Transfer Pricing

We Provide Expert Transfer Pricing Services Aligned with UAE Corporate Tax Law

Transfer pricing is the method used to establish the prices for goods, services, or intellectual property exchanged among various entities within a multinational corporation. Transactions between affiliated parties must adhere to the arm’s length principle, which dictates that the pricing should reflect what unrelated parties would agree upon under similar conditions. This principle serves as the foundational guideline for transfer pricing regulations and practices.

What Are Transfer Pricing Services in the UAE?

Transfer pricing services in the UAE involve assisting companies in determining and documenting arm’s length prices for transactions between related entities, in line with OECD Transfer Pricing Guidelines and UAE Corporate Tax Law. These services are essential for businesses to ensure that intercompany transactions—such as the sale of goods, provision of services, loans, or licensing of intellectual property—are priced fairly and transparently, preventing tax base erosion and profit shifting.

Since the implementation of UAE Corporate Tax (effective June 2023), transfer pricing compliance has become a key focus for multinational companies operating in the UAE. Businesses are now required to maintain proper transfer pricing documentation, including a Master File, Local File, and a Disclosure Form, to justify their intercompany pricing policies.

Transfer pricing in the UAE

On December 9, 2022, the Ministry of Finance (MoF) of the United Arab Emirates (UAE) issued Federal Decree-Law No. 47 of 2022, which addresses the Taxation of Corporations and Businesses (the CT law). This law includes specific articles on transfer pricing (TP) that mandate UAE taxpayers to adhere to the arm’s length principle when pricing transactions with related parties. To enhance understanding of the UAE CT framework, the MoF also published a series of frequently asked questions that provide additional insights. The Federal Tax Authority (FTA) will oversee the implementation of the CT law.

On May 11, 2023, the UAE MoF released Ministerial Decision No. 97 of 2023, outlining the requirements for the preparation and maintenance of TP documentation in accordance with the UAE CT regime, as stipulated in Article 55(2) of Federal Decree-Law No. 47 of 2022 (the CT law).

The implementation of UAE TP will apply to all taxpayers in the UAE. All are required to: Adhere to the arm’s length principle for related party transactions, irrespective of corporate tax grouping statuses, the entity’s location in a free trade zone, or the applicable corporate tax rate. Submit a transfer pricing disclosure form as part of the corporate tax return, provided specific thresholds are met. Taxable entities must fill out the related party schedule in their tax returns if their total transactions with related parties surpass AED 40 million. Individual transaction types, such as goods, services, or interest, must be reported if they exceed AED 4 million each. Transactions with connected individuals must be reported if payments or benefits to each connected individual exceed AED 500,000. Furthermore, UAE taxpayers with a turnover exceeding AED 200 million or those part of a multinational group with a global turnover exceeding AED 3.15 billion are required to prepare a local file and master file annually. Taxable entities claiming Small Business Relief are exempt from preparing transfer pricing documentation. Lastly, all UAE Qualifying Free Zone entities must comply with the arm’s length principle, including maintaining suitable supporting documentation.

What Services FMC Accountants Providing In Transfer Pricing

As the UAE strengthens its position in the global economy and aligns with international tax standards, the introduction of the Corporate Tax Law has made transfer pricing compliance an essential requirement for businesses engaged in domestic and cross-border intercompany transactions. At FMC Accountants, we offer specialized Transfer Pricing Services in the UAE, designed to help businesses navigate complex regulatory requirements, ensure arm’s length pricing, and avoid costly penalties.

Transfer pricing involves setting fair and transparent prices for transactions between related entities—such as subsidiaries, parent companies, or branches—within a corporate group. This includes the transfer of goods, services, intellectual property, and financial arrangements. In the UAE, businesses must comply with Articles 34 and 55 of the Corporate Tax Law, which require adherence to the OECD Transfer Pricing Guidelines and submission of documentation that proves the fairness of intercompany pricing.

Our team of seasoned tax advisors, economists, and legal professionals bring deep expertise in international tax, economic analysis, and local UAE compliance, allowing us to provide tailored, end-to-end support for businesses across sectors.

Transfer Pricing Documentation: We prepare the necessary Master File, Local File, and Transfer Pricing Disclosure Forms in compliance with UAE regulations, backed by accurate functional and economic analysis.
Transfer Pricing Planning & Strategy: We assist in developing robust transfer pricing policies that align with your operational model, reduce tax risk, and ensure tax efficiency across jurisdictions.
Benchmarking Analysis: Our experts conduct detailed benchmarking studies using global databases to determine the arm’s length range for your related-party transactions.
Intercompany Agreement Review: We review or draft intercompany agreements to ensure legal clarity, operational consistency, and regulatory compliance.
Audit Defense & Representation: In case of inquiries or audits by the Federal Tax Authority (FTA), we provide strategic guidance and representation to ensure a favorable outcome.

WHAT IS TRANSFER PRICING?

Transfer Pricing refers to the pricing of transactions between Related Parties or Connected Persons within a multinational enterprise (MNE) Group. This practice is crucial for determining the taxable income of each entity involved in cross-border transactions. It ensures that transactions are conducted at arm’s length, meaning the prices are set as if the parties were independent entities negotiating in a free market.

WHY IS TRANSFER PRICING IMPORTANT?

Transfer Pricing is essential because it affects the distribution of taxable income among different jurisdictions. Proper Transfer Pricing ensures that each entity within an MNE Group reports an accurate profit based on the value it contributes to the Group. This prevents profit shifting to low or no-tax jurisdictions, which could lead to tax base erosion and profit shifting (BEPS) issues.

HOW IS TRANSFER PRICING REGULATED IN THE UAE?

In the UAE, Transfer Pricing is regulated under the Corporate Tax Law and Ministerial Decision No. 97 of 2023. These regulations require that transactions between Related Parties or Connected Persons adhere to the Arm’s Length Principle. Additionally, the Federal Tax Authority (FTA) has set guidelines for Transfer Pricing documentation and disclosure requirements.

WHO ARE CONSIDERED RELATED PARTIES UNDER UAE LAW?

Related Parties include individuals or entities with a pre-existing relationship through kinship, ownership, or control. This includes family members up to the fourth degree of kinship, entities with common ownership, and entities under common control, such as parent-subsidiary relationships

WHAT ARE THE DOCUMENTATION REQUIREMENTS FOR TRANSFER PRICING IN THE UAE?

Taxable Persons must maintain detailed Transfer Pricing documentation to support the arm’s length nature of their transactions. This documentation should include a master file, a local file, and a Country-by-Country Report (CbCR) for MNE Groups meeting specific thresholds. Proper documentation helps in reducing the risk of audits and penalties.