Businesses in the UAE generally adopt a corporate form, with limited liability companies (LLCs) being the most common. However, it is also very common for foreign businesses to operate through branches or as a permanent establishment (PE), especially in sectors requiring direct market access. The key difference is that while LLCs are separate legal entities with limited liability, branches and PEs are extensions of the parent company and do not have separate legal personality. LLCs are taxed as separate entities for tax purposes, whereas branches and PEs are subject to UAE corporate tax on their locally sourced income.

Transparent entities like partnerships and trusts are commonly used in the UAE, particularly in the investment and financial sectors. Limited partnerships (LPs) and general partnerships (GPs) are popular for private equity and hedge funds due to their tax transparency and flexibility. Family foundations, especially in ADGM and DIFC, are widely adopted for wealth management, estate planning, and investment holding, offering structured governance while maintaining tax efficiency. Also, while real estate investment trusts (REITs) are not transparent by nature, they may qualify for exemption from UAE CT, making this vehicle prevalent in real estate and asset management.

UAE determines the tax residence of incorporated businesses based on the place of incorporation or effective management and control. A company incorporated in the UAE is typically considered a UAE tax resident. However, even if incorporated elsewhere, a company may be deemed a UAE tax resident if its place of effective management and control is in the UAE. For transparent entities like partnerships and foundations, tax residence depends on where key management decisions are made or where the entity is effectively controlled. Double taxation treaties (DTTs) may override domestic rules, often applying the tie-breaker test, which considers factors like the place of incorporation, effective management, and economic substance.

Incorporated businesses in the UAE are subject to a 9% corporate tax on taxable income exceeding AED375,000, with income below this threshold taxed at 0%. Certain businesses, such as those in free zones, may benefit from tax exemptions if they meet qualifying criteria.

For businesses owned by individuals directly or through transparent entities (such as partnerships or sole proprietorships), taxation depends on whether the entity is considered a separate legal entity. If not, profits may be taxed at the owner’s level, with corporate tax applying if the income arises from a business or commercial activity conducted in the UAE. However, personal income from employment, dividends, and capital gains remains tax-free for individuals.

Taxable profits in the UAE are primarily calculated by assessing the accounting net profit or loss for the relevant tax period, based on the financial statements prepared in compliance with Article 20 of the UAE Corporate Tax Law. This calculation may involve specific tax adjustments. Profits are recognised on an accrual basis, meaning income and expenses are recorded when earned or incurred, rather than when cash is received or paid.

Key tax adjustments include:

• non-deductible expenses, such as fines, bribes, penalties, and certain entertainment costs;
• interest deduction limits, with net interest expense generally capped at 30% of EBITDA;
• exempt income, including qualifying dividends, capital gains from eligible shareholdings, and certain foreign branch profits (subject to conditions); and
• transfer pricing adjustments that ensure transactions between related parties follow the arm’s length principle.

Losses can be carried forward and offset against future taxable income, subject to conditions.

The UAE offers special tax incentives for technology investments, including full deductibility of R&D expenses and a planned R&D tax credit (30%-50%) from 2026 to encourage innovation. Qualifying Intellectual Property (IP) income, such as royalties from patents and copyrighted software, can benefit from a 0% corporate tax rate if the IP is developed or managed in the UAE, acting as a patent box regime. Additionally, technology companies in Free Zones can enjoy a 0% tax rate on qualifying income, which includes revenue from IP licensing, certain software sales, and transactions with Free Zone or foreign clients but excludes trademarks as income from trademarks is taxable at the standard corporate tax rate and does not qualify for preferential treatment under Free Zone or IP regimes, as trademarks are excluded from the definition of Qualifying Intellectual Property.

However, income not meeting the qualifying criteria may be subject to the standard 9% corporate tax. In the UAE, trademarks are excluded from the definition of Qualifying Intellectual Property, so income from trademarks does not benefit from the 0% Free Zone tax rate – but importantly, it is not treated as non-qualifying income, meaning it will not, by itself, disqualify a Free Zone entity from receiving the 0% rate on other qualifying income.

The UAE offers industry-specific tax incentives across Free Zones, financing, holding companies, investment funds, and innovation-driven businesses.

Free Zones & Industry-Specific Benefits

• 0% corporate tax on Qualifying Income in designated Free Zones, including tech, logistics, and financial services.
• DIFC, Dubai Internet City, and Masdar City offer sector-specific advantages.

