UAE Corporate Tax Disclosure: How Zoho Helps

The threshold everyone reads, and the one that matters

Ask a finance manager in Dubai whether transfer pricing applies to their business and you will usually get a confident no. The number they have in mind is AED 40 million, the aggregate related-party transaction threshold that triggers the related party schedule in the corporate tax return. For a company turning over AED 30 million, that sounds settled.

There is a second threshold, and it is eighty times smaller.

According to Grant Thornton’s summary of the FTA’s Corporate Tax Guide, disclosure on the Connected Persons schedule is required where payments or benefits to a single connected person, including their related parties, exceed AED 500,000. FTI Consulting puts the same figure at AED 0.5 million, with the details then reported for each connected person individually rather than in aggregate.

A connected person includes an owner of the taxable person, a director or officer, and a related party of any of them. Which means that in a great many owner-managed UAE companies, the single largest connected-person relationship is the owner-director, whose salary, benefits, and any rent or interest paid to them can reach AED 500,000 on their own.

Not every business will cross it, and the test depends on your own facts. But the assumption that transfer pricing is a multinational concern is wrong often enough to be worth checking, and the checking is not difficult. It is just something nobody has asked the accounting system to do.

This article is for the person who completes or reviews that schedule: a CFO, a finance director, a controller, sometimes an owner-manager with an external accountant. It covers who counts, what the disclosure asks for, and what your finance systems have to hold so that answering it is a report rather than an archaeology project.

One thing stated up front. These rules are not new in 2026. The framework is Federal Decree-Law No. 47 of 2022, with the FTA’s Transfer Pricing Guide of 23 October 2023 and Corporate Tax Guide of 11 November 2024 supplying the disclosure detail. What is live now is the filing cycle. Techvaria is a Zoho implementation and consulting partner, not a tax adviser. Pricing methods, market-value judgements and whether a particular relationship is in scope belong with a qualified UAE tax adviser.

Why this reaches further than most businesses expect

The related-party test aggregates, and it does not net. Per Grant Thornton, the related party schedule is triggered when all related-party transactions, recorded in the financial statements or at market value, exceed AED 40 million in aggregate; once triggered, each category (goods, services, intellectual property, interest, assets, liabilities, other) must be disclosed where it exceeds AED 4 million. FTI Consulting adds that income and expenses go on separate forms and must not be netted.

That last point catches groups. A company that nets intercompany receivables and payables in its management accounts sees a small balance and concludes it is well under the threshold. The test does not work that way, and the gross figures can be several times the netted ones.

Connected-person disclosure is granular. FTI Consulting notes the schedule requires, for each connected person above the threshold, their name, corporate tax number, the payment or benefit, its gross value and its market value. Market value is not a number any accounting system stores. It is a judgement that has to be made and documented.

Documentation obligations sit above it. Per Grant Thornton, a master file and local file are required where the taxpayer is part of a multinational group with consolidated revenue of at least AED 3.15 billion, or where its own revenue is at least AED 200 million. Below those thresholds, taxpayers must still keep reasonable records, which is the part most smaller businesses skip entirely.

The FTA can ask on short notice. Documentation must be produced within 30 days of an FTA request. Thirty days is not long enough to reconstruct who your counterparties were.

Accuracy matters. FTI Consulting warns that inaccurate disclosures may lead to penalties, and that reducing taxable income through a downward adjustment requires FTA approval.

Who counts as a related party or connected person

This is where the data problem starts, because the definitions reach into territory no finance system models.

Read those together and the practical reach becomes clear. The fourth degree of kinship is a wide net in a family-owned business. “Significant influence” is a judgement, not a percentage. And a connected person’s related parties are in scope too, so the landlord company owned by the director’s brother is not an arm’s-length third party for these purposes, however it looks in the purchase ledger.

No accounting system knows any of this. Your vendor master knows a company’s name, TRN and bank details. It does not know that its shareholder is your shareholder’s cousin.

