Summary
The UAE Federal TaxAuthority (FTA) has recently issued Public Clarification CTP011¹, setting out its position on downward transfer pricing (TP) adjustments made by a Taxable Person in the Corporate Tax Return, along with the disclosure and documentation expected to support such adjustments.
Background
Article 34(1) of the Corporate Tax Law requires all transactions and arrangements between Related Parties to meet the arm's length standard. Where amounts recordedintheFinancial Statements are not at arm's length, the Taxable Person are required to make a TP adjustment in the Tax Return, upward (increasing Taxable Income) or downward (decreasing Taxable Income) to align with the arm's length result. Prior to the clarification, downward transfer pricing adjustment could be made only upon obtaining prior approval from the FTA.