Financing & Holding Companies

• Interest expense is deductible, and Islamic finance is tax-neutral.
• Holding companies benefit from participation exemptions on dividends and capital gains.
• No withholding tax applies (but the rate is 0%) on interest, dividends, and royalties.

Investment Funds & Restructuring

• Qualifying Investment Funds enjoy tax exemptions if they meet regulatory conditions.
• Intra-group transfers and restructurings can be tax-free under specific conditions.

R&D & IP Incentives

• Full R&D expense deductibility and upcoming R&D tax credits (30%-50%) from 2026.
• 0% corporate tax on Qualifying IP income (eg, patents, copyrighted software).

Energy & General Investment Benefits

• Extractive industries are taxed at the Emirate level, with incentives for renewables.
• No capital gains tax, personal income tax, or foreign tax credits are available.

In the UAE, tax losses can be carried forward indefinitely and used to offset up to 75% of taxable income in future tax periods, provided that at least 50% ownership continuity is maintained, or the business continues to operate in a similar manner following a change in ownership exceeding 50%. Tax loss carryback is not allowed, meaning losses cannot be applied to prior tax periods. Losses can generally be used to offset taxable income, but capital and ordinary business losses may be subject to specific restrictions depending on their nature. Additionally, losses can be transferred within a group under conditions outlined below.

• Both companies must be resident juridical persons (not natural persons).
• There must be at least 75% common ownership between the entities (direct or indirect).
• Neither company can be an exempt person or a Free Zone person benefiting from the 0% tax rate.
• Both must be subject to UAE Corporate Tax during the relevant period and use the same accounting standards.
• The loss transfer is allowed only up to 75% of the taxable income of the receiving company.

In the UAE, businesses can deduct the greater of AED12 million or 30% of adjusted EBITDA for net interest expenses. Any disallowed interest expenses can be carried forward for up to 10 tax periods for future deductions. Interest on related party loans used for dividends, share buybacks, capital contributions, or acquiring related businesses is not deductible unless the taxpayer proves there was no tax avoidance intent. Banks, insurers, and certain infrastructure projects that meet government criteria are exempt from these interest deduction limits.

Companies under common ownership can form a tax group, allowing them to be treated as a single taxable entity if they meet the conditions outlined below.

• A parent company must directly or indirectly own at least 95% of the share capital, voting rights, and entitlement to profits and net assets in each subsidiary.
• All group members must be UAE resident juridical persons, have the same financial year, and use the same accounting standards.
• Exempt persons and QFZPs cannot be included in a tax group.

Groups can still benefit from tax loss transfers if tax consolidation is not chosen. One entity can transfer losses to another if there is at least 75% common ownership, provided that both entities are UAE resident juridical persons, they meet the same financial year and accounting standards requirements, and neither should be an exempt person or QFZP. This allows separate companies within a group to utilise losses while maintaining their individual tax filings.

In the UAE, capital gains from selling shares in another corporation are taxed differently depending on whether the investment is domestic or foreign.

• Domestic investments – capital gains from selling shares in UAE resident companies are exempt from corporate tax without conditions. This means businesses can freely trade shares of local companies without incurring tax liabilities.
• Foreign investments – capital gains from foreign shareholdings can be exempt under the participation exemption, provided that:
1. the seller holds a minimum holding of 5% of the shares and voting rights in the “participation interest” (ie, the entity from which the income is derived) and should be entitled to at least 5% of the profits available and the liquidation proceeds; and
2. the seller holds the shares for at least 12 months; or, alternatively
3. the acquisition cost of the ownership interest must be at least AED4 million, and the foreign company is subject to a tax rate of at least 9% in its jurisdiction.

If these conditions are not met for foreign investments, the capital gains are subject to the standard 9% corporate tax rate.

Aside from corporate tax, an incorporated business in the UAE may also be liable for value-added tax (VAT) at 5% on most goods and services it supplies. Customs duties can apply to imported goods, while excise tax is levied on specific products such as tobacco, carbonated beverages, and energy drinks. Additionally, certain transactions, like property or share transfers, might incur registration fees or stamp duties depending on the emirate and nature of the transaction. Although withholding tax exists, its rate is generally 0%, so it typically (at this stage) does not add to the tax burden on transactions.       

