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Related parties and connected persons

Applies
FY2024 onwards
Reviewed
Rule
UAE-CT-RELPTY-2024.1
By

Who is a Related Party for UAE Corporate Tax?

Relatives to the fourth degree and persons linked by 50% ownership or control. Owners, directors and officers are Connected Persons.

Per Federal Decree-Law No. 47 of 2022, Article 35, Related Parties and Control

Related Parties are: two or more natural persons related within the fourth degree of kinship or affiliation; a natural person and a juridical person where the natural person, alone or with its Related Parties, owns at least the published ownership interest in or Controls the juridical person; two or more juridical persons on the same footing, or where any Person owns at least that interest in or Controls both; a Person and its Permanent Establishment or Foreign Permanent Establishment; partners in the same Unincorporated Partnership; and a trustee, founder, settlor or beneficiary of a trust or foundation, and their Related Parties. Control means the ability to influence another Person, including by exercising the published proportion of the voting rights, determining that proportion of the Board, receiving that proportion of the profits, or determining or exercising significant influence over the conduct of the Business and affairs. A Connected Person is an owner, a director or officer, a Related Party of either, or — for a partner in an Unincorporated Partnership — another partner and that partner's Related Parties.

The gate to the whole of Chapter Ten. Being Related Parties brings the arm's length standard in Article 34; being a Connected Person brings the Market Value limit on deductions in Article 36(1).

Who is related, and what Control means

35(1) — the six routes to Related Party status

  • (a) Two or more natural persons related within the fourth degree of kinship or affiliation, including by way of adoption or guardianship
  • (b) A natural person and a juridical person, where the natural person alone or with its Related Parties is a shareholder and directly or indirectly owns at least the published ownership interest, or Controls the juridical person
  • (c) Two or more juridical persons, where one alone or with its Related Parties owns at least that interest in or Controls the other, or where any Person owns at least that interest in or Controls both
  • (d) A Person and its Permanent Establishment or Foreign Permanent Establishment
  • (e) Two or more Persons that are partners in the same Unincorporated Partnership
  • (f) A Person who is the trustee, founder, settlor or beneficiary of a trust or foundation, and its Related Parties

The three routes people forget are not the ownership ones

(d) makes a branch and its head office Related Parties with no second Person, no ownership and no control. (e) makes co-partners related to each other. (f) reaches everyone around a trust or foundation. None of the three involves a percentage.

35(2) — Control is four abilities

  • (a) The ability to exercise the published proportion or more of the voting rights of another Person
  • (b) The ability to determine the composition of that proportion or more of the Board of directors
  • (c) The ability to receive that proportion or more of the profits
  • (d) The ability to determine, or exercise significant influence over, the conduct of the Business and affairs of another Person

Limb (d) has no percentage at all

It is a judgement. A rule that tested only the three numeric limbs would report 'not controlled' on facts where the article says otherwise, so it is an input of its own — and the article's own words are that Control means the ability to influence, 'including' these four, so the list is not exhaustive either.

Ownership and Control are alternatives

Each of (b) and (c) offers either. Control is not a backstop for a near miss on ownership: meeting one limb is enough, and the result says which.

36(2)–(4) — Connected Persons

  • (a) An owner of the Taxable Person — being, per Clause 3, any natural person who directly or indirectly owns an ownership interest in it or Controls it
  • (b) A director or officer of the Taxable Person
  • (c) A Related Party of any of those Persons
  • Where the Taxable Person is a partner in an Unincorporated Partnership, any other partner in it and any Related Party of that partner (Clause 4)

Order of testing

  1. 1

    Inputs requiring your determination

    Any input a person must decide and has not decided stops the computation. Only the facts the stated relationship turns on are asked for — asking a branch about its own voting rights would put a question to the reader that the article does not.

  2. 2

    A Person and its Permanent Establishment

    Article 35(1)(d). Related Parties with no ownership or control test at all.

  3. 3

    Partners in the same Unincorporated Partnership

    Article 35(1)(e). Likewise.

  4. 4

    A party to a trust or foundation

    Article 35(1)(f). Likewise.

  5. 5

    Kinship within the fourth degree

    Article 35(1)(a), for two natural persons.

  6. 6

    Ownership interest under Article 35(1)(b) or (c)

    Tested first of the two alternatives, against the published minimum.

