Latest news with #CorporateTax
Al Bawaba
2 days ago
- Business
- Al Bawaba
UAE Transfer Pricing Rules Bring Director Salaries Under New Scrutiny Says ADJC
As businesses across the UAE adjust to the Corporate Tax (CT) regime, ADJC is urging companies to revisit how they remunerate directors, particularly those who may be classified as related parties. Under the new rules, director salaries fall within the scope of Transfer Pricing (TP) scrutiny—an area many businesses are now navigating for the first time.'The UAE's transfer pricing framework is fully aligned with OECD standards, and that means companies must apply the arm's length principle to all related-party transactions—including director compensation,' said Iftikhar Kazi, Business Manager at ADJC. 'If a director qualifies as a related party, then their salary, bonuses, and benefits must be benchmarked to reflect what an independent party would accept under similar market conditions.'Under UAE CT Law (Federal Decree-Law No. 47 of 2022), related parties include individuals who own or control 50% or more of a business, directors with significant decision-making authority who are also shareholders, and in some cases, even family members. If a director falls into this category, then any payments made to them must meet arm's length criteria—typically substantiated through a benchmarking analysis or Local File documentation.'Benchmarking director salaries is not just a compliance formality—it's a necessity,' Kazi added. 'Companies should rely on market data from sources such as Mercer, Willis Towers Watson, or regional salary surveys to ensure compensation falls within a defensible range. The Federal Tax Authority (FTA) may challenge excessive payments, especially if they fall outside the interquartile range commonly accepted in transfer pricing reports.'According to Ministerial Decision No. 97 of 2023, companies with revenue above AED 50 million—or part of a multinational group with global turnover exceeding AED 3.15 billion—must maintain contemporaneous transfer pricing documentation, including any material director compensation paid to related parties. ADJC advises UAE businesses to proactively assess their internal remuneration policies, ensure benchmarking is up to date, and prepare robust documentation to withstand potential audits. ADJC is a leading advisory firm in the UAE specializing in corporate tax, transfer pricing, and compliance advisory. With a dedicated team of experts and a deep understanding of regional regulations, ADJC supports businesses in achieving tax efficiency and regulatory clarity.
Web Release
3 days ago
- Business
- Web Release
UAE Transfer Pricing Rules Bring Director Salaries Under New Scrutiny Says ADJC
As businesses across the UAE adjust to the Corporate Tax (CT) regime, ADJC is urging companies to revisit how they remunerate directors, particularly those who may be classified as related parties. Under the new rules, director salaries fall within the scope of Transfer Pricing (TP) scrutiny—an area many businesses are now navigating for the first time. 'The UAE's transfer pricing framework is fully aligned with OECD standards, and that means companies must apply the arm's length principle to all related-party transactions—including director compensation,' said Iftikhar Kazi, Business Manager at ADJC. 'If a director qualifies as a related party, then their salary, bonuses, and benefits must be benchmarked to reflect what an independent party would accept under similar market conditions.' Under UAE CT Law (Federal Decree-Law No. 47 of 2022), related parties include individuals who own or control 50% or more of a business, directors with significant decision-making authority who are also shareholders, and in some cases, even family members. If a director falls into this category, then any payments made to them must meet arm's length criteria—typically substantiated through a benchmarking analysis or Local File documentation. 'Benchmarking director salaries is not just a compliance formality—it's a necessity,' Kazi added. 'Companies should rely on market data from sources such as Mercer, Willis Towers Watson, or regional salary surveys to ensure compensation falls within a defensible range. The Federal Tax Authority (FTA) may challenge excessive payments, especially if they fall outside the interquartile range commonly accepted in transfer pricing reports.' According to Ministerial Decision No. 97 of 2023, companies with revenue above AED 50 million—or part of a multinational group with global turnover exceeding AED 3.15 billion—must maintain contemporaneous transfer pricing documentation, including any material director compensation paid to related parties. ADJC advises UAE businesses to proactively assess their internal remuneration policies, ensure benchmarking is up to date, and prepare robust documentation to withstand potential audits. ADJC is a leading advisory firm in the UAE specializing in corporate tax, transfer pricing, and compliance advisory. With a dedicated team of experts and a deep understanding of regional regulations, ADJC supports businesses in achieving tax efficiency and regulatory
Mid East Info
