Transfer pricing in the UAE : what businesses should expect

With the advent of UAE corporate tax, transfer pricing (TP) has moved to the centre of tax governance for groups operating in the region. Related party dealings—goods, services, royalties, financing and recharges—must now be priced on an arm’slength basis and supported by robust documentation. This guide sets out practical expectations, governance steps and common pressure points.

Scope and related parties

Transactions typically in scope include:

• intragroup sales and services (IT, support, management fees);
• IP licensing and royalty flows;
• intercompany financing (loans, cashpooling, guarantees);
• asset/business transfers (restructurings, intangibles).

Parties are “related” where there is direct/indirect control or significant influence (shareholdings, common management, economic dependence).

Arm’slength principle and methods

Prices between related entities must mirror those that independent enterprises would have agreed in comparable circumstances. Common methods are:

• CUP (comparable uncontrolled price);
• Costplus;
• Resale price;
• Resale price;
• Profit split (where intangibles/integration drive value).

Method selection follows a functional analysis (functions, assets, risks) and a comparables review (databases, local market testing).

Documentation: master file, local file and records

Depending on thresholds and profile, the FTA may expect:

• a master file (group value chain, intangibles, financing);
• a local file (entity transactions, analyses, comparables);
• harmonised intercompany agreements and TP schedules.

Documentation quality determines defensibility in audits and reduces the risk of adjustments and penalties.

Intercompany financing – key pressure points

• Arm’slength interest: market references, implied rating, collateral and covenant packages.
• Debt capacity: solvency tests, leverage, interest deductibility limitations.
• Cashpooling: leader remuneration and allocation of benefits/risks.

Intragroup services and management fees

Demonstrate:

• reality of the service (deliverables, reports, time records);
• benefit to the recipient (no duplication);
• objective allocation keys (revenue, headcount, assets);
• arm’slength margins for SSCs/service hubs.

Intangibles and royalties

Map intangibles (brands, technology, knowhow), identify DEMPE functions (development, enhancement, maintenance, protection, exploitation) and set royalties consistent with contributions and risks.

Governance and internal controls

• formal TP policy signed off at group level;
• intercompany contracts aligned to the policy;
• annual reviews of margins/rates with yearend trueups where needed;
• systematic evidence retention (benchmarks, reports, emails);
• regulatory watch (thresholds, forms, filing timelines).

Audit readiness

Expect FTA reviews focusing on contractual consistency, flows vs. accounting, allocation keys and timely availability of files. To mitigate double taxation, be ready to use MAP procedures under tax treaties.

A simple roadmap

1. Identify related party transactions and riskrank them.
2. Perform the functional analysis and select methods.
3. Run benchmarks and set target margins/rates.
4. Update agreements and deploy monitoring.
5. Prepare/refresh TP files and audit responses.

In the UAE, TP compliance rests on a clear policy, strong documentation and regular monitoring of intercompany margins and rates. This discipline reduces assessment risk and supports sustainable tax outcomes for international groups.

Our lawyers, who are experts in tax law, are available to answer all your questions and provide advice. We offer face-to-face meetings or videoconferencing. You can make an appointment directly online at https://www.agn-avocats.fr/.

AGN AVOCATS – Tax Law
contact@agn-avocats.fr
09 72 34 24 72