Most of the families we advise operate within multi-entity, multi-jurisdiction structures:

• A holding company at the top

• Several UAE and foreign subsidiaries

• Loans moving between entities

• Management fees, royalties, commissions

• Salaries or consulting fees paid to family members

All of these are Related Party Transactions (RPTs).

Under UAE Corporate Tax, that entire ecosystem must now satisfy one central rule:

• Every transfer of value must look as if it occurred between two independent parties.
  This is the Arm’s Length Principle, and it is no longer optional.

Where Tax Risk Comes From

In most family groups, nothing is intentionally hidden. The risk comes from informality.

Common issues we see:

• “Management fees” with no description of the services or deliverables

• Shareholder loans with interest rates that are too high, too low, or undocumented

• Payments to family members with no written contracts

• Intercompany charges that do not reflect the actual functions, assets, or risks

When these flows are not formally documented or priced correctly, three things can happen:

1. The FTA adjusts your taxable income upward

If a fee looks inflated or a loan looks artificial, the FTA can replace your number with their own.

2. Transfer pricing penalties and interest accumulate

Incorrect pricing, missing documentation, or non-disclosure triggers financial consequences.

3. Repeated artificial arrangements raise red flags

If patterns suggest intentional manipulation, the matter moves from “tax issue” to potential penal exposure,  something no family or founder wants.

Disclosure Is a Compliance Obligation

The UAE requires additional reporting when:

• RPTs exceed certain thresholds

• Payments are made to “connected persons” (including family members, shareholders, directors, etc.)

Many businesses meet the criteria without realizing it.
Failing to disclose properly is a risk on its own, even if pricing is correct.

Doing the Right Thing: Formalize What You Already Do

Most families are not trying to be aggressive. They simply operate based on trust and long-standing habits.

The solution is not to change the business.
The solution is to document the business you are already doing.

A strong RPT framework includes:

✔ Written agreements for management services, shareholder loans, and royalties
✔ Clear pricing methods tied to benchmarking and economic logic
✔ Regular review of intercompany flows to ensure they match reality
✔ Proper disclosure in the CT return and, where relevant, transfer pricing forms

This is always cheaper and calmer than defending unclear arrangements during an FTA inspection.

How Dawia Helps You Stay Ahead

Business Care Kit

• We map your related party flows across your chart of accounts

• We structure your internal coding so RPTs are always visible and trackable

Taxes Care Kit

• We work with transfer pricing specialists to benchmark key transactions

• We prepare the documentation needed to justify your pricing and defend your position

• We support your disclosure requirements so you remain compliant, not exposed

Family business is a strength.
With the right structure and documentation, it stays that way – even under Corporate Tax.