July 2026 / United Arab Emirates

The United Arab Emirates' Federal Tax Authority (FTA) has issued a new Public Clarification on how taxpayers should report downward transfer pricing adjustments within their Corporate Tax Returns. The clarification provides greater certainty for businesses seeking to ensure that related-party transactions comply with the arm's length principle while meeting the country's corporate tax requirements.

According to the clarification, taxpayers may make qualifying downward transfer pricing adjustments directly within their Corporate Tax Return without obtaining prior approval from the FTA. However, these adjustments remain subject to review during future tax audits, making robust documentation essential.

The clarification also highlights that taxpayers should disclose all related-party transactions for which a downward adjustment is made, regardless of the value or nature of the transaction. This reinforces the importance of transparency in transfer pricing reporting and aligns with the UAE's broader tax compliance framework.

From a documentation perspective, businesses are expected to maintain sufficient evidence supporting the adjustment, including the commercial rationale, transfer pricing analysis, reconciliation between accounting and tax figures where applicable, and documentation demonstrating the corresponding treatment by the related party.

The clarification further specifies that it applies only to downward adjustments made under the relevant provisions governing self-assessment within the UAE Corporate Tax regime and does not extend to other adjustment mechanisms provided under the legislation.

Why this matters

The clarification provides additional certainty for multinational groups operating in the UAE by outlining the conditions under which downward transfer pricing adjustments can be reflected in tax returns. Companies engaging in cross-border related-party transactions should review their transfer pricing policies, documentation processes and tax reporting procedures to ensure they remain aligned with the latest administrative guidance.

The United Arab Emirates Federal Tax Authority (FTA) has released an updated version of its guidance on Private Clarifications, the administrative mechanism through which taxpayers may request official guidance on the application of UAE tax legislation to specific factual situations.

The revised guidance reflects recent developments in the UAE tax framework and provides additional procedural information on how clarification requests should be submitted. Particular attention is given to matters relating to the Pillar Two Top-up Tax, following the introduction of the global minimum tax rules within the UAE tax system.

Private Clarifications are an important tool for businesses seeking greater certainty when dealing with complex tax matters. Although they do not constitute generally binding legislation, they enable taxpayers to obtain the FTA's interpretation before taking significant tax positions, thereby helping reduce uncertainty and supporting voluntary compliance.

The updated guide also clarifies who is eligible to submit a request. Besides the taxpayer concerned, certain authorised representatives may file applications, while designated filing entities may do so in relation to Pillar Two matters where permitted under the applicable rules. Requests must continue to be submitted through the EmaraTax platform and comply with the procedural requirements established by the FTA.

In addition, the guidance provides further clarification on the scope of the procedure, emphasising that requests should relate to genuine areas of uncertainty under the tax legislation and outlining situations in which an application may be declined. It also summarises key procedural aspects, including indicative response times and the applicable administrative fees.

The update comes at a time when the UAE tax framework continues to evolve rapidly. The introduction of Corporate Tax and the implementation of the OECD's Global Minimum Tax rules have increased the need for clear administrative guidance, particularly for multinational groups operating across multiple jurisdictions.

For businesses with operations in the UAE, the revised guidance reinforces the FTA's commitment to improving transparency, strengthening tax certainty and providing practical support as taxpayers adapt to the country's expanding tax regime.