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On 23 October 2023, the Federal Tax Authority (FTA) issued the Transfer Pricing Guide (TP Guide) to help taxpayers better understand
and comply with the UAE Corporate Tax (CT) Law. This guide provides practical insights on the application of Transfer Pricing (TP)
rules and regulations within the UAE, aligning broadly with the OECD Transfer Pricing Guidelines.
Transfer pricing refers to the method of setting prices for goods, services, or intangible assets exchanged between related parties
(such as subsidiaries of multinational corporations). These prices must reflect fair market conditions and be consistent with what
independent entities would charge under similar circumstances.
The TP Guide explains how businesses should:
Transfer pricing regulations in the UAE are designed to:
Transfer pricing rules apply to:
All transactions must follow the Arm’s Length Principle, meaning the terms should mirror those that would have been set between
unrelated parties.
The term “Related Parties” refers to entities or individuals with a direct or indirect relationship significant enough to
influence the terms of a transaction. This includes:
This principle emphasizes that the economic substance of a transaction should take precedence over its legal
structure when evaluating its tax implications—especially in related-party transactions.
Full audit of records and transactions to ensure adherence to UAE Corporate Tax Law.
Core to transfer pricing rules, this principle requires that inter-company transactions be priced as if they were
between independent parties under similar market conditions.
The UAE TP framework follows the internationally accepted OECD Guidelines, particularly on:
These two documents are essential for TP compliance under the OECD framework:
These include:
No, such transactions are eliminated in the consolidated financials of the Group. However, exceptions exist—e.g., when a
group member calculates standalone taxable income for loss utilization or when exiting the Group.
Yes. TP rules apply to all transactions with Related Parties and Connected Persons, whether they are based in the UAE, a
Free Zone, or overseas.
Absolutely. Loans between related entities must be priced fairly (e.g., interest rate, terms, and duration) according to
market conditions
Yes. Qualifying Free Zone entities that are part of a large multinational enterprise (MNE) will be subject to special
corporate tax rates once BEPS Pillar Two rules are integrated into UAE law.
Yes, if the companies have 75% or more common ownership and meet other conditions. However, tax loss transfers from
exempt entities or those under the 0% Free Zone regime are not allowed.
Yes, companies in a Qualifying Group can transfer assets/liabilities at net book value, enabling tax-neutral transactions.
Only if they are managed and controlled in the UAE and are considered UAE tax residents. Generally, only UAE-resident
juridical persons are eligible.
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UAE that will be effective from 1 June
2023. This article explains how Article
44 governs the computation of CT
liability and its settlement process
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Corporate Tax might indirectly affect
salary structures, allowances, and
company benefits for employees in the
UAE.
A detailed look at the corporate tax
landscape in 2023, including updates
from the authorities, compliance
strategies, and key implementation
dates.
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