Transfer Pricing & Benchmarking in the UAE

For UAE corporate tax purposes, businesses are required to ensure that all transactions with related parties are conducted on an arm’s length basis, transparently, and in line with prevailing market prices. This approach prevents artificial profit manipulation and practices intended for tax avoidance, ensuring that all related-party transactions are commercially justifiable.

At CorporateTaxUAE.com, we assist businesses in understanding, documenting, and complying with the transfer pricing requirements under the UAE Corporate Tax Law. Our services include expert benchmarking analysis, comprehensive documentation, and professional advisory support to help companies maintain full compliance and transparency.

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Importance of Transfer Pricing in the UAE?

Businesses are required to disclose related-party transactions and maintain comprehensive documentation to show prices to be in conformity with market levels.

Implementing proper transfer pricing helps in:

Avoiding penalties and FTA audits.
Having transparency for regulators and investors.
Having fair taxation and avoiding reputation loss.

Failure to achieve this will lead to adjustments from the FTA, additional tax payments, and even reputation loss.
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What Is Benchmarking Analysis?

Benchmarking analysis is a comparison of your independent third-party data prices for related-party transactions and you’re pricing to determine if they meet the arm's length test.

We prepare meticulous benchmarking analyses at CorporateTaxUAE.com, using credible financial databases to ensure your pricing is in line with the average market prices. This backs your transfer pricing file and protects you from FTA intervention.
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When Does Transfer Pricing Apply?

Transfer pricing is used in the case of transactions between:

Parent and subsidiary enterprises.
Entities under common control.
Branches of the same enterprise (in the UAE or abroad).
Family or cross-shareholding entities.

Goods, services, management fees, loans, royalties, and cost-sharing arrangements fall under it.
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Transfer Pricing Documentation in the UAE

UAE law mandates companies to preserve and, on demand, file the following documents with the Federal Tax Authority (FTA):

Transfer Pricing Disclosure Form – filed along with the corporate tax return.
Master File – highlighting the group's worldwide view of operations.
Local File – highlighting detailed information of transactions based in the UAE.

All intra-group transactions should be specifically identified as being in accordance with the Arm's Length Principle.
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How We Make It Easy for You to Remain Compliant

Our transfer pricing and benchmarking experts demystify the process, make it transparent, and compliant. We assist businesses:

Identify related-party transactions.
Perform robust benchmarking analyses.
Prepare disclosure forms and transfer pricing reports.
Guiding restructuring or price adjustments where required.
Audited with auditors and the FTA.

Verified with us, all your tax reporting is in accordance with the UAE Corporate Tax Law, correct, and timely.
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Key Approaches Adopted in Transfer Pricing

The FTA acknowledges several of the internationally accepted methods to determine arm's length pricing, including:

Comparable Uncontrolled Price (CUP) Method
Resale Price Method
Cost-Plus Method
Transactional Net Margin Method (TNMM)
Profit Split Method

Choosing the right method depends on your business type of transaction, industry, and data availability. Our experts identify the most defendable method for your business.
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Consequences of Non-Compliance

Non-compliance with transfer pricing disclosure and documentation regulations can result in:

Reconsideration of taxes and added taxes.
Penalties imposed by the FTA.
Increased attention in corporate tax audits.
Documentation is your strongest defense against controversy.

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We make transfer pricing compliance easy at CorporateTaxUAE.com.

Our experts make your transactions UAE corporate tax law compliant with proper benchmarking and professional documentation, audit-ready, and penalty-free.

Call us today, and we shall be glad to assist you.
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Frequently Asked Questions (FAQs)

What is transfer pricing under UAE corporate tax?

It is the pricing of related-party transactions, which is governed by the Arm's Length Principle of the UAE Corporate Tax Law.

Who needs to observe transfer pricing policies?

Any UAE business having connected-person or related-party transactions has to comply with and report such transactions in its tax return.

What if my company doesnot prepare documentation?

You risk FTA penalties, profit adjustments, and heightened audit risk.

What is a benchmarking analysis?

It's a comparison of your intra-group transaction prices against independent market data to demonstrate they're fair and at arm's length.

What has to be filed with the FTA?

You require a transfer pricing disclosure form, master file, and local file based on your business structure and turnover.

Do free-zone or small businesses fall under transfer pricing?

Yes, if they have related-party transactions or transactions with persons associated with them, they need to apply identical principles.

How often does benchmarking need to be updated?

At least once a year, or whenever there is a significant change in business operations or prices.

How can CorporateTaxUAE.com help?

We provide transfer pricing services from start to finish, risk assessment and documentation, all the way through to benchmarking and FTA representation.