On 15 July 2026, the UAE Federal Tax Authority (FTA) published a Public Clarification on adjustments made in Corporate Tax Returns under the transfer pricing (TP) rules.
- The Public Clarification CTP011 confirms that prior FTA approval is no longer needed for downward transfer pricing adjustments in Corporate Tax Returns.
- Any downward adjustment requires full disclosure of all affected Related Party transactions, regardless of transaction value or type.
- Taxable Persons must maintain a robust transfer pricing file: rationale, benchmarking study, and reconciliation from Financial Statements to the arm's length figures in the Tax Return.
- The FTA expects symmetrical adjustments, supported by evidence that the corresponding Related Party has made a matching adjustment for the same transactions.
- Downward adjustments are likely to be high‑scrutiny cases, so UAE businesses should align internal processes and documentation with the clarified transfer pricing requirements.
Who does this affect?
The FTA’s Public Clarification is relevant for UAE Taxable Persons that carried out transactions with Related Parties during the relevant tax period. This can include a range of intra-group transactions falling within the scope of the transfer pricing rules, for example:
- sale and purchase of goods;
- provision of services (including management and administrative services);
- granting of loans (intra-group financing);
- licensing of intellectual property rights in return for royalty payments, and others.
Adjusting the Corporate Tax Return under the TP rules
The FTA’s Public Clarification CTP011 addresses adjustments made by Taxable Persons in their Tax Returns to comply with the transfer pricing rules, where such adjustments result in a decrease in taxable income.
Article 34 of the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022) requires Related Parties to apply the arm’s length principle to transactions between them (i.e., to transact on market terms). This principle is satisfied where the outcome of the transaction is consistent with the outcome that would have resulted from a similar transaction concluded under comparable conditions between independent parties.
Transactions with Related Parties must be reflected in the Taxable Person’s Financial Statements in accordance with the arm’s length principle. However, where this has not been done (for example, where non-arm’s length pricing was applied between Related Parties), the Taxable Person must make the corresponding adjustment under the transfer pricing rules in its Tax Return.
Obligations of the Taxable Person
A Taxable Person must self-assess whether it needs to make an adjustment to its Tax Return under the transfer pricing rules. Such an adjustment may either increase or decrease Taxable Income. The Taxable Person is not required to obtain prior approval from the FTA to make an adjustment.
A Taxable Person must disclose all transactions with its Related Parties in respect of which it has made an adjustment that decreases taxable income (a downward adjustment), irrespective of the value or nature of the transaction. In all other cases, disclosure of Related Party transactions is mandatory only where the thresholds prescribed by the FTA are exceeded.
As a reminder, the FTA had previously explained that any transfer pricing adjustment decreasing taxable income could only be made on an application basis, following the FTA’s approval (paragraph 9.3.4 of the “Tax Returns – Corporate Tax Guide”).
Substantiating the transfer pricing adjustment
When making an adjustment that decreases taxable income, a Taxable Person must have in place:
- a rationale for the adjustment (explaining why the amounts originally reflected in the Financial Statements did not comply with the transfer pricing rules);
- an arm’s length analysis, including a comparability (benchmarking) study, demonstrating that the adjustment is consistent with the applicable transfer pricing rules and methods;
- a reconciliation between the amounts reflected in the Financial Statements and the amounts disclosed in the Tax Return on an arm’s length basis;
- evidence of a corresponding (symmetrical) adjustment made by the Related Party in respect of the relevant transaction(s).
What to keep in mind?
UAE Taxable Persons should consider the UAE transfer pricing rules when preparing their Tax Returns, adjusting the relevant figures where necessary. Prior approval from the FTA is not required for such adjustments.
Where an adjustment to arm’s length value results in a decrease in a company’s Taxable Income, disclosure of all transactions between Related Parties in the Corporate Tax Return is required irrespective of their value. Businesses should be prepared for the FTA to scrutinise such cases closely.
Our Corporate Tax services in the UAE
Uniwide, a licensed tax consultant in Dubai, provides accounting and Tax Return preparation and filing services in the UAE, taking into account the transfer pricing rules and the FTA’s latest clarifications.
Tags: corporate tax, UAE