What the disclosure actually asks you to produce

Per FTI Consulting, the two schedules require different fields:

Turn that into a data requirement and you get four things your systems need to support:

1. A flag on the counterparty identifying it as a related party, a connected person, or neither, maintained as a master-data attribute rather than remembered
2. Aggregation across every ledger, because connected-person payments do not all sit in the purchase ledger. Owner remuneration runs through payroll. Director expenses run through an expense system. Rent runs through purchases. Interest on a shareholder loan runs through the general ledger
3. Category classification, so the related-party totals can be split into goods, services, intellectual property, interest, assets, liabilities and other
4. A place to record market value and the reasoning behind it, attached to the relationship rather than kept in an adviser’s working file

The first and second are where most businesses fail, and they fail silently: the number produced looks plausible because nobody can see what it excluded.

Where Zoho fits, and what it will not do

Nothing here makes you compliant, and no software decides whether a transaction is at arm’s length. What a well-configured system does is make the population visible and the totals reliable, so your adviser is analysing complete data rather than assembling it.

Zoho Books supports custom fields on customers and vendors. Per Zoho’s knowledge base, you can add up to ten custom fields for customers and vendors, created through Preferences and the Contacts sub-tab, and edited or deleted from the same place. Ten is a real constraint, so the fields you spend them on matter. Counterparty status is a strong candidate.

Mapped to the requirement:

Four limitations, stated plainly

• It cannot determine who is connected. Fourth-degree kinship, significant influence and beneficial ownership are facts about people, not data in your ledger. Someone has to establish them and record the answer. The system holds the conclusion.
• It does not produce the disclosure form. Nothing in Zoho’s published material generates the FTA’s related party or connected persons schedules. What it can produce is the underlying totals that populate them.
• Market value is not a system output. It is an analysis, usually performed by a tax adviser, and the system’s role is to store the conclusion and its basis alongside the transaction data.
• Ten custom fields is the limit on contacts. If the vendor master is already carrying ten fields for other purposes, counterparty status competes with them. That is a design decision to make deliberately rather than discover.

UAE-specific considerations

Free zone entities have a second reason to care. Qualifying Free Zone Person status requires arm’s length treatment of related-party transactions. Our guide to the QFZP de minimis test covers the revenue classification side; the counterparty side described here sits alongside it, and the same customer and vendor records serve both.

Counterparty status is becoming a recurring theme. The October 2026 VAT changes already require supplier due diligence as a condition of input tax recovery, as covered in our guide to the input tax recovery changes. Different obligation, same underlying asset: a supplier master that knows something about who the supplier actually is. Design the fields once.

Family-owned businesses carry the widest exposure. The fourth-degree kinship reach, combined with the prevalence of family shareholding and family employment in UAE companies, means the connected-person population can be larger than anyone has listed.

Owner remuneration is a live question, not a formality. Because the UAE has no personal income tax, connected-person dealings are drawn into the arm’s length framework in a way that may be unfamiliar to finance teams from other jurisdictions.

An advance agreement is now possible for large transactions. Per Grant Thornton, the FTA introduced an Advance Pricing Agreement programme in December 2025, starting with unilateral APAs applying prospectively, with eligibility generally where covered controlled transactions reach at least AED 100 million per tax period. That is not an SME route, but it is worth knowing it exists.

Best practices

• Classify at onboarding, not at year end. The person creating a vendor usually knows whether the owner is related to someone. Nine months later, nobody does.
• Make the flag mandatory before a counterparty can transact. An optional field will be left blank.
• Record the basis, not just the answer. “Connected: director’s shareholding” is auditable. A tick box is not.
• Sweep payroll and expenses, not just purchases. Owner and director payments are the most likely to be missed because they do not look like counterparty transactions.
• Keep the gross figures. Do not rely on netted intercompany balances to judge the AED 40 million test.
• Keep reasonable records even below the documentation thresholds. Grant Thornton is explicit that taxpayers under the master file and local file thresholds must still do this.
• Review the population annually. Shareholdings change, directors join and leave, and the family tree does not sit in your system.

