What to record for related party transactions in a UAE business

Article 35 of the Corporate Tax Law treats as related: individuals within the fourth degree of kinship or affiliation, a person and any company in which that person and their related parties own 50% or more, and entities under common control. Article 36 adds connected persons, which are owners, directors and officers, and their related parties.

Turn that into a register. List each shareholder, director and senior officer, their close family members who have business dealings with the company, and every company any of them controls. Note the relationship and the date it started. Update the register when shareholding or directorships change.

Example: a Dubai interiors company owned 60% by Khalid and 40% by his cousin. The register lists Khalid, the cousin, Khalid's wife who rents the company a storage unit, Khalid's furniture import business in Ajman, and the cousin's joinery workshop in Sharjah. That is five related parties for a company with twelve employees.

Every recurring related party transaction should have written terms: a lease for the storage unit, a supply agreement with the furniture importer, an employment contract for the cousin if he also works in the business, a loan agreement for any shareholder loan.

The document does not need to be long. It needs to show what is supplied, at what price or rate, on what payment terms, and from when. Without it, the FTA has nothing to compare your ledger entries against except its own view of the market.

This is the record most small businesses never make. A short note for each type of transaction is enough: we charge the joinery workshop the same rate card we use for outside customers; we pay Khalid's wife AED 4,000 for each month of storage, against three local quotes of AED 3,800 to AED 4,500; we buy from the Ajman importer at list price less the 10% discount any trade customer receives.

Keep the evidence with the note: the quotes, the rate card, the price list. Article 34 requires related party transactions to meet the arm's length standard, and these papers are how you show it.

In the ledger, set up related parties as named customers or suppliers, not as 'cash' or 'sundry'. Every invoice, bill, loan movement and expense claim should sit against the related party's record. That way you can produce a full list of the year's transactions with each party in seconds.

Article 55 allows the FTA to require a disclosure of related party and connected person transactions with the tax return, and to ask for supporting documents within 30 days. A ledger organised by party makes both straightforward.

• Sales to and purchases from related businesses
• Salaries, bonuses and benefits paid to owners, directors and family
• Rent paid to or received from related parties
• Loans in either direction, with interest and repayments
• Guarantees, shared costs and recharges

Related party balances drift. The company thinks it owes the Ajman importer AED 86,000; the importer's books show AED 91,500 because of a credit note nobody posted. Agree balances in writing with each related party at year end, and investigate differences before the accounts are signed.

Shareholder current accounts deserve particular attention. Personal expenses paid by the company and salary not drawn both flow through them, and an unexplained debit balance owed by the owner can look like a disguised distribution.

In HelloBooks you mark a customer or supplier as a related party once, with the relationship noted. From then on the AI agent tags every invoice, bill and bank match with that party, and flags payments from the company account to an owner or family member that have no supporting document. Contracts and pricing notes attach to the party record.

At year end, ask 'list all related party transactions for 2026 by party' and you get a schedule ready for your accountant's review, with totals by type. The judgement on whether prices are at arm's length stays with you and your tax agent. If your firm wants the schedule in its own format, request it via /book-a-demo.