Transfer Pricing Services in UAE

Transfer Pricing refers to the rules and methods used to price transactions between related parties (e.g., subsidiaries of the same group) so that they are conducted at arm's length — meaning the pricing mirrors what unrelated parties would agree in an open market. This principle is required under the UAE Corporate Tax Law and aligned with OECD Transfer Pricing concepts. The Federal Tax Authority (FTA) enforces these rules to prevent profit shifting and ensure businesses pay tax in the appropriate jurisdiction.

Businesses subject to UAE Corporate Tax must meet Transfer Pricing obligations if they have related-party transactions. This includes UAE multinationals, free zone entities seeking 0% tax benefits, and domestic companies with controlled transactions. Exemptions may apply for small entities with limited transactions, but the arm's-length principle still applies. Any company that has transactions with parent companies, subsidiaries, affiliates, or related individuals must consider Transfer Pricing documentation requirements.

The FTA and UAE Ministry of Finance require: Master File (high-level group information), Local File (detailed local entity transactions), and Transfer Pricing Disclosure Form (TPDF) filed with your corporate tax return. All documentation should demonstrate that related-party transactions are priced at arm's length and must be maintained for at least 5 years. Missing or incomplete documentation increases audit risk and can result in significant FTA penalties and tax adjustments.

Transfer Pricing documentation must be prepared and ready by the time you file your UAE Corporate Tax return, typically within 9 months of the end of the financial year. The Transfer Pricing Disclosure Form (TPDF) must be submitted with the tax return. While the full documentation (Master File and Local File) does not need to be submitted with the return, it must be available upon FTA request. Late submission can trigger FTA audits and penalties. HAMG prepares comprehensive Transfer Pricing documentation packages aligned with all FTA deadlines.

Non-compliance with Transfer Pricing rules in UAE can lead to: tax adjustments by the FTA (where transactions are repriced at arm's length), administrative penalties, increased audit scrutiny, and potential double taxation impacts where two jurisdictions tax the same income. The FTA has the authority to adjust taxable income where related-party transactions are not priced at arm's length. HAMG helps businesses implement robust Transfer Pricing policies to proactively manage and minimize these risks.

Companies must select a recognized arm's-length method based on the nature of the transaction. UAE Transfer Pricing rules (aligned with OECD guidelines) allow methods including the Comparable Uncontrolled Price (CUP) method, Resale Price Method, Cost-Plus Method, Transactional Net Margin Method (TNMM), and Profit Split Method. Method selection depends on transaction type, availability of comparable data, and economic analysis. HAMG's Transfer Pricing team conducts detailed benchmarking studies to select and support the most appropriate method for each client's specific transactions.