#FTA publishes #Corporatetax Guide for Tax Return – Transfer Pricing aspects
The #UAE published a Corporate tax Guide – CTGTXR1 for taxpayers to aid them in filing of tax returns in the EmaraTax portal. The document provides guidance on topics in the manner they normally appear in the tax return. This Guide specifically states that it does not provide technical guidance on various aspects of the Tax return, and has referenced the respective guides issued earlier at the relevant sections.
The alert covers sections of the corporate tax return relating to #transferpricing , along with its respective analysis and key takeaways, including:
- Threshold limits (of AED 40 million aggregate and AED 4 million per category) for applicability of disclosure of related party transactions and threshold limits (AED 500,000) for disclosure of transactions with #connectedpersons.
- Inclusion of “Other” transfer pricing method in the tax return, including providing description of the “Other” Method.
- Separate disclosure of each type of transaction with the connected person and not aggregating the same.
- Addition and deduction adjustments w.r.t. transactions with related parties and connected persons.
- Having contemporaneous documentation through #localfile or otherwise in order to disclose in the tax return that transactions with related party / connected person are in line with Arm’s length price / market value.
- Ensuring that transactions with related parties / connected persons are adjusted to arm’s length value / market value during the course of finalization of books of accounts, so that no further adjustments in the Tax returns may be needed.
- All the transactions with related party and connected persons are to be ensured to be at arm’s length / market value irrespective of whether or not they are required to be disclosed in the Tax return.
The alert also captures a flow chart combining the requirements for maintenance of local file and #masterfile along with requirements for disclosure of transactions with related party / connected persons in the Tax return.
In case of any support on UAE TP requirements do reach out to VSTN