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The UAE has introduced transfer pricing based on the Organisation for Economic Co-operation and Development (OECD) principles to promote fair taxation and prevent profit shifting among multinational corporations. This has added a new layer of complexity in corporate tax and is now a crucial element for businesses with cross-border transactions.
Transfer pricing refers to the pricing of goods, services, IPs and financial transactions & other transactions between related entities within a multinational group. It determines the arm’s length prices, which means they must be priced as if they were between independent entities operating in similar market conditions. This prevents companies from adjusting prices within their corporate group to reduce their overall tax obligations.
Our experts have expertise in Transfer Pricing regulations in the UAE and can help you understand the tax structure for inter-company and cross-border transactions. We provide a comprehensive suite of services to ensure that your company fulfils all the Transfer Pricing requirements.
Transfer pricing regulations apply to all transactions between related parties or associated entities within the UAE or across borders, including:
There are various transfer pricing methods used to fix arm’s length price. Businesses need to select the most appropriate method for them based on data availability, actual business model, value chain analysis and industry standards.
Transfer pricing regulations and cross-border transactions can be a complex territory when translated into tax structures. If not filed accurately, some companies can unknowingly fall under tax evasion and be charged with serious penalties for non-compliance.
Selecting the most appropriate method for transfer pricing for your related party transactions s can be a daunting task.
Identifying appropriate comparable to determine arm’s length for transfer pricing can be a complex and time-consuming process.
Justifying transfer pricing methods to authorities requires sound economic analysis and robust documentation.
Benchmarking analysis for transfer pricing needs to be relevant to your company’s industry and highlight industry-specific practices and access to transfer pricing comparable databases.
The tax regimes in the UAE are constantly evolving, and keeping up with modifications requires extra attention and expertise.
We offer end-to-end solutions for transfer pricing that help you remain compliant with the latest regulations in the UAE.
This assessment involves the evaluation of intra-group transactions between related entities to verify that they are priced at arm’s length and reflective of OECD & regulatory standards. This promotes transparency, reduces tax inaccuracies and ensures alignment with compliance regulations. Our comprehensive assessment includes:
Our comprehensive assessment includes:
Our experts assist in preparing detailed and robust transfer pricing documentation to support compliance and tax audits. These documents include:
We examine the potential financial and operational impact of transfer pricing on your business. We identify opportunities for improvement for a more efficient and compliant pricing model.
We offer continuous support to comply with transfer pricing regulations in UAE and globally, including document filings, disclosures and reports.
The Arm’s Length Principle is the internationally recognised standard for Transfer Pricing. It requires that transactions between Related Parties be conducted as if they were between independent parties under similar circumstances.
Non-compliance with transfer pricing regulations can result in inaccuracies in intercompany transaction pricing, leading to tax disputes and hefty penalties.
In the UAE, Transfer Pricing is regulated under the Corporate Tax Law and Ministerial Decision No. 97 of 2023.
Under the UAE Corporate Tax and Transfer Pricing Regulations, Related Parties are broadly defined to include individuals and entities with close ownership or control relationships. This includes individuals and their relatives up to the fourth degree, as well as companies and their shareholders, partners, directors, or any person/entity that holds 50% or more ownership, voting rights, or profit entitlement, whether directly or indirectly. It also includes entities under common control, affiliated companies, and relationships involving influence or decision-making power. Certain transactions with government entities may also fall under the scope, depending on the context. All transactions with Related Parties must comply with the arm’s length principle and, if applicable, Transfer Pricing documentation requirements.
A Controlled Transaction is any transaction or arrangement between Related Parties or Connected Persons. This can include the transfer of goods, provision of services, financial transactions, and the commercial exploitation of intangible assets like patents or trademarks etc.
