What is Transfer Pricing?
Transfer pricing refers to how companies set prices for transactions between their related entities (like subsidiaries or parent companies). The UAE requires these transactions to follow the “arm’s length principle” – meaning prices should be similar to what unrelated companies would charge.
Who Needs to Comply?
- Businesses with related-party transactions exceeding AED 50 million per year
- Companies in free zones with mainland transactions
- Multinational enterprises (MNEs) operating in the UAE
Key Requirements
1. Maintain Proper Documentation
- Master File: Overview of global business operations
- Local File: Details of UAE-related transactions
- Country-by-Country (CbC) Report (if group revenue > AED 3.15 billion)
2. Follow the Arm’s Length Principle
- Use approved pricing methods (comparable uncontrolled price, cost-plus, etc.)
- Benchmark transactions with independent market data
3. File a Disclosure Form
- Submit with annual tax return (if transactions exceed AED 50 million)
4. Conduct a Risk Assessment
- Identify high-risk transactions (loans, royalties, intra-group services)
- Adjust pricing if needed to avoid tax penalties
Penalties for Non-Compliance
- AED 20,000–500,000 for missing documentation
- 50% additional tax for incorrect disclosures
- Potential audits by the UAE Federal Tax Authority (FTA)
How Ez Bizz Corporate Services LLC Can Help
✔ Prepare transfer pricing documentation
✔ Benchmark transactions fairly
✔ Assist with FTA audits & disputes
✔ Ensure compliance with UAE corporate tax laws
Contact Us:
📞 +971 52 610 6577
📧 info@ezbizzsetup.com
FAQs
Only if related-party transactions exceed AED 50 million/year.
Aligned with corporate tax return deadlines (9 months after financial year-end).
No, if they transact with mainland UAE entities.
Yes, if they find them non-compliant.
Complying with UAE transfer pricing rules avoids penalties and ensures smooth business operations. Professional guidance helps maintain accuracy and reduce risks.