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Transfer Pricing in UAE

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Transfer Pricing in UAE

As the UAE continues its journey toward global tax transparency and alignment with international standards, transfer pricing (TP) has become a critical area of compliance for businesses operating in the country. With the introduction of the corporate tax law effective from 1 June 2023, the UAE has firmly established its commitment to OECD-aligned tax practices.

At Maats Auditors and Accountants LLC, we simplify transfer pricing with clear, practical solutions. Our expert team helps businesses stay compliant, manage risks, and optimize international operations—so you can focus on growth while we handle the complexities.

Under the UAE Corporate Tax Law, any business that is part of a multinational enterprise (MNE) group with cross-border related party transactions must comply with OECD-style TP requirements.

UAE Transfer Pricing Documentation Requirements

The arm’s length principle must be applied for all related party transactions, including:

Must apply the arm’s length principle.

Who Are Related Parties Under UAE Corporate Tax?

As per Article 35(1) of the Corporate Tax Law, related parties are individuals or entities linked to a taxpayer through:

These rules apply whether the other party is inside or outside the UAE.

Related Parties

Include family ties (up to 4th degree), entities with 50%+ ownership or control, a person and their Permanent Establishment, partners in the same unincorporated partnership, and trusts/foundations with their founders, trustees, or beneficiaries.

Connected Persons

Owners, directors, officers, their close relatives (up to 4th degree), and partners in unincorporated partnerships. Payments to connected persons are deductible only if arm’s length and business-related.

Controlled Transactions

These are dealings between related parties or connected persons—covering goods, services, loans, funding, or use of intangibles (brands, IP, know-how). Both cross-border and domestic transactions, including free zone dealings, must follow the Arm’s Length Principle (ALP)

Arm's Length Principle (ALP)

As per Article 34, prices in related-party transactions must reflect what independent parties would agree under similar conditions. This ensures fair profit allocation and compliance with OECD-aligned UAE TP rules.

Applying ALP

Consequences of Non-Compliance

What Should UAE Businesses Do?

To ensure full compliance and minimize tax risk, companies should:

Final Thoughts

Transfer pricing is now an integral part of the UAE’s tax compliance ecosystem. As enforcement becomes more sophisticated and documentation requirements tighten, the time to act is now.

Businesses that take a proactive approach — through proper documentation, internal training, and risk assessment — will be best positioned to avoid penalties and build trust with the FTA.

Need Support?

If you are unsure about your TP compliance readiness, or need assistance with preparing documentation and disclosures, our professional advice can help you navigate this evolving landscape confidently.

Enquire Now

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