Common implementation mistakes

• Assuming the AED 40 million threshold settles it. The connected-person schedule has its own, far lower trigger.
• Netting intercompany before testing the threshold. The gross figures are the test, and they can be several times larger.
• Flagging only vendors. Related parties appear as customers too, and the disclosure separates income from expense.
• Leaving owner remuneration out of scope. It runs through payroll and is easy to overlook precisely because it is routine.
• Treating the flag as a reporting field. If it is not captured at onboarding by someone who knows the answer, it will be guessed later.
• Spending all ten contact custom fields before deciding what matters. Counterparty status competes with every other field someone wanted.

An illustrative scenario

The following example is entirely fictional. It is not a Techvaria client, and the details are invented to illustrate the mechanics described above.

A Dubai trading company turns over somewhat under AED 40 million and is owned by two brothers, one of whom is managing director. The finance manager reviews the corporate tax return and concludes the related party schedule does not apply, which on the aggregate threshold is correct.

Preparing the return, the company’s external accountant asks a different question: what has the company paid to connected persons this year?

The answer takes a week to assemble, because it sits in four places. The managing director’s remuneration runs through payroll. A monthly rent is paid to a company that owns the warehouse, and that company is owned by the brothers. A vehicle lease sits with a related entity. And there is interest on a shareholder loan recorded directly in the general ledger.

Individually, none of these looked like a counterparty transaction. Together, the payments to the managing director and parties related to him comfortably exceed AED 500,000, and the schedule requires each to be reported at gross value and market value.

The market-value question is the harder one, and the accountant handles it. What the company has to supply is the complete population and the totals, and nothing in its system identified any of these counterparties as connected.

The remedy is a half-day of design and a morning of data work: a counterparty status field on customers and vendors, populated for the entities the brothers own; the same status recorded against the managing director in the payroll records; and a report that totals payments by connected person across all four sources. Next year the question takes an afternoon.

Where this applies

• Family-owned trading and distribution businesses, where shareholding, employment and property ownership overlap across relatives.
• Groups with multiple UAE entities, where intercompany flows are routine and the gross figures are larger than the netted ones.
• Free zone companies, which need arm’s length treatment of related-party transactions for QFZP status as well as for disclosure.
• Professional services firms structured as partnerships, where partners and their related parties fall within the connected-person definition.
• Any owner-managed company where the owner is also an employee, a landlord or a lender, which is a large share of the UAE market.

Implementation guidance

1. Establish the population first. List the shareholders, directors and officers, and the entities they own or control. This is a conversation with ownership, not a system query, and it is the foundation for everything else.
2. Decide the field design. Counterparty status, the basis for it, and the date reviewed. Remember the ten-field limit on contacts and allocate deliberately.
3. Configure Zoho Books and CRM together, so the status is captured at onboarding in CRM and carried on the customer or vendor record in Books.
4. Populate the existing master data. De-duplicate first: a counterparty recorded twice will split its totals and defeat the threshold test.
5. Extend beyond the purchase ledger. Identify how owner remuneration, director expenses, rent, leases and shareholder interest are recorded, and make each traceable to the connected person.
6. Build the aggregation report in Zoho Analytics across Books, Payroll and Expense, totalling by counterparty and by category.
7. Create a place for market-value conclusions to be attached to the relationship, with the adviser’s basis recorded.
8. Set permissions carefully. Connected-person data is commercially and personally sensitive; restrict who can see the totals.
9. Test against the last filed return. Run the report for the prior period and compare it with what was actually disclosed. Differences are the measure of the problem.
10. Agree an annual review of the counterparty population with whoever knows the ownership position, and take the tax treatment to a qualified adviser. Our Zoho Books implementation page covers how the configuration work is usually scoped.

Approaches compared