Transfer pricing in the UAE — overview and why it matters now

Transfer pricing in the UAE is the requirement that transactions between related parties and connected persons be priced on arm's length terms — as if agreed between independent parties — and that the pricing can be evidenced to the Federal Tax Authority. It applies under the UAE Corporate Tax regime introduced by Federal Decree-Law No. 47 of 2022.

Under the UAE transfer pricing regulations, a related party transaction must meet the arm's length standard, and the business must be able to demonstrate that it does. A position that is well designed and properly documented is a source of certainty — reducing the risk of adjustment and withstanding examination; one assembled after the fact, or inconsistent across filings, is where an enquiry begins. Our role is to help businesses achieve the former, from strategy and design through to documentation and defence.

The UAE transfer pricing framework

The UAE's transfer pricing rules sit within Federal Decree-Law No. 47 of 2022 (the Corporate Tax Law). Article 34 requires that transactions and arrangements between related parties meet the arm's length standard — that is, be consistent with what independent parties would have agreed in comparable circumstances.

Article 36 applies the same standard to payments or benefits to connected persons — broadly, an entity's owners, its directors or officers, and their related parties — allowing a deduction only to the extent the payment corresponds to the arm's length value. Where the standard is not met, the FTA may adjust taxable income accordingly. Related parties and connected persons are the two categories that bring a transaction within the regime.

Article 55, read with Ministerial Decision No. 97 of 2023, sets out the documentation the FTA may require — principally the Local File and Master File — and the thresholds at which it becomes mandatory. The regime follows the OECD Transfer Pricing Guidelines, interpreted for the UAE by the FTA's Transfer Pricing Guide, with Country-by-Country Reporting under Cabinet Resolution No. 44 of 2020 completing the framework for the largest groups.

A single principle, several obligations

The arm's length principle is universal: it binds every related party and connected person transaction, with no threshold below which it ceases to apply — free zone entities and those electing Small Business Relief included. The disclosure and documentation requirements, by contrast, are triggered at defined levels, and a business may fall within one and outside another at the same time. The table below sets out how each is triggered.

  • Arm's length principle (Art. 34-36) — Applies to every related party and connected person transaction, with no threshold. Pricing must meet the arm's length standard and be supportable on enquiry.
  • TP Disclosure Form — The related party schedule applies where aggregate related party transactions exceed AED 40 million, with each category above AED 4 million then itemised; the connected person schedule where payments or benefits to a connected person, together with its related parties, exceed AED 500,000. Filed with the annual return.
  • Local File & Master File — Under Article 55 read with Ministerial Decision No. 97 of 2023, where entity revenue is AED 200 million or more, or the entity belongs to an MNE group with consolidated revenue of AED 3.15 billion or more. Produced within 30 days of an FTA request.
  • Country-by-Country Reporting — Where a UAE-resident Ultimate Parent Entity heads an MNE group with consolidated revenue of AED 3.15 billion or more, under Cabinet Resolution No. 44 of 2020.
The transfer pricing lifecycle

Transfer pricing is best understood not as an annual task but as a lifecycle — a continuous discipline, strongest when each stage is addressed deliberately and weakest where one is neglected. Our services map onto its four stages.

  • Planning and design — Structuring and pricing intra-group transactions before they are entered into, aligned to where the group creates value.
  • Implementation — Embedding the policy into intercompany agreements, pricing mechanics and systems, so that what is documented is what actually happens.
  • Compliance and documentation — Evidencing the position and meeting the filing obligations — benchmarking, Local and Master File, the policy record, the Disclosure Form and, where relevant, CbCR.
  • Controversy and defence — Standing behind the position when questioned — FTA enquiries and audits, adjustments, and securing certainty in advance via an Advance Pricing Agreement where the stakes justify it.
TP risk review and health check

For many businesses the right first step is diagnosis: a transfer pricing risk review, or health check, that tests the group's related party dealings against the arm's length principle and the UAE requirements and identifies where exposure lies and what to address first. It is the natural entry point to the lifecycle, and the focus of our Risk Assessment service.

How we help

As transfer pricing consultants in the UAE, we organise our practice into three areas of work, each offered as a standalone service. A business may engage us for any one of them, according to what it needs: to understand its exposure, to design how it prices, or to prepare the documentation and filings that evidence its position.

  • Risk Assessment — A structured diagnostic of your related party transactions and the exposure they carry.
  • Advisory - Strategy and Design — The design of a transfer pricing policy and operating model aligned to your value chain.
  • Documentation — Transfer pricing policy, benchmarking, Local and Master File, the Disclosure Form and CbCR.