{"id":25313,"date":"2026-03-17T05:52:41","date_gmt":"2026-03-17T05:52:41","guid":{"rendered":"https:\/\/stratrich.com\/ae\/?p=25313"},"modified":"2026-03-27T09:35:08","modified_gmt":"2026-03-27T09:35:08","slug":"is-uae-transfer-pricing-aligned-with-global-best-practices","status":"publish","type":"post","link":"https:\/\/stratrich.com\/ae\/insights\/uae-transfer-pricing\/","title":{"rendered":"Is UAE Transfer Pricing Aligned with Global Best Practices?\u00a0"},"content":{"rendered":"\n

When the UAE introduced Federal Decree-Law No. 47 of 2022, businesses across the region faced a shift that many were not fully prepared for. Transfer pricing in UAE<\/strong>, once <\/strong>a largely unregulated area, became a structure, mandatory compliance obligation almost overnight. <\/p>\n\n\n\n

For multinationals and family-owned groups alike, that change raised a major concern: how do the UAE\u2019s rules actually compare to what they already follow elsewhere? <\/p>\n\n\n\n

The answer for this is not simple, as the UAE has built its framework on OECD principles, several aspects of how those principles are applied here differ from established markets like the US, India, Germany, or the UK. <\/p>\n\n\n\n

Understanding those differences is not just a compliance exercise; it affects how businesses structure transactions, set intercompany prices, and manage audit exposure across their groups. <\/p>\n\n\n\n

The Scope of Parties Covered Is Wider Than Most Markets <\/h2>\n\n\n\n

Most jurisdictions apply transfer pricing<\/a> rules to related parties; companies connected through ownership or control. The UAE does the same, but it goes considerably further. <\/p>\n\n\n\n

Under Article 36 of the Law, transfer pricing in UAE <\/strong>also covers \u201cconnected persons.\u201d This category includes owners, directors, officers, and individuals linked to them through kinship up to the fourth degree, through birth, marriage, adoption, or guardianship. In short, if a business pays a family member or a director, that payment now falls within transfer pricing obligations. <\/p>\n\n\n\n

The FTA’s Transfer Pricing Guide, published on 23 October 2023, is explicit: payments to connected persons are deductible only where they are incurred wholly for business purposes and priced at arm’s length<\/strong>. This means a family-owned group paying salaries to relatives must demonstrate those amounts that reflect what an unrelated person would earn in the same role. <\/p>\n\n\n\n

This is a meaningful departure from how most other markets work. Consider the contrast: <\/p>\n\n\n\n

Jurisdiction<\/strong> <\/th>Transfer Pricing Scope<\/strong> <\/th><\/tr><\/thead>
UAE<\/strong> <\/td>Related parties and connected persons (up to 4th degree of kinship) <\/td><\/tr>
UK<\/strong> <\/td>Related parties (entities with common control) <\/td><\/tr>
Singapore<\/strong> <\/td>Related parties (25%+ ownership or effective control) <\/td><\/tr>
Hong Kong<\/strong> <\/td>Associated persons (50%+ common ownership or control) <\/td><\/tr>
India<\/strong> <\/td>Associated enterprises (26%+ ownership or de facto control) <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The UAE’s broader scope creates a compliance layer that simply does not exist in many comparable jurisdictions, and it catches businesses off guard precisely because it feels more personal than corporate.<\/em><\/strong> <\/p>\n\n\n\n

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\n Get Our UAE Tax Compendium\n <\/h2>\n\n \n Download Free Guide   \u2197<\/span>\n <\/a>\n <\/div>\n\n \n
\n \n <\/i>\n Tax residency rules\n <\/span>\n\n \n <\/i>\n Transfer pricing & compliance\n <\/span>\n <\/div>\n\n <\/div>\n <\/div>\n<\/section>\n\n\n