Two or more Persons shall be considered Related Parties if they are associated in economic, financial and regulatory aspects.

1. UAE VAT Related Parties
Related Parties are two or more persons who are not separate on the economic,
financial or regulatory level, where one can control the others either by Law, or
through the acquisition of shares or voting rights.
Two or more Persons shall be considered Related Parties if they are associated in
economic, financial and regulatory aspects, taking into account the following:
1) Economic practices, which shall include at least one of the following:
a) Achieving a common commercial objective.
b) One Person’s Business benefiting another Person’s Business.
c) Supplying of Goods or Services by different Businesses to the same
customers.
2) Financial practices, which shall include at least one of the following:
a) Financial support given by one Person’s Business to another Person’s
Business.
b) One Person’s Business not being financially viable without another
Person’s Business.
c) Common financial interest in the proceeds.
3) Regulatory practices, which shall include any of the following:
a) Common management.
b) Common employees whether or not jointly employed.
c) Common shareholders or economic ownership.
For example, Mr. A is a Director in Sunflower Trading Ltd and a Partner in B-One
Trading Ltd. Mr. R is a Director of B-One Trading Ltd. Also, Mr. R is a Partner in
Sunflower Trading Ltd. Therefore, Mr. A and Mr. R will be treated as related parties
and will be eligible to apply for VAT Group Registration provided the conditions are
fulfilled.
As an exception to Articles (34) and (35) of Federal decree-law No (8) Of 2017 on
value added tax, the value of the supply or Import of Goods or Services between
Related Parties shall be considered equal to the market value if the following
conditions are met which are (1) The value of the supply is less than the market
value. (2) If the supply is a Taxable Supply and the Recipient of Goods or
Recipient of Services does not have the right to recover the full Tax that would
have been charged to such supply as Input Tax.
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