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Transfer Pricing Reports
Transfer Pricing Reports are a fundamental aspect of corporate tax compliance in the UAE, designed to ensure that transactions made between related parties—such as subsidiaries, parent companies, or affiliated entities—are conducted at arm’s length. This means that the prices set for goods, services, or intellectual property exchanged are consistent with what independent parties would agree upon in the open market. The purpose is to prevent profit shifting and tax avoidance within multinational enterprises.
UAE Transfer Pricing Reporting Requirements
Disclosure Forms
Companies engaging in related-party transactions that exceed AED 40 million must submit detailed disclosure forms alongside their corporate tax returns. Each individual transaction above AED 4 million must be disclosed, including details such as transaction nature, the transfer pricing method applied, and any tax adjustments.
Local and Master Files
Businesses with group revenues surpassing AED 3.15 billion or local revenues over AED 200 million are required to prepare contemporaneous transfer pricing documentation. This consists of a Master File, providing a broad overview of the global group's transfer pricing policies and financials, and a Local File, offering more detailed information focused specifically on transactions and policies within the UAE entity.
Country-by-Country Reporting (CbCR)
Multinational groups headquartered in the UAE with consolidated revenues above AED 3.15 billion must annually file a CbCR. This report summarizes income, tax paid, and economic activity by country, enhancing transparency for tax authorities.
Connected Persons Disclosure
Payments or benefits exceeding AED 0.5 million to connected persons—such as owners, directors, or their related parties—must be separately disclosed to the Federal Tax Authority (FTA).
Important Considerations
- Transfer pricing documentation must be prepared before filing tax returns.
- All related party and connected person transactions should comply with the arm’s length principle.
- Maintaining detailed records is essential, given the stringent FTA audit protocols and penalties for incorrect or incomplete documentation.
- Certain exceptions apply, including intra-group transactions fully eliminated within tax groups.
How TAPfiscal Can Assist
TAPfiscal’s team of tax professionals possesses in-depth expertise in UAE transfer pricing laws. We provide comprehensive support in preparing transfer pricing reports, from collecting and organizing necessary documents to performing benchmarking studies that defend pricing policies. TAPfiscal ensures full compliance with FTA requirements and helps clients avoid costly penalties. By partnering with TAPfiscal, companies can confidently fulfill their transfer pricing obligations while minimizing tax risks and focusing on their core business operations.
This approach ensures that transfer pricing compliance is not only a regulatory requirement met with accuracy but also a strategic component of sound tax planning for businesses operating in the UAE.
