UAE transfer pricing is not limited to multinational groups. The arm's-length principle can apply to domestic and cross-border transactions involving Related Parties and Connected Persons, including owner-manager arrangements and transactions within local groups.
Identify the relationship before pricing
- Direct and indirect ownership and control
- Common ownership or control between entities
- Partners and related partnerships
- Directors, officers, owners, and Connected Persons
- Family relationships relevant under the rules
- Permanent establishments and head-office dealings
Create a controlled-transaction register
List sales, services, loans, guarantees, royalties, asset transfers, cost allocations, management charges, rent, compensation, and transactions without a stated price. Record the parties, amount, currency, agreement, business purpose, pricing method, and evidence of performance.
Apply the arm's-length principle
Analyse the functions performed, assets used, and risks assumed by each party. Review contractual terms against actual conduct, economic circumstances, market characteristics, and business strategies. Select a method that can be supported with reliable internal or external comparables and appropriate adjustments.
Separate compliance layers
The arm's-length requirement can apply even when master-file or local-file thresholds are not met. A taxpayer may also need a related-party or connected-person disclosure with the return, and the FTA can request supporting information. The FTA's general guide notes a 30-day response period for information supporting the arm's-length nature of transactions unless another date is directed.
Watch owner and management transactions
- Salary, bonus, pension, and benefits
- Management and technical-service fees
- Shareholder or director loans
- Personal expenses paid by the business
- Use or transfer of company assets
- Payments to relatives or commonly controlled businesses
Maintain defensible evidence
Keep signed agreements, invoices, work product, time records, allocation keys, loan schedules, benchmarking, board approvals, and proof that services or benefits were actually received. Documentation prepared after an audit request is less persuasive than records maintained with the transaction.
Frequently asked questions
Do UAE transfer-pricing rules apply only to cross-border transactions?+
No. FTA guidance states that the rules apply to both domestic and cross-border transactions involving Related Parties and Connected Persons.
If a business is below master-file thresholds, can transfer pricing still apply?+
Yes. The arm's-length principle and other disclosure or support requirements can apply even when a master file or local file is not required.
Official sources
Use the government pages below to verify current instructions and requirements.
Federal Tax Authority: Transfer Pricing Guide ↗Federal Tax Authority: General Corporate Tax Guide ↗Bring the notice, return, or records to a focused consultation.
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