The direct answer: small does not mean outside the pricing rule
Related-party transactions must meet the arm’s-length principle: pricing consistent with comparable independent dealings. Connected-person payments have market-value and business-purpose conditions for deduction. Apply the statutory relationship definitions; a commercial connection alone does not make every supplier a related party.
Do not confuse being below a documentation or disclosure threshold with having no obligation to support the tax treatment. Begin with the transaction and the relationship, then assess which reporting and record requirements apply.
Flows to look for in your books
- Management fees or recharges between group companies
- Loans from shareholders or between companies
- Salaries or consultancy fees paid to owners
- Goods sold between related companies at non-market prices
Disclosure and documentation
Assess the tests separately and check the current return instructions when filing. Prepare gross income and expense reconciliations instead of assuming a net intercompany balance answers the disclosure questions.
| Requirement | Threshold or principle |
|---|---|
| Arm’s-length pricing | A pricing obligation, not an AED 200 million exemption for smaller companies. |
| Related-party return schedule | FTA return guidance uses aggregate transactions above AED 40 million; after that test, disclose categories exceeding AED 4 million. Dividends are excluded from these tests. |
| Connected-person return schedule | FTA guidance uses AED 500,000, including related-party aggregation; report each connected person whose payments/benefits, together with its related parties, exceed that amount. |
| Master File and Local File | Decision 97 applies where the taxpayer’s revenue is at least AED 200 million, or it belongs to a multinational enterprise group with consolidated revenue at least AED 3.15 billion in the relevant tax period. The Local File has transaction-specific inclusions/exclusions. |
What to do now
- List every related-party flow for the year
- Put intercompany agreements in writing
- Check owner pay against the market
- Keep evidence of how prices were set
A management recharge needs more than an invoice
Suppose a group company sends a monthly invoice labelled management support. Assemble the contract, description of work, recipient benefit, cost base and allocation method. Then ask whether the charge reflects what actually happened. An invoice proves that an amount was billed; it does not alone explain why the amount is appropriate.
If several companies share the cost, record why the allocation key fits the work. Headcount might help explain one kind of support but not another. The method and any benchmarking need to match the facts; do not use a universal mark-up copied from another business.
Create a reproducible year-end pack
Give each transaction family a short working sheet: parties, relationship, transaction description, agreement, amount, method, supporting evidence and unresolved questions. Reconcile these sheets to the ledger and financial statements. Keep the assessment of disclosure thresholds separate from the assessment of the price itself.
Flag new loans, unusual owner payments, changed agreements and unsupported recharges early enough to investigate. A late unexplained journal entry is not a substitute for an analysis. Meraki can scope records preparation and transfer-pricing support around the actual transactions rather than promising that a standard file fits every group.
Transfer-pricing support Corporate tax return support QFZP conditions