3 days ago
- Business
- Mid East Info
UAE Transfer Pricing Rules Bring Director Salaries Under New Scrutiny Says ADJC - Middle East Business News and Information
As businesses across the UAE adjust to the Corporate Tax (CT) regime, ADJC is urging companies to revisit how they remunerate directors, particularly those who may be classified as related parties. Under the new rules, director salaries fall within the scope of Transfer Pricing (TP) scrutiny—an area many businesses are now navigating for the first time. 'The UAE's transfer pricing framework is fully aligned with OECD standards, and that means companies must apply the arm's length principle to all related-party transactions—including director compensation,' said Iftikhar Kazi, Business Manager at ADJC. 'If a director qualifies as a related party, then their salary, bonuses, and benefits must be benchmarked to reflect what an independent party would accept under similar market conditions.' Under UAE CT Law (Federal Decree-Law No. 47 of 2022), related parties include individuals who own or control 50% or more of a business, directors with significant decision-making authority who are also shareholders, and in some cases, even family members. If a director falls into this category, then any payments made to them must meet arm's length criteria—typically substantiated through a benchmarking analysis or Local File documentation. 'Benchmarking director salaries is not just a compliance formality—it's a necessity,' Kazi added. 'Companies should rely on market data from sources such as Mercer, Willis Towers Watson, or regional salary surveys to ensure compensation falls within a defensible range. The Federal Tax Authority (FTA) may challenge excessive payments, especially if they fall outside the interquartile range commonly accepted in transfer pricing reports.' According to Ministerial Decision No. 97 of 2023, companies with revenue above AED 50 million—or part of a multinational group with global turnover exceeding AED 3.15 billion—must maintain contemporaneous transfer pricing documentation, including any material director compensation paid to related parties. ADJC advises UAE businesses to proactively assess their internal remuneration policies, ensure benchmarking is up to date, and prepare robust documentation to withstand potential audits. ADJC is a leading advisory firm in the UAE specializing in corporate tax, transfer pricing, and compliance advisory. With a dedicated team of experts and a deep understanding of regional regulations, ADJC supports businesses in achieving tax efficiency and regulatory clarity.
Zawya
4 days ago
- Business
- Zawya
UAE transfer pricing rules bring Director Salaries under New Scrutiny says ADJC
Dubai, UAE – As businesses across the UAE adjust to the Corporate Tax (CT) regime, ADJC is urging companies to revisit how they remunerate directors, particularly those who may be classified as related parties. Under the new rules, director salaries fall within the scope of Transfer Pricing (TP) scrutiny—an area many businesses are now navigating for the first time. 'The UAE's transfer pricing framework is fully aligned with OECD standards, and that means companies must apply the arm's length principle to all related-party transactions—including director compensation,' said Iftikhar Kazi, Business Manager at ADJC. 'If a director qualifies as a related party, then their salary, bonuses, and benefits must be benchmarked to reflect what an independent party would accept under similar market conditions.' Under UAE CT Law (Federal Decree-Law No. 47 of 2022), related parties include individuals who own or control 50% or more of a business, directors with significant decision-making authority who are also shareholders, and in some cases, even family members. If a director falls into this category, then any payments made to them must meet arm's length criteria—typically substantiated through a benchmarking analysis or Local File documentation. 'Benchmarking director salaries is not just a compliance formality—it's a necessity,' Kazi added. 'Companies should rely on market data from sources such as Mercer, Willis Towers Watson, or regional salary surveys to ensure compensation falls within a defensible range. The Federal Tax Authority (FTA) may challenge excessive payments, especially if they fall outside the interquartile range commonly accepted in transfer pricing reports.' According to Ministerial Decision No. 97 of 2023, companies with revenue above AED 50 million—or part of a multinational group with global turnover exceeding AED 3.15 billion—must maintain contemporaneous transfer pricing documentation, including any material director compensation paid to related parties. ADJC advises UAE businesses to proactively assess their internal remuneration policies, ensure benchmarking is up to date, and prepare robust documentation to withstand potential audits. ADJC is a leading advisory firm in the UAE specializing in corporate tax, transfer pricing, and compliance advisory. With a dedicated team of experts and a deep understanding of regional regulations, ADJC supports businesses in achieving tax efficiency and regulatory clarity.
