# What the FTA's 2025 Results Tell You About Your CT and TP Audit Risk in H2 2026

The UAE Federal Tax Authority does not publish an annual report to celebrate. It publishes one to signal where it is going.

The 2025 report, released this July, is worth reading carefully — not for what it says about last year, but for what it confirms about the next twelve months. The headline numbers are significant: total tax revenues reached AED 46 billion, up from AED 41 billion in 2024. That AED 5 billion uplift is not attributable to economic growth alone. The FTA reviewed approximately 1.7 million transactions during the year, more than 20 percent above 2024 volumes, and formal audits increased by 46 percent. The message is straightforward: the enforcement apparatus is operational, it is scaling, and it is producing results.

For UAE entities with related-party transactions — holding structures, founder-director remuneration arrangements, intercompany loans, management fee streams — the question is not whether audit attention is coming. It is whether your documentation is in a position to withstand it.

From Education to Enforcement: What the Shift Means in Practice

The UAE spent the better part of a decade building its tax infrastructure — legislating, educating, and issuing guidance. The FTA's own communications acknowledged that phase explicitly. That phase has now closed. The 2025 Annual Report marks, in institutional terms, a formal transition into the enforcement period. AI-driven audit targeting is described as operational across VAT, excise, and corporate tax. This is not a future capability. It is the tool being used to select who gets examined now.

AI-assisted selection changes the risk profile for entities that assumed low visibility. In a manual audit environment, volume constraints meant that smaller or less prominent structures might not surface for years. Algorithmic selection does not work that way. It matches patterns across return data, transaction flows, and cross-referenced registration information. An entity with a clean registration and a single related-party transaction it cannot adequately document is as visible as a larger group filing complex consolidated returns — potentially more so, if the pattern is anomalous.

The first corporate tax return cycles are completing this year. September 2026 is the deadline for FY2025 filers. These filings will generate a structured dataset that the FTA has never had before at this scale: corporate income, related-party disclosures, transfer pricing positions, and connected persons arrangements, all filed simultaneously across thousands of entities. The 2025 Annual Report signals explicitly that corporate tax and transfer pricing audits represent the FTA's next enforcement frontier. That is not conjecture. It is the stated direction.

Three Areas That Warrant Attention Before September

**Transfer pricing documentation.** For DMCC and DIFC entities with related-party transactions — intercompany services, royalties, financing arrangements, intra-group asset transfers — the question is whether the existing documentation meets the standard that would be required in an audit, not merely whether something was filed. The UAE's transfer pricing rules follow the OECD Guidelines, and the FTA has indicated it will apply them accordingly. A local file that describes the transaction in general terms without functional analysis, comparability data, or a reasoned application of the arm's length principle is unlikely to hold up. The gap between what was filed and what would satisfy an audit is the risk. That gap should be assessed now, before the CT return is submitted, not after a notice arrives.

**ESR historical positions.** The FTA's 15-year audit window for Economic Substance Regulation matters is relevant here in a specific way. Many entities that filed ESR notifications in the early years — when guidance was still developing and enforcement seemed distant — filed positions that would not survive scrutiny today. Some claimed exemptions that did not apply. Some filed as meeting the substance test without adequately evidencing it. Some have changed their activities since filing without revisiting their ESR position. The 2025 enforcement data should prompt a review of those historic positions. An ESR deficiency that predates the corporate tax era is still an open liability.

**Connected persons remuneration.** Regulatory guidance issued earlier this year clarified the treatment of remuneration paid to connected persons — including founder-directors — under the corporate tax framework. The boundary between deductible remuneration and non-deductible profit extraction has specific conditions attached, and the default position of many owner-managed UAE entities does not satisfy them. With CT returns due in September, this is a material filing question. An arrangement that looked benign in 2024, when it was not yet being reported, carries direct CT implications now.

The Window Is Narrowing

There is a practical point about timing. Pre-audit documentation — transfer pricing local files, ESR health-checks, remuneration reviews — carries significantly more weight when completed before a filing or before an audit is opened. The FTA's enforcement tools create a record at the point of submission. What a business does in response to a notice is remediation. What it does before filing is planning. Those are treated differently, both in terms of outcome and in terms of how the authority reads the entity's overall compliance posture.

The AED 46 billion in revenues reported for 2025 represents an enforcement-driven inflection point in UAE tax administration. The infrastructure is in place. The data is now flowing in volume. The question for any entity with related-party complexity — in DMCC, in DIFC, or in any UAE free zone — is not whether it will eventually face scrutiny. It is whether, when scrutiny arrives, the position is one that was thought through.

The September 2026 filing deadline is the relevant horizon. The time between now and then is the window.

*Affinitas FZCO provides advisory services to family offices and HNW founder-directors on UAE corporate tax structuring, transfer pricing documentation, and regulatory compliance. We work with a limited number of clients by choice.*

Founded in 2010. In DMCC Dubai since 2014. Affinitas was the first firm authorised by DMCC to establish Special Purpose Vehicles for clients when that product launched.