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Transfer pricing refers to the prices set on transactions between related parties within the same corporate group. These transactions can include the sale of goods, provision of services, licensing of intellectual property, or intercompany loans, essentially any deal where the two parties on either side are connected rather than independent.
For years, transfer pricing was something most UAE businesses didn’t have to worry about. But that changed when the UAE introduced Corporate Tax effective June 2023. Under the new UAE Corporate Tax law, businesses with related-party and connected-person transactions are now legally required to ensure those transactions comply with the arm’s length principle and maintain proper documentation.
In simple terms: if your group companies are doing business with each other, the prices and terms must reflect what two unrelated parties would agree to in a free market. If they don’t, the Federal Tax Authority (FTA) can challenge your transactions, adjust your taxable income, and issue significant penalties.
Leads Accountancy is a UAE-based tax and accounting consultancy with deep expertise in Corporate Tax compliance and transfer pricing. We help businesses of all sizes understand their obligations, build strong documentation, and stay protected in the face of increasing regulatory scrutiny.
The UAE’s approach to transfer pricing is firmly grounded in international best practice, drawing heavily on the OECD Transfer Pricing Guidelines. Here’s what businesses need to understand.
UAE Federal Decree-Law No. 47 of 2022 (the Corporate Tax Law) introduced transfer pricing rules that apply to all taxable persons with related-party transactions. Article 34 establishes the arm's length principle as the governing standard
The arm's length principle requires that transactions between related parties be priced as if they were conducted between independent parties in comparable circumstances. This is the global standard, endorsed by the OECD and adopted by the UAE. I
The UAE has explicitly aligned its transfer pricing framework with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. This means the five recognised OECD transfer pricing methods CUP, Resale Price, Cost Plus, TNMM, and Profit Split
UAE businesses with related-party transactions must disclose these transactions in their Corporate Tax returns. Those meeting certain thresholds must also maintain a Local File and, where applicable, a Master File.
When it comes to transfer pricing, the quality of your advisors matters enormously. Here’s why UAE businesses consistently choose Leads Accountancy. Deep UAE Tax Expertise Our team is fully up to date with UAE Corporate Tax law, FTA guidance, and the practical realities of operating a business in the UAE. We don’t apply generic international templates, we give you advice that works in the UAE context. OECD Methodology Applied Locally We bring internationally recognised transfer pricing methodology to every engagement, applying OECD Guidelines in a way that satisfies UAE regulatory requirements and stands up to FTA scrutiny. Tailored, Not Template-Driven Every business is different. We take the time to understand your group structure, your transactions, your industry, and your risk profile before recommending any approach. You’ll never receive a one-size-fits-all document. Accurate, Defensible Documentation Our transfer pricing documentation is prepared with the FTA in mind. Every Master File and Local File we produce is thorough, well-structured, and built to be defensible in a regulatory review. Strict Confidentiality We treat your business information with the highest level of confidentiality. Your financial data, group structure, and transaction details are handled securely and never shared without your consent. Proven Track Record We have supported businesses across a wide range of industries from manufacturing and trading to financial services and technology in meeting their transfer pricing obligations. Our clients trust us because we deliver results. Proactive Advisors We don’t just prepare documentation and disappear. We keep you informed about regulatory developments, help you plan ahead, and are available to answer questions as your business evolves.
At Leads Accountancy, we offer a comprehensive suite of transfer pricing services designed to meet the specific needs of businesses operating in the UAE. Whether you’re just beginning to understand your obligations or you’re facing an FTA audit, we have the expertise to support you.
The cornerstone of transfer pricing compliance is thorough, accurate documentation. We prepare both the Master File (group-level overview of your business, structure, and intercompany transactions) and the Local File (detailed documentation of UAE-specific related-party transactions). Our documentation is built to meet the requirements of the UAE Corporate Tax law and the OECD Transfer Pricing Guidelines, giving you a solid foundation in the event of an FTA review.
To prove that your intercompany prices are at arm's length, you need a benchmarking study a comparison of your transactions against those of comparable independent companies operating in similar markets. We use reputable commercial databases and apply recognised OECD methodologies to build defensible benchmarking analyses tailored to your industry and transaction type.