Mid East Info
4 days ago
- Business
- Mid East Info
FTA Holds Awareness Workshop in Dubai on Corporate Tax Rules Highlighting Penalty Waiver for Timely Registration
Registrants seeking to benefit from the initiative to exempt from late registration fines for corporate tax are required to submit their returns within 7 months of the end of the first tax period Dubai, May 2025: As part of its continuing campaign to raise awareness of corporate tax among business sectors and taxpayers, the Federal Tax Authority (FTA) held a workshop in Dubai today on 'Rules for Determining Income Subject to Corporate Tax'. This new workshop comes as part of FTA's efforts to inform and educate eligible taxpayers of their obligations and payment procedures, as well as to encourage an environment of voluntarily compliance with the corporate tax law, which came into effect two years ago. The FTA also announced that six more, in-person workshops are planned for the remainder of 2025, as the Authority's nationwide campaign gathers pace and is set to include a large number of events and workshops – via remote videoconferencing or in-person formats – in all seven of emirates that make up the UAE. The FTA further emphasised that the campaign is designed to address various tax topics, so as to disseminate knowledge of relevant legislation, requirements and procedures for a thorough understanding of corporate tax compliance. To date, the campaign has utilised tailored and targeted programmes to meet the needs of each of the key groups concerned. This ensures that taxpayers have straightforward access to all the relevant and necessary information. Additionally, the campaign seeks to support and encourage the business community to implement the corporate tax law efficiently and accurately. Today's workshop, held in Dubai, had a strong turnout and active participation from the attendees with approximately 940 representatives of businesses, several government entities and stakeholders present. As hosts of this in-person event, FTA representatives provided a comprehensive explanation of the general principles of corporate tax and the importance of voluntary compliance with tax legislation. Within the framework of the campaign, started in phases from 2024, the Federal Tax Authority (FTA) has regularly issued advisories to unregistered corporate taxpayers to expedite the submission of their corporate tax registration applications. Most recently, this includes an update to take advantage of the UAE Cabinet Decision to waive the administrative penalties resulting from the late submission of registration applications, within the specified legal period. Using the platform of the workshop, the FTA again took to opportunity to call on corporate taxpayers (or exempt persons required to register) who have registered for tax to benefit from the initiative to submit their tax returns (or annual declarations) within a period not exceeding seven months from the end of the registrant's first tax period. This is the stipulated period in order to qualify for the exemption from the penalty, in accordance with the Cabinet Decision. FTA representatives again clarified that to benefit from the exemption, taxpayers must file the tax return (or annual declaration) within a period not exceeding seven months from the end of the tax period. However, this only applies to the legal or natural person's first tax period (or the exempted person required to register), regardless of whether the due date of the first tax return (or the first annual declaration) is before or after the implementation of the new decision. Today's workshop agenda covered a range of topics including how to determine income subject to corporate tax, as well as considerations that must be undertaken in the determination and calculation of tax due, the accounting standards applied for corporate tax purposes, the financial statements determined in accordance with the accounting standards applied by the taxpayer, and the basis of accounting accrual under which the taxpayer recognises income when it is earned and expenses when they are incurred. Other elements to be taken into account include the definition of financial assets and financial liabilities, the method of accounting for equity as defined in IFRS, the method of accounting in accordance with the accounting standards applied by the taxpayer, and the cost method of accounting. Information was also provided in relation to explaining the Corporate Tax Law and its associated decisions, requirements for compliance with the law, registration procedures through EmaraTax digital tax services platform, the criteria for determining taxable persons, applicable rates and tax periods, and the mechanism for applying the provisions of the Corporate Tax Law.
