSEM SULEIMANI
Killing of Qassem Suleimani
You may remember …
Robbie Keane (Atletico de Kolkata) The Irish striker is, along with his former Spurs teammate Dimitar Berbatov, the headline figure in this season’s ISL, having joined defending champions ATK. His grand entrance after arrival from Major League Soccer in the US will be delayed by three games, though, due to a knee injury.
Dimitar Berbatov (Kerala Blasters) Word has it that Rene Meulensteen, the Kerala manager, plans to deploy his Bulgarian star in central midfield. The idea of Berbatov as an all-action, box-to-box midfielder, might jar with Spurs and Manchester United supporters, who more likely recall an always-languid, often-lazy striker.
Wes Brown (Kerala Blasters) Revived his playing career last season to help out at Blackburn Rovers, where he was also a coach. Since then, the 23-cap England centre back, who is now 38, has been reunited with the former Manchester United assistant coach Meulensteen, after signing for Kerala.
Andre Bikey (Jamshedpur) The Cameroonian defender is onto the 17th club of a career has taken him to Spain, Portugal, Russia, the UK, Greece, and now India. He is still only 32, so there is plenty of time to add to that tally, too. Scored goals against Liverpool and Chelsea during his time with Reading in England.
Emiliano Alfaro (Pune City) The Uruguayan striker has played for Liverpool – the Montevideo one, rather than the better-known side in England – and Lazio in Italy. He was prolific for a season at Al Wasl in the Arabian Gulf League in 2012/13. He returned for one season with Fujairah, whom he left to join Pune.
MATCH INFO
Uefa Champions League, last-16, second leg (first-leg scores in brackets):
PSG (2) v Manchester United (0)
Midnight (Thursday), BeIN Sports
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MATCH INFO
Uefa Champions League, last 16, first leg
Ajax v Real Madrid, midnight (Thursday), BeIN Sports
Profile
Name: Carzaty
Founders: Marwan Chaar and Hassan Jaffar
Launched: 2017
Employees: 22
Based: Dubai and Muscat
Sector: Automobile retail
Funding to date: $5.5 million
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Why the Tourist Club?
Originally, The Club (which many people chose to call the “British Club”) was the only place where one could use the beach with changing rooms and a shower, and get refreshments.
In the early 1970s, the Government of Abu Dhabi wanted to give more people a place to get together on the beach, with some facilities for children. The place chosen was where the annual boat race was held, which Sheikh Zayed always attended and which brought crowds of locals and expatriates to the stretch of beach to the left of Le Méridien and the Marina.
It started with a round two-storey building, erected in about two weeks by Orient Contracting for Sheikh Zayed to use at one these races. Soon many facilities were planned and built, and members were invited to join.
Why it was called “Nadi Al Siyahi” is beyond me. But it is likely that one wanted to convey the idea that this was open to all comers. Because there was no danger of encountering alcohol on the premises, unlike at The Club, it was a place in particular for the many Arab expatriate civil servants to join. Initially the fees were very low and membership was offered free to many people, too.
Eventually there was a skating rink, bowling and many other amusements.
Frauke Heard-Bey is a historian and has lived in Abu Dhabi since 1968.
The specs
Engine: 3.8-litre V6
Power: 295hp at 6,000rpm
Torque: 355Nm at 5,200rpm
Transmission: 8-speed auto
Fuel consumption: 10.7L/100km
Price: Dh179,999-plus
On sale: now
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
UAE currency: the story behind the money in your pockets
MATCH INFO
Uefa Champioons League semi-final:
First leg: Liverpool 5 Roma 2
Second leg: Wednesday, May 2, Stadio Olimpico, Rome
TV: BeIN Sports, 10.45pm (UAE)
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
UAE currency: the story behind the money in your pockets
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Killing of Qassem Suleimani
Killing of Qassem Suleimani
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The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Killing of Qassem Suleimani
KILLING OF QASSEM SULEIMANI
Indika
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Tailors and retailers miss out on back-to-school rush
Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”
A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.
“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”
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