In the UAE, incorporated businesses are generally subject to corporate tax at 9% but may also face additional taxes depending on their activities and location. Branches of foreign banks are subject to Emirate-level corporate taxes, which range from 20% to 55% depending on the emirate. This applies separately from federal corporate tax. Similarly, oil and gas companies are taxed at up to 55% under Emirate-specific rules.

Most closely held local businesses in the UAE are structured as corporate entities, typically as limited liability companies or free zone companies, rather than as non-corporate businesses like sole proprietorships. This preference is driven by the benefits of limited liability and a formal, stable legal framework that facilitates access to financing and investment.

Currently, the UAE does not impose personal income tax on individuals, so professionals such as architects, engineers, consultants, and accountants do not pay income tax on their earnings. The newly introduced corporate tax, effective for financial years starting on or after June 1, 2023, applies a 9% tax on profits exceeding AED 375,000. No specific rules prevent individuals from incorporating to benefit from potential tax efficiencies, as the primary tax burden relates to corporate earnings above the threshold. However, with the corporate tax regime just beginning, additional compliance requirements and anti-avoidance regulations may be introduced in the future to address such practices.

No specific rules in the UAE prevent closely held corporations from retaining earnings for investment purposes. Unlike some other jurisdictions, the UAE does not impose an accumulated earnings tax or similar penalty on undistributed profits. The corporate tax law focuses on taxing profits above certain thresholds rather than regulating how earnings are used. This approach is designed to encourage reinvestment and support business growth.

Individuals are not taxed on dividend income because there is no personal income tax in the UAE. Similarly, any capital gains realised from the sale of shares in closely held corporations are not subject to tax. Consequently, individuals receive dividends and realise gains on share sales without incurring additional personal tax liabilities.

Individuals in the UAE are not taxed on dividends from publicly traded corporations, as there is no personal income tax. Likewise, any gains realised by the individual from the sale of shares, including capital gains, are not subject to tax.

In the UAE, withholding taxes on interest, dividends, and royalties are levied at a statutory rate of 0% in the absence of income tax treaties. This 0% rate means that, in practice, these payments are not subject to any tax. Consequently, no additional reliefs are available since the effective rate is already zero.

The UAE has an extensive network of tax treaties with over 90 jurisdictions, which helps provide certainty and favourable tax treatment for foreign investors. Key treaty countries often include major financial centres such as the United Kingdom, the Netherlands, and Singapore, along with other developed economies like Germany, France, etc.

While the UAE tax authorities generally accept the use of treaty country entities, they scrutinise arrangements that appear artificial or solely aimed at securing treaty benefits. Authorities focus on ensuring that these entities have genuine tax residency and meet economic substance requirements in the treaty jurisdiction. In practice, properly structured entities that comply with local and treaty rules are not typically challenged.

For inbound investors operating through a local UAE corporation, the primary transfer pricing issues include establishing robust arm’s-length pricing for related party transactions, such as intercompany financing, service fees, and royalty arrangements, in the absence of extensive local guidance. Valuation challenges can arise due to the UAE’s unique economic environment, making comparability analyses and the selection of appropriate transfer pricing methods critical. In addition, comprehensive documentation is essential to support pricing decisions and comply with evolving international standards and local economic substance requirements. Finally, ensuring consistency with both UAE and home jurisdiction transfer pricing rules is vital to minimise the risk of adjustments or penalties.

In the UAE, local authorities typically accept related-party limited risk distribution arrangements if they are well-documented and reflect genuine business functions at arm’s length. However, if these arrangements appear primarily structured to shift profits or fail to meet substance requirements, they may be scrutinised. Robust transfer pricing documentation and clear functional analyses are key to mitigating potential challenges. Overall, while the UAE has a relatively liberal tax regime, compliance with both international transfer pricing principles and local substance rules is essential.

Based on the latest available information, the UAE’s transfer pricing approach remains broadly aligned with the OECD arm’s length principle, though the regime is still maturing and less detailed than many OECD jurisdictions. Enforcement tends to rely more on economic substance and general anti-avoidance measures rather than on exhaustive transfer pricing documentation requirements. While this may seem less rigorous, it also means that the UAE authorities focus on ensuring that transactions reflect genuine business activities and are not solely structured for tax avoidance. However, given that tax policies can evolve, it is advisable to consult current local guidance or a UAE tax professional for the most up-to-date details.

