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Transfer pricing in the UAE rests on one rule: deals with related parties and connected persons must follow the arm's length principle. Source: Federal Decree-Law No. 47, Article 34, checked .
DubaiAccountingFirms.com is an independent directory. It is not the Federal Tax Authority (FTA) and does not give tax advice. This page explains the basics and helps you ask firms for a quote.
What is the arm's length rule in the UAE?
When two related companies trade with each other, they could set any price. The law asks you to use the price that independent parties would agree. Examples of deals it can touch:
- Goods or services sold between a parent and a subsidiary.
- A loan from a shareholder to the company, and the interest on it.
- Rent, management fees or royalties paid to an owner or a connected person.
- A company paying an owner or family member for services.
If a price is not arm's length, the taxable income can be adjusted. Keep a written reason for each price, such as a quote from an outside supplier or a market rate.
Do I need transfer pricing documentation in the UAE?
The law says a taxable person must keep a master file and a local file if it meets conditions set by the Minister. The FTA can ask for transfer pricing documents and supporting information, and you have 30 days from the request to provide them. Source: Federal Decree-Law No. 47, Article 55, checked .
The thresholds
Ministerial Decision No. 97 sets the conditions. From a search extract, which we did not read in full, master file and local file are required if either of these is true:
- The person is part of a multinational group with consolidated revenue of AED 3.15 billion or more.
- Its own revenue is AED 200 million or more in the period.
Check Ministerial Decision 97 on the Ministry of Finance site before you rely on these figures. We have not confirmed any other disclosure threshold for related party transactions, so check the current rule on the FTA site for filing requirements in your return.
Source: Ministry of Finance, Ministerial Decision No. 97 (search extract), checked .
Why does transfer pricing matter for free zone companies?
A Qualifying Free Zone Person must comply with the arm's length rule and the documentation rule. If it fails a condition at any time in a tax period, it stops being qualifying from the start of that period. Under a later ministerial decision it can lose the status for the next 4 tax periods as well. See qualifying free zone person.
What a firm can do
A transfer pricing engagement usually covers some of these tasks. Scope and cost differ from firm to firm.
| Task | What you receive |
|---|---|
| Identify related party deals | A list of transactions with related parties and connected persons |
| Pricing analysis | A view on whether each price is at arm's length |
| Documentation | A master file or local file where required, or a shorter memo where not |
| Return support | Input for the corporate tax return |
| Review of agreements | Advice on written intercompany terms |
No price for transfer pricing work is published in our facts, so we do not quote one. Ask each firm for a fixed fee after you describe your deals.
What to prepare before you ask for quotes
- A list of related parties and the owners behind them.
- The size of each deal in the last tax period.
- Any written agreements between the parties.
- Your revenue, and your group's revenue if you belong to a group.
- Your year end and the date of your next corporate tax deadline.
Use the quote form on this page to describe your case. Firms in the directory reply with their scope and fee. The wider rules are on corporate tax in the UAE, and a corporate tax consultant can look at the full picture.
