No prior FTA approval, but full disclosure and robust support are essential
On 15 July 2026, the UAE Federal Tax Authority (FTA) issued Public Clarification CTP011, providing important clarity on downward transfer pricing (TP) adjustments made through Corporate Tax Returns.
Where a related party transaction recorded in the financial statements does not reflect an arm’s length outcome, the taxpayer may make an appropriate downward adjustment to its Taxable Income.
What has been clarified?
1. Self-assessment without prior approval
A downward TP adjustment may be made directly in the Corporate Tax Return without prior FTA approval. However, the adjustment remains subject to FTA review or audit.
2. Full disclosure with no threshold
Every related party transaction subject to a downward adjustment must be included in the Related Party Transactions Schedule, regardless of its value, nature or the usual disclosure thresholds.
3. Robust TP support
Before filing, the taxpayer should maintain:
- a clear rationale for the adjustment;
- an arm’s length analysis and appropriate benchmarking;
- a reconciliation between the financial statements and the Corporate Tax Return; and
- evidence of the corresponding adjustment by the relevant related party.
The practical takeaway
With FY2025 Corporate Tax compliance underway, businesses should identify potential downward adjustments early, align the treatment with the relevant related parties and complete the supporting documentation before filing.
As the clarification reflects the FTA’s position from the effective date of the legislation, previously filed returns containing downward TP adjustments should also be reviewed where relevant.
How Grant Thornton UAE can support
Our Transfer Pricing team can support businesses in assessing and quantifying downward adjustments, preparing the required arm’s length analysis and reconciliation, and ensuring that the disclosures and related party treatment are appropriately aligned.
Click the following link to read the full FTA Public Clarification CTP011.
Contact our tax team
For more details regarding this Tax alert or other Tax issues, reach out to our team of experts listed below on the latest tax developments within the UAE and the Middle East region.
