Allocates a flow-through entity's income or loss by reference to transparency, owners and permanent establishments, with special UPE rules.
What should you do now?Map the ownership chain and identify the tax owner of each interest before allocation.
What does the official Article provide?
The official source is Arabic. This English commentary is explanatory and is not presented as an official translation.
Allocates a flow-through entity's income or loss by reference to transparency, owners and permanent establishments, with special UPE rules.
This is a verified summary rather than a verbatim reproduction. Consult the official Arabic text, the Law and later decisions before making a final determination.
What does the Article mean in plain language?
Allocate flow-through income by the owner's status and profit rights, not incorporation alone. First remove the outside-group owners' share under Paragraph A, subject to Paragraph B exceptions, then allocate PE income under Article 10. A non-UPE tax-transparent entity allocates the remainder to Constituent Entity owners, tracing transparent chains to the owner specified by the rule. A reverse hybrid retains its allocated income. Apply the rules separately to each profit-bearing interest and reduce the entity's result by amounts allocated elsewhere to prevent double counting.
Financial reporting, tax, transfer-pricing and consolidation teams.
Map the ownership chain and identify the tax owner of each interest before allocation.
Treating all owners as equally tax-transparent or retaining income already allocated to an owner.
Related Articles
Before relying on the result
Is this Article enough on its own?
Usually not. Read it with the connected Law Article, definitions, any effective election and current NBR guidance, especially for an amount or deadline.
Does NBR guidance replace the Regulations?
No. Guidance explains application and supports procedures and examples, but current legislation and decisions prevail in case of inconsistency.