If your group doesn't yet have a formal transfer pricing policy or if your existing policy needs updating we help you design one from the ground up. A well-designed TP policy sets out clear principles for how intercompany transactions are priced, reviewed, and documented. It also reduces the risk of inconsistencies between entities and strengthens your overall compliance position.
We conduct detailed reviews of your existing intercompany transactions, whether that's management fees, royalties, service charges, loans, or goods transfers to identify pricing risks and compliance gaps. If we spot issues, we provide practical recommendations for correction before they become a problem with the tax authority.
Determining the right price for a transaction between related parties isn't always straightforward. Different transaction types call for different pricing methods, the Comparable Uncontrolled Price method, the Cost Plus method, the Transactional Net Margin Method, and others. We help you select and apply the most appropriate method for each of your transactions, ensuring your pricing stands up to regulatory scrutiny.
If the FTA has initiated a review of your transfer pricing, you need experienced advisors by your side. We provide full audit support, preparing responses, gathering evidence, liaising with the tax authority, and presenting your case clearly and compellingly. We also offer proactive risk assessments for businesses who want to identify and address vulnerabilities before an audit occurs.
For more complex transactions ,particularly those involving intangibles, financial instruments, or significant services, we conduct in-depth economic analyses to support your pricing decisions. This includes functional analysis (what each party does, what risks they bear, what assets they contribute) and industry benchmarking to place your transactions in a credible market context.
You may need professional transfer pricing support if any of the following apply to your business:
Multinational companies with UAE operations UAE parent companies with overseas subsidiaries Businesses providing services to group entities Companies licensing IP within the group Entities with intercompany loans or financing arrangements Free Zone companies transacting with related parties Mainland companies operating within group structures Joint venture entities with related-party transactions Businesses that have not documented transfer pricing previously Companies preparing for or currently facing an FTA audit
If you’re unsure whether your business has a transfer pricing obligation, the safest approach is to speak to one of our consultants. A 30-minute conversation can help you understand exactly where you stand and what steps to take next.
Many business owners assume that because they control both entities in a transaction, pricing doesn’t need to follow any particular rules. That assumption is increasingly risky. Here’s what you need to know.
It's a Legal Requirement
UAE Corporate Tax law, specifically Article 34, requires that transactions between related parties comply with the arm's length standard. Businesses must be able to demonstrate with proper documentation that their intercompany transactions are priced as they would be between independent parties.
The Penalties Are Real
Non-compliance with transfer pricing rules can result in tax adjustments, surcharges, and administrative penalties. The FTA has the authority to disallow deductions, adjust profits, and recalculate your tax liability if your transfer pricing does not hold up to scrutiny.
Audits Are Increasing
The UAE's tax authority is actively developing its audit capabilities. Companies with complex group structures or large intercompany transaction volumes are particularly exposed. Having robust documentation in place is your first and best line of defence.
Multinationals Face Additional Obligations
If your group has a global consolidated revenue above AED 3.15 billion, you may also be subject to Country-by-Country Reporting (CbCR) requirements. Even below that threshold, businesses with significant related-party transactions need to maintain Master Files and Local Files as part of their compliance framework.
Incorrect or Unsupported Intercompany Pricing Many businesses have simply adopted prices that seemed commercially reasonable without conducting any formal analysis. We review your existing pricing and either confirm it meets the arm’s length standard or help you adjust it before the FTA takes a closer look. Missing or Incomplete Documentation One of the most frequent issues we encounter is businesses that have been operating for years without adequate TP documentation. We build comprehensive Master Files and Local Files from scratch, tailored to your specific transaction profile. High Audit Risk Exposure Certain industries and transaction types attract greater scrutiny from tax authorities. We assess your risk profile, identify the transactions most likely to be challenged, and help you build a stronger defence around them. Regulatory Confusion UAE Corporate Tax is still relatively new, and many businesses are genuinely unsure what they need to do. We cut through the complexity and give you clear, practical guidance on exactly what applies to your business. Complex Group Structures Businesses with multiple entