Related-party pricing you can actually defend.
Corporate Tax brought formal transfer pricing rules to the UAE. If your group moves goods, services, IP or funding between entities, the arm's-length standard now applies, and the documentation burden comes with it.
Overview
Transactions between related parties and connected persons must be priced as though the parties were independent. That principle, the arm's-length standard, is the foundation of the OECD framework the UAE has adopted, and it applies to management fees, intercompany loans, shared services, royalties and goods alike.
Compliance operates on two levels. Every in-scope business discloses related-party transactions alongside its Corporate Tax return. Larger groups must additionally maintain a master file and local file, prepared contemporaneously and produced on request within the prescribed period.
Where we add the most value is before the documentation stage: setting policies that are commercially sensible and defensible, so the file writes itself and the position holds.
What's included
Every engagement is scoped to what you actually need. This is the full range we cover:
Who this is for
UAE members of multinational groups, holding companies with cross-border subsidiaries, businesses with intercompany financing, and free-zone entities transacting with related mainland parties.
Meeting the transfer pricing requirements is one of the conditions attached to Qualifying Free Zone Person status. A group treating its free-zone entity as outside the rules risks the 0% position it depends on.
How the engagement runs
- Mapping. We identify every related-party and connected-person flow, including the ones clients routinely forget: director remuneration, shareholder loans, informal cost sharing.
- Analysis. Functional and risk analysis establishes which entity does what and bears what, which drives the appropriate pricing method.
- Benchmarking. Independent comparables are searched and applied to establish a defensible arm's-length range.
- Documentation. Master and local files prepared contemporaneously, ready to produce if requested rather than assembled under pressure.
Documentation layers
| Layer | Purpose |
|---|---|
| Disclosure form | Filed with the Corporate Tax return, summarising related-party transactions |
| Local file | Detailed analysis of the UAE entity's controlled transactions |
| Master file | Group-wide overview of structure, intangibles and financing |
| CbC report | Jurisdiction-by-jurisdiction reporting for large multinational groups |
Transfer Pricing, answered.
The questions we're asked most often on this service.
More often than owners expect. The arm's length principle applies to any transaction with a related party or connected person, regardless of how large the business is. If you own two companies that trade with each other, if your UAE entity is funded by a shareholder loan, or if you pay yourself a salary or management fee from your own company, transfer pricing is already in scope. What changes with size is the documentation burden, not whether the rules apply. Smaller businesses still need to show the pricing was arm's length, they just may not need a full master and local file to do it.
Broadly, anyone connected to you by ownership, control or close family. That covers companies under common ownership, entities where one controls the other, and individuals related within a defined degree of kinship, along with their businesses. Connected persons are a separate category and include owners, directors and officers, and their relatives. The two most commonly missed are payments to a shareholder or director in their personal capacity, and dealings with a company owned by a family member that nobody thinks of as part of the group.
The disclosure form goes in with your Corporate Tax return, so the analysis has to exist before you file, not afterwards. Master file and local file requirements apply where revenue or group thresholds are met, and the FTA can request them within a set period once it asks. The practical point is that documentation supporting a position has to be contemporaneous. Building a benchmarking study two years after the transaction, once a query has landed, carries far less weight than one prepared at the time.
Yes. Related party financing is one of the most frequently challenged areas, because interest is deductible and the rate is easy to set without evidence. We benchmark the interest rate against comparable third party debt using recognised databases, and we test the arrangement itself: whether the borrower could have obtained that debt independently, whether the terms are commercial, and whether the amount is consistent with the borrower's capacity to service it. A rate alone is not a defence if the loan would never have been made at arm's length.
Find out where you stand.
It takes less than 30 minutes.
A call to review your obligations across tax, VAT, audit and reporting. We flag anything at risk and give you a clear next step. If you don't need us, we'll tell you that too.