A Simplified Guide to New Transfer Pricing Requirements for Businesses in UAE

The UAE Federal Tax Authority (FTA) and the Ministry of Finance (MoF) has issued a set of detailed transfer pricing guidelines, providing businesses with clarity on how to determine arm's length prices for their cross-border transactions. In this blog, we will explore the key highlights of these regulatory changes, shedding light on their implications for multinational corporations in the UAE.

1. Comprehensive Transfer Pricing Guidelines by the FTA

These guidelines enable businesses to align their transfer pricing practices with international standards. The decision uses terms defined in the Corporate Tax Law unless specified differently. For instance, "Taxable Person" refers to businesses subject to corporate tax.?

2. Core Elements of the FTA Guidelines

Documentation Requirements The FTA guidelines outline extensive documentation requirements, including a master file, local file, and country-by-country report. Compliance with these requirements is crucial for businesses.?

• If your business is part of a "Multinational Enterprises Group" with a total group revenue of AED 3.15 billion or more during the relevant tax period, you need to maintain both a master file and a local file.
• If your business's revenue for the tax period is AED 200 million or more, you need to maintain both files.
• Comparability Analysis
• Advance Pricing Agreements (APAs)

3. Ministry of Finance's Decision on Documentation Requirements

- Transfer Pricing Documentation Deadline

- Penalties for Non-Compliance

4. Implications for Businesses

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To summarize, the UAE's new transfer pricing guidelines and documentation requirements mark a significant step in the country's commitment to international tax standards and transparency. Businesses operating in the UAE should promptly assess their transfer pricing practices, ensuring compliance with these guidelines, and seek expert advice with our financial advisors to help navigate the new transfer pricing requirements with confidence.