  7. 7

    Control under Article 35(1)(b) or (c)

    The four limbs of Article 35(2). The three numeric limbs are tested against the published proportion; the fourth is a determination with no percentage, and the result says so when it is what decided the answer.

Examples

Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.

A branch and its head office

A foreign company and its UAE Permanent Establishment. No shareholding between them, because they are the same Person.

Computed

The Persons are Related Parties as computed: Article 35(1)(d) makes a Person and its Permanent Establishment or Foreign Permanent Establishment Related Parties, without any ownership or control test. Transactions and arrangements between them must meet the arm's length standard under Article 34. The Person is not a Connected Person of the Taxable Person on the facts you supplied.

Decided by the a person and its permanent establishment

A majority shareholding between two companies

One UAE company holding 60% of another, with the shareholder also a director of it.

Computed

The Persons are Related Parties as computed: Article 35(1)(c) makes them Related Parties where a direct or indirect ownership interest of at least the published minimum is held, and the interest is 60% against a published minimum of 50% for FY2026. Transactions and arrangements between them must meet the arm's length standard under Article 34. The Person would also be a Connected Person (Article 36(2)(b) — a director or officer of the Taxable Person), but public clarification CTP010 treats a Person who is both only as a Related Party — so payments to it are tested under Article 34, not Article 36(1).

Decided by the ownership interest under article 35(1)(c)

A minority holding with board control

A 30% shareholder that can appoint half the board — below the ownership minimum but within Control.

Computed

The Persons are Related Parties as computed: Article 35(2)(b) — the ability to determine the composition of that proportion or more of the Board of directors, at 50% against a published proportion of 50% for FY2026, amounts to Control, and Article 35(1)(c) makes them Related Parties where one Controls the other. Transactions and arrangements between them must meet the arm's length standard under Article 34. The Person is not a Connected Person of the Taxable Person on the facts you supplied.

Decided by the control under article 35(1)(c)

A small holding with significant influence and no percentage to point at

A 10% shareholder with contractual rights that let it direct the conduct of the business. Article 35(2)(d) sets no percentage for this.

Computed

The Persons are Related Parties as computed: Article 35(2)(d) makes the ability to determine, or exercise significant influence over, the conduct of the Business and affairs of another Person a form of Control, and it sets no percentage — so it is met on your determination rather than on a figure. Transactions and arrangements between them must meet the arm's length standard under Article 34. The Person is not a Connected Person of the Taxable Person on the facts you supplied.

Decided by the control under article 35(1)(c)

An arm's-length minority investment

A 10% passive shareholding with no board rights, no profit entitlement beyond the shares and no influence over the business.

Computed

The Persons are not Related Parties under Article 35(1)(c) as computed: the ownership interest of 10% is below the published minimum of 50% for FY2026, no limb of Control in Article 35(2) is met on the facts you supplied, and you have not determined that there is the ability to exercise significant influence over the conduct of the Business. The Person is not a Connected Person of the Taxable Person on the facts you supplied.

Decided by the ownership or control under article 35(1)(c)

A director who is not a shareholder

An individual who is an officer of the company but holds no interest in it and is unrelated to anyone who does — not a Related Party, but a Connected Person.

Computed

The Persons are not Related Parties as computed: you have indicated their relationship is none of the six that Article 35(1) lists. The Person is also a Connected Person: Article 36(2)(b) — a director or officer of the Taxable Person. A payment or benefit to a Connected Person is deductible only so far as Article 36(1) allows.

Decided by the relationships listed in article 35(1)

Try it

Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.

Not computed yet

2 inputs still need your determination:

  • How do the two Persons stand to each other, in the terms of Article 35(1)?
  • Is the Person also a Connected Person of the Taxable Person — an owner, a director or officer, a Related Party of one of those, or another partner in the same Unincorporated Partnership? Per public clarification CTP010, a director sits on the board or equivalent governing body (a job title alone does not count), and an officer has ultimate authority to plan, direct and control, make strategic decisions or bind the Taxable Person — a CEO, GM or CFO, or anyone who in fact holds that authority.

Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.

Thresholds

uae.related_party_ownership_threshold
50% · reviewed 2026-09-28 · source
uae.control_threshold
50% · reviewed 2026-09-28 · source

Threshold values are published separately from the rule and carried with a citation. Where none has been published for the period being computed, the rule reports that rather than applying a default.

Sources

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Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader