If you pay yourself, a co-founder, or a sister company, this applies to you. Price it like strangers would and keep your workings. That’s the Arm’s Length rule.
What these mean in plain English
Related Parties = under common ownership/control (covers family ties, owning more than 50%, or having effective control).
Connected Persons = owners, directors/officers, and their related parties. Payments are deductible only up to market value and still must be wholly and exclusively for business.
Golden rule
Price in-group deals at market value and keep evidence. See the FTA Transfer Pricing Guide for how to apply arm’s length in practice.
What to actually do
Map relationships: list owners, directors, sister companies, JVs. Tag who is Related and who is Connected.
Price at market: quotes, salary surveys, loan indices, or comparables tied to Art. 34.
Paper it: one-pager with scope, basis for rate, dates, approvals.
Disclosures in the CT return (exact triggers)
Related-party schedule (RPT): required if aggregate related-party transactions exceed AED 40m. When triggered, disclose categories that exceed AED 4m (goods, services, IP, interest, etc.).
Connected-person schedule (CP): required if payments/benefits to at least one connected person exceed AED 500k; then disclose each connected person over AED 500k.
Common client cases
Founder home-office rent → cap at market; apportion the business-use portion; document.
Management fees to HoldCo → real services, fair rates, benchmarking.
Shareholder loans → interest must be arm’s length and watch the interest deduction limit: deductible net interest is the higher of 30% of adjusted EBITDA or AED 12m (with carry-forward rules).
Director compensation/success fees → market-consistent, scope in writing, approvals kept.
Red flags that invite questions
Round numbers with no backup.
Fees with no real services.
Rates way above market.
Backdated agreements.
Bottom line: in-group deals are fine, just make them look like deals with a stranger and save a short evidence pack. That keeps you deductible and audit-ready.