▶️UAE Transfer Pricing Compliance: Must Know Before Filing Corporate Tax

With the introduction of Corporate Tax in the UAE, Transfer Pricing (TP) compliance has become a critical requirement for businesses. Many companies are still unaware of how TP rules apply and what steps they need to follow to stay compliant.

In this blog, we’ll break down everything you need to know about UAE Transfer Pricing in a simple and practical way.

What is Transfer Pricing?

Transfer Pricing refers to the pricing of transactions between related parties or connected persons. These transactions must follow the Arm’s Length Principle, meaning they should be priced as if the parties were unrelated.

Who Needs to Apply Transfer Pricing?

Transfer Pricing rules apply to all UAE taxable persons who:

• Have transactions with related parties such as:

  • Parent companies

  • Subsidiaries

  • Group entities

  • Shareholders

  • Directors

  • Family foundations

• Deal with connected persons, including:

  • Owners

  • Relatives of owners

Steps for Transfer Pricing Compliance

To ensure proper compliance, businesses should follow these key steps:

Step 1: Identify Transactions

Map all transactions with related parties and connected persons.

Step 2: Conduct TP Analysis

Perform benchmarking and identify comparable transactions.

Step 3: Select TP Method

Choose the appropriate Transfer Pricing method as per guidelines.

Step 4: Prepare Documentation

Maintain proper TP documentation, including:

• Disclosure Form

• Local File

• Master File (if applicable)

Step 5: File Disclosure Form

Submit the TP Disclosure Form along with your Corporate Tax return on the FTA portal.

Step 6: Be Audit Ready

Keep all documents ready for potential review or audit by authorities.

Transfer Pricing Methods

Businesses must select a suitable method to determine the Arm’s Length Price, such as:

• Comparable Uncontrolled Price (CUP)

• Resale Price Method

• Cost Plus Method

• Transactional Net Margin Method (TNMM)

(Selection depends on the nature of transactions.)

TP Documentation Requirements

1. Disclosure Form

This is mandatory and submitted with the Corporate Tax return.

It includes:

• Nature of transactions

• Value of transactions

• Details of related parties

• Method used for pricing

2. Master File & Local File

These are required if:

• Group revenue ≥ AED 3.15 billion, OR

• Taxable person’s revenue ≥ AED 200 million

Master File (Group Level)

Covers:

• Global structure

• Intangible assets

• Financing

• TP policies

Local File (Entity Level)

Includes:

• Business overview

• Detailed transactions

• Benchmarking study

Note: These are submitted only upon request (within 30 days).

Why TP Compliance is Important

Failure to comply with Transfer Pricing rules can result in:

• Penalties

• Tax adjustments

• Increased scrutiny from authorities

Maintaining proper documentation ensures transparency and reduces risk.

Final Thoughts

Transfer Pricing is no longer optional—it’s a key part of UAE Corporate Tax compliance. Businesses should proactively:

• Review their related-party transactions

• Maintain proper documentation

• Ensure pricing is at arm’s length

Being prepared today will help avoid complications tomorrow.

▶️Need Expert Assistance?

Navigating these changes can be complex. MF Khan & Associates is here to assist you with expert chartered accountancy services in both the UAE and India.

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This information is provided by CA M.F.KHAN – Tax Expert.

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