When Might a Business Valuation Be Needed for UAE Corporate Tax?

01The short answer

UAE corporate tax requires transactions between related parties and connected persons to meet the arm's-length standard. For recurring transactions this is normally addressed through transfer pricing analysis. Where a whole business, a shareholding or a valuable intangible asset changes hands, a valuation is usually the clearest way to evidence the price.

02Transactions where a valuation often helps

• Sale of shares by an owner to a company they control
• Transfer of a business between sister companies
• Moving a brand or software into an IP-holding company
• Transfers between a free-zone entity and a mainland group company
• Share-for-share exchanges in a group reorganisation

03Reliefs and boundaries

The Corporate Tax Law contains reliefs for transfers within qualifying groups and for business restructurings. Whether a relief applies, and whether market value must be recognised, is a tax question for your adviser. A valuation provides the evidence on which those conclusions rest; it does not replace them.

04Documentation

A valuation prepared for tax should record the purpose, the basis of value, the valuation date and the information available at that date, so that it can be read alongside transfer pricing files if the Federal Tax Authority asks questions later.