What Information Must Be Disclosed in the UAE Corporate Tax Transfer Pricing Disclosure Form (CT-TPD)?

The introduction of the UAE’s Corporate Tax (CT) regime has brought with it a critical compliance obligation: the Transfer Pricing Disclosure Form (CT-TPD). This form is not a standalone submission but an integral part of your annual Corporate Tax Return . For businesses engaged in transactions with Related Parties and Connected Persons, accurately completing the CT-TPD is paramount to avoiding penalties and minimizing the risk of an audit by the Federal Tax Authority (FTA).

Understanding exactly what needs to be disclosed, and when, is the first step to ensuring compliance. This guide provides a detailed breakdown of the information required for the CT-TPD, the applicable thresholds, and key practical considerations for UAE businesses.

Why the CT-TPD is a Cornerstone of FTA Compliance

The CT-TPD is the FTA’s primary tool for transparency and risk assessment . It requires taxpayers to self-report their controlled transactions, the methods used to price them, and any adjustments made to align with the arm’s length principle.

The consequences of inaccurate or incomplete disclosure are significant :

• Penalties for Late Filing: AED 500 per month for the first 12 months, increasing to AED 1,000 per month thereafter.
• Increased Scrutiny: The form is used by the FTA to identify taxpayers for transfer pricing audits .
• Disallowed Deductions: Payments to Connected Persons that are not at market value may be disallowed for tax purposes .

Proactive and accurate completion of the CT-TPD is your first line of defense. For foundational support, engaging experts in UAE corporate tax is a critical first step.

Understanding the Disclosure Thresholds

Before diving into the specific data fields, it’s crucial to know if you are required to complete the form. Disclosure is mandatory if the following thresholds are met :

Key Consideration: The value of transactions is determined based on the amounts recorded in your financial statements or their market value, whichever is applicable . It is essential to note that for Related Parties, the scope of “transactions” includes balance sheet items such as loans (principal amount) and other assets/liabilities, not just income statement flows .

A Detailed Breakdown of Required Information

The CT-TPD is divided into two main schedules. Here is a comprehensive look at the information required for each.

1. Related Party Transaction Schedule

This schedule requires a detailed breakdown of material transactions with all Related Parties. The information must be reported separately for income and expenses; they cannot be netted off .

• Legal Full Name of the Related Party .
• Transaction Type, categorized as: Goods, Services, Intellectual Property, Interest, Assets, Liabilities, or Other .
• Country of Tax Residence of the Related Party .
• Corporate Tax Registration Number (TRN) of the Related Party .
• Gross Value of Transaction in AED, as recorded in your financial statements .
• Transfer Pricing Method used (e.g., CUP, TNMM, Cost Plus, Profit Split, or Other) .
• Arm’s Length Value (ALV) of the transaction in AED, which should be determined through a benchmarking study .
• Tax Adjustment: The difference between the Gross Value and the Arm’s Length Value. It is critical to remember that downward adjustments (which decrease taxable income) can only be made after obtaining approval from the FTA. Upward adjustments should be reported without offsetting them against downward adjustments .

2. Connected Person Transaction Schedule

This schedule focuses on payments and benefits provided to individuals closely associated with the business. Disclosure is required for each Connected Person separately .

• Full Name of the Connected Person .
• Corporate Tax TRN of the Connected Person (if applicable) .
• Description of Payment or Benefit provided .
• Actual Value of the payment or benefit in AED .
• Market Value of the payment or benefit in AED, determined by applying the arm’s length principle .
• Tax Adjustment: The difference between the Actual Value and the Market Value is automatically disallowed for tax deduction purposes if the payment exceeds market value .

Critical Practical Challenges and Considerations

Based on guidance from major firms, several areas require careful attention to ensure accurate disclosure :

• Loans and Principal Amounts: The principal amount of a loan provided to or received from a Related Party is considered a transaction in the “Assets” or “Liabilities” category and must be included in the AED 40 million threshold test .
• Transactions within a Tax Group: While transactions between members of the same tax group are generally eliminated for CT purposes, disclosure may still be required in specific scenarios, such as when a member has unutilized tax losses or joins an existing group with losses .
• Investment in Subsidiaries: Capital investments like equity infusions are typically not considered ongoing revenue-generating transactions and are generally not required to be disclosed in the CT-TPD .
• Third-Party Expense Reimbursements: If your company pays a third-party expense on behalf of a Related Party and then recovers the cost, this transaction is considered a controlled transaction and is disclosable in the year the payment is made, not when it is reimbursed .
• Contemporaneous Documentation is Key: The figures reported in the CT-TPD, especially the Arm’s Length Value, must be supported by robust transfer pricing documentation (Local File/Master File) . This documentation must be prepared on a contemporaneous basis and provided to the FTA within 30 days upon request . This is a mandatory part of your compliance services obligations.

Conclusion: Accuracy and Preparedness are Non-Negotiable

The UAE Corporate Tax Transfer Pricing Disclosure Form is a significant compliance requirement that demands a thorough understanding of your related-party dealings. Simply meeting the thresholds is not enough; the accuracy and consistency of the information disclosed are critical.

The process underscores the importance of having robust contemporaneous transfer pricing documentation in place before filing your tax return. By proactively identifying reportable transactions, conducting appropriate benchmarking studies, and meticulously completing the CT-TPD, you transform a compliance obligation into a demonstrable act of good corporate governance.

Don’t leave your disclosure to chance. For expert guidance on preparing your CT-TPD, maintaining compliant documentation, and ensuring overall corporate tax compliance, consulting with specialists can safeguard your business against unnecessary risks.