Transfer Pricing Compliance in UAE

What is UAE Transfer Pricing?

Transfer pricing compliance in UAE is simple. It means family companies charge fair prices when they buy and sell from each other. Does UAE mom company sell goods to Abu Dhabi kid company? They pay the same price as strangers would. No special low prices to hide money.

The UAE started this rule with a new 9% corporate tax in 2023. The Federal Tax Authority watches all deals. Goods, services, and loans between branches all count. Wrong prices mean they fix your tax and add fines up to AED 50,000.

What is the Arm’s Length Principle?

The Arm’s length principle UAE means family companies charge the same prices as strangers would. Does your UAE office sell goods to the Abu Dhabi branch? Use the market price, not a special low rate.

UAE follows five simple methods to prove it:

Comparable Uncontrolled Price: finds exact matches.
Cost Plus: adds normal profit to costs.
Resale Price: subtracts profit from sales.
TNMM: uses industry averages.
Profit Split: shares based on work done.

UAE Transfer Pricing Rules Explained

Transfer pricing rules UAE cover every family deal since June 2023. Free zone companies follow too to keep 0% tax.

When you need papers:

Total family deals over AED 40 million? File disclosure form.
Goods or services over AED 4 million each? Please list them.
Help to connect people over AED 500,000? Please report it.
UAE sales over AED 200 million? Make Local File.
Global group over AED 3 billion? Make a Master File.

What are the Transfer Pricing Documentation UAE Thresholds

Disclosure Form: File if total family deals over AED 40 million.
Master File: Global group revenue over AED 3 billion.
Local File: UAE turnover AED 200 million, or family deals AED 40 million.
Country-by-Country: AED 3.15 billion worldwide.

What are the Penalties for Non-Compliance?

Wrong transfer pricing documentation UAE brings real pain. The Federal Tax Authority fines AED 10,000 for late papers. Miss completely? AED 50,000 starts.

Fixed fines: AED 10K-50K for no filing.
Tax hit: Pay back all owed tax + interest.
Free zone danger: Lose 0% tax status, pay 9% corporate tax.

Practical Tips for UAE Businesses

Early Assessment Steps: Check family deals now. List goods, services, and loans.
Strengthen Your Documentation: Build transfer pricing documentation files early.
Align TP with Customs & ESR: Match transfer prices with import duties.
Review Intercompany Policies: Check old contracts with sister companies.
Plan for Future APAs: Advance Pricing Agreements start in 2025.

For more compliance, you can take help from our licensed business setup consultants in UAE. They are the top professionals from PRO Services in UAE with over 12+ years of experience.