UAE tax authorities are increasingly focused on transfer pricing compliance, but since the first tax exercise begins in 2024, there are no prior years to re-open using new information. International transfer pricing disputes resolved through double tax treaties and the MAP process remain relatively infrequent. While there has been a modest increase in enquiries, MAP cases are still relatively limited compared to jurisdictions with more established transfer pricing regimes. Overall, the emphasis is on ensuring robust compliance going forward rather than revisiting historical periods.

Under the current UAE regime, compensating adjustments, as typically seen in other jurisdictions, are not explicitly provided when settling transfer pricing claims.

Under the UAE corporate tax regime, both a local branch of a non-local corporation and a local subsidiary (a separate UAE-incorporated company) of a non-local corporation are generally subject to the same 9% corporate tax rate on taxable income exceeding AED 375,000. The key difference lies in how profits are recognised and allocated:

• a local branch is taxed on the profits attributable to its UAE activities, as it is not a separate legal entity from its foreign parent; and
• a local subsidiary is a separate legal entity that is taxed on the profits it generates in (or is otherwise attributable to) the UAE, subject to the specific rules of corporate tax law.

However, the statutory tax rate itself does not differ solely because one entity is structured as a branch and the other as a subsidiary. The compliance and filing obligations can vary somewhat (for example, a subsidiary files its own return, while a branch may file as the permanent establishment of its foreign parent), but both face the same basic corporate tax regime.

Under the current UAE tax framework, capital gains on the sale of shares in local corporations are generally not taxed for non-residents. This applies even when the gain is derived from selling shares of a non-local holding company that directly owns local corporate stock. Applicable tax treaties should also typically be consulted to confirm this treatment. Consequently, both direct and indirect capital gains are not taxed in the UAE for gains earned by non-resident investors under the current UAE corporate tax law.

Under the current UAE tax regime, no specific change-of-control provisions trigger tax or duty charges solely because of a change in ownership, even for the disposal of an indirect holding high up in an overseas group. Transactions are generally only taxed based on UAE-sourced income rather than the mere fact of a change in control. No additional stamp duties or reassessments are triggered by such disposals under federal tax law.

Under the current UAE corporate tax framework, there is no statutory requirement to use specific formulas to determine the income of foreign-owned local affiliates selling goods or providing services. Instead, taxable income is determined on an arm’s-length basis, with affiliates expected to substantiate their income and expenses in accordance with general tax principles and transfer pricing guidelines.

The arm’s length principle is applied, meaning the expense must reflect what independent parties would pay for similar services. The local affiliate must demonstrate that the management or administrative expense was incurred wholly and exclusively to generate UAE-sourced income and provide a commensurate benefit. Adequate documentation supporting the nature, amount, and necessity of the services rendered is essential. Essentially, the deduction is only allowed if the expense is justified and aligned with market conditions, ensuring no artificial profit shifting.

Foreign-owned local affiliates borrowing from non-local affiliates must follow the arm’s length principle, meaning that interest rates and terms should match those agreed upon by independent parties. Adequate documentation is required to demonstrate the loan’s commercial substance and genuine business purpose. No fixed statutory ceilings or prescribed rates exist, but transactions must reflect market conditions. UAE authorities may adjust the terms if they deviate from arm’s length standards, ensuring that interest deductions are justified. In addition, in the UAE, net interest expense is generally deductible up to 30% of the taxable EBITDA, with a safe harbour threshold of AED12 million of net interest expense per tax period.

Local corporations in the UAE are taxed on their worldwide income, including foreign-sourced income. This foreign income is not exempt but is subject to the same corporate tax rate, with potential relief through foreign tax credits or treaty benefits to avoid double taxation. If the conditions are met, any taxes paid abroad may be credited against the UAE tax liability. The exact application depends on the nature of the foreign income and the provisions of applicable double tax treaties.

Since foreign income is fully taxable under the UAE corporate tax regime, there is no specific disallowance of expenses attributable to foreign income. All expenses incurred in generating taxable income, whether domestic or foreign, are generally deductible if they meet standard requirements and are properly documented. When expenses relate to both domestic and foreign income, they must be reasonably allocated between the two sources. In effect, no additional non-deductibility rules are triggered by foreign income because it is taxed along with domestic income.

