Connected Persons’ Remuneration at Arm’ s Length under UAE Corporate Tax Law
If you’re a solopreneur or the owner of a single-shareholder company in the UAE, this one’s for you — especially now that you’ve filed at least one Corporate Tax return.
Many single owners work full-time in their own business but draw no salary, simply taking profit instead. The common reasoning: “The company isn’t making much profit, so I shouldn’t book a salary.” This video explains why that approach can put you offside with the Federal Tax Authority (FTA).
The key point: the FTA isn’t concerned with whether you claim a deduction or not. What it looks at is whether your transactions with your own company are at arm’s length — the principle that governs Connected Persons and Related Parties under UAE Corporate Tax Law.
As a single shareholder, you’re actively running the business — bringing technical know-how, financial expertise, strategic direction, and years of experience. Had you done that same work as an employee elsewhere, you’d have earned a salary. That salary is your compensation, and it should be booked as an expense in your accounts — regardless of whether the company is profitable.