DO NOT FAIL THE ARM'S LENGTH TEST

Concept ensures transactions between related parties are priced fairly, transparently

- BY SAMEER MISHRA Special to Gulf News

The UAE's corporate tax framework has introduced specific requirements for free zone companies seeking to benefit from preferential tax treatment.

One of the most critical requirements is compliance with the arm's length principle — a concept that ensures transactions between related parties are priced fairly and transparently.

A Qualifying Free Zone Person (QFZP) is a Free Zone Person that meets the conditions of Article 18 of the Corporate Tax Law, and meets all of the following conditions:

It's important to note that not all Free Zone companies automatically qualify for zero per cent corporate tax, and not all income generated by a QFZP necessarily qualifies for preferential treatment.