Dividends received by local corporations from foreign subsidiaries are included in the local income for UAE corporate tax purposes. However, foreign tax credits may be available to mitigate double taxation if the income was already taxed in the foreign jurisdiction. Some dividends might benefit from preferential tax treatment or exemptions if specific conditions and documentation requirements are met in certain circumstances. Under the UAE corporate tax regime, the participation exemption allows local corporations to receive dividends from foreign subsidiaries free from additional UAE taxation, provided that specific criteria such as minimum ownership thresholds and holding period requirements are met and the dividend has been subject to tax abroad.

Intangibles developed by local corporations and used by non-local subsidiaries must be transferred at arm’s length, and any income derived from such transfers (eg, royalty payments) is subject to UAE corporate tax (unless it constitutes qualifying income and meets all QFZP requirements). If the pricing does not reflect market conditions, transfer pricing adjustments can be made to ensure that the income is appropriately taxed.

Local corporations in the UAE are not subject to CFC-type rules, meaning they are not taxed on the income of their non-local subsidiaries; the foreign subsidiary’s income is taxed only in its own jurisdiction, and dividends repatriated to the local parent may benefit from participation exemptions. In contrast, non-local branches of local corporations are not separate legal entities, so their income is consolidated with the parent’s worldwide income and taxed accordingly under the UAE corporate tax regime.

Tax rules in the UAE do not impose direct substance requirements on non-local affiliates; however, if a non-local affiliate operates through a UAE permanent establishment or otherwise engages in UAE-based activities, that entity must comply with applicable economic substance regulations. For non-local affiliates that remain entirely abroad, local substance rules generally do not apply.

Local corporations are generally taxed on the capital gain from the sale of shares in non-local affiliates, although they may be eligible for a participation exemption if specific conditions are met, such as minimum ownership thresholds, holding periods, and the non-local affiliate being subject to an adequate level of tax. If these conditions are not satisfied, the gain is included in the taxable income and is subject to the standard UAE corporate tax rate of 9%.

The corporate tax framework in the UAE incorporates overarching anti-avoidance provisions, including general anti-avoidance rules and economic substance requirements, to counter arrangements that lack genuine commercial substance and are primarily designed to secure tax benefits. Additionally, transfer pricing rules and specific measures targeting certain transactions enable authorities to scrutinise and adjust artificial arrangements to ensure they reflect true economic activity.

The UAE Federal Tax Authority uses a risk-based approach rather than a fixed routine audit cycle, meaning audits are not scheduled at regular intervals for all taxpayers. Risk indicators, discrepancies in filings, or random sampling typically trigger audits. Companies are required to maintain detailed records and documentation to support their tax positions, and the FTA may request additional information if needed. Overall, while there is no fixed cycle, maintaining robust compliance is essential to navigate potential reviews.

As is clear from the above, the UAE has implemented several BEPS-recommended changes, including the introduction of a comprehensive corporate tax framework that aligns with OECD and international standards. New economic substance rules and updated transfer pricing guidelines have been introduced to ensure that profits are taxed where economic activities take place.

Additionally, the UAE has adopted Pillar Two (effective FY2025) measures and country-by-country reporting requirements for larger multinational groups to mitigate profit shifting and enhance tax transparency. These initiatives collectively reinforce the UAE’s commitment to a fair and robust tax system that aligns with global best practices.

The UAE government has taken a proactive stance on BEPS, integrating measures like economic substance rules and a new corporate tax framework to balance international compliance with its investment-friendly environment. Its goal is to curb profit shifting and ensure taxation occurs where genuine economic activity occurs, while maintaining competitive tax rates to attract business.

Pillar Two is expected to be implemented, likely in tandem with the new corporate tax regime, ensuring a global minimum tax for multinationals, whereas Pillar One may have a more limited immediate impact given the UAE’s current tax structure. These changes will most affect large multinationals that must enhance their reporting and compliance efforts to meet global standards.

International tax matters generally have a lower public profile in the UAE compared to other jurisdictions, allowing policymakers to implement BEPS recommendations without significant domestic political pressure. The government is focused on maintaining its reputation as a global business hub while meeting international standards and ensuring transparency. As a result, BEPS measures are being integrated primarily through technical and regulatory reforms rather than public debate, ensuring smooth compliance with global expectations. This pragmatic approach helps balance international obligations with the UAE’s goal of remaining an attractive investment destination.

Government is committed to maintaining a competitive tax environment in the UAE while adopting BEPS recommendations in a calibrated manner. By integrating measures such as economic substance rules and the new corporate tax framework alongside targeted exemptions and a low effective rate, the government aims to meet international standards without undermining its appeal as a global business hub.

The UAE is not subject to EU state aid rules, and its frameworks are designed to align with international standards, mitigating such risks. There have been no significant disputes or challenges in this area, with the system largely praised for its balance between competitiveness and compliance. The government is expected to continuously review and adjust its policies in light of BEPS pressures to ensure the regime remains attractive and robust.

Currently, the UAE tax regime does not have dedicated provisions specifically targeting hybrid instruments, but there is awareness of international trends and proposals emerging from the BEPS process. Future changes will likely be implemented through targeted amendments to the corporate tax framework designed to address hybrid mismatches while preserving the UAE’s competitive tax environment and aligning with global anti-abuse standards.

While the corporate tax regime is not strictly territorial, the UAE has implemented interest deductibility limitations aligning with OECD BEPS Action 4. Net interest expense is generally deductible up to 30% of the taxable EBITDA, with a safe harbour threshold of AED12 million of net interest expense per tax period. Under certain conditions, disallowed interest can be carried forward for up to 10 years.

Additionally, interest paid to related parties may be further restricted unless a valid business purpose test and arm’s length conditions are met, as per Article 30 of the law and relevant transfer pricing guidelines. Consequently, investors and companies might need to adjust their financing structures once these proposals are implemented, although any changes will likely seek a balance between curbing tax avoidance and maintaining market attractiveness.

The UAE’s corporate tax regime is not strictly territorial. However, the need for traditional CFC rules is less pressing, as foreign income is generally only taxed if and when repatriated or connected to UAE economic activity. While the general intent behind CFC proposals (to curb profit shifting) is sound, any measures adopted in the UAE must be carefully calibrated to avoid inadvertently penalising genuine cross-border business activities and undermining the jurisdiction’s competitive tax advantages.       

DTC limitation on benefits and anti-avoidance rules are designed to ensure that tax treaty benefits are granted only to genuine investors and may impact transactions structured primarily for tax avoidance. However, given the UAE’s favourable tax environment, including a 0% withholding rate on many cross-border payments, the practical impact for bona fide inbound and outbound investors is generally limited. Investors should ensure that their structures meet substance requirements and align with arm’s-length standards to fully benefit from treaty provisions.

The BEPS-driven changes have increased the emphasis on robust transfer pricing documentation and economic substance, but they have not radically altered the UAE’s competitive and business-friendly tax regime. Likewise, the taxation of profits from intellectual property is managed through standard arm’s length principles and substance principles, and has not emerged as a significant source of controversy, provided that transactions are properly structured and documented.

The UAE fully supports transparency measures, including country-by-country reporting for larger multinational enterprises. The jurisdiction has implemented CBCR as part of its commitment to international tax standards and information exchange. This approach helps maintain its reputation as a responsible tax jurisdiction while preserving its competitive environment. Overall, the UAE balances transparency with its attractive, business-friendly tax framework.

Presently, no specific measures targeting the taxation of transactions or profits from digital economy businesses operating largely from outside the UAE's jurisdiction are in effect. The focus remains on ensuring that taxation applies only when there is a substantial economic presence in the UAE. While international discussions under BEPS, Pillar One, and Pillar Two are ongoing, no significant changes have been proposed in this area to date.

The UAE has maintained a balanced stance on digital taxation, emphasising that its tax regime applies only to businesses with a genuine economic presence in the country. To date, no specific digital taxation proposals have been introduced, with the jurisdiction opting to align with international frameworks such as BEPS and monitoring the developments under Pillar One and Pillar Two.

The UAE has not implemented separate provisions specifically for the taxation of offshore intellectual property deployed within the country. Instead, any income derived from such IP is taxed as part of a local corporation’s overall income under the standard corporate tax framework, without a distinct withholding tax or direct assessment imposed on the IP owner.

The regime does not differentiate between IP owners based on whether they are in tax havens or countries with a double tax treaty, so long as the income is attributable to UAE-based activities. The focus remains on applying the arm’s length principle and standard corporate taxation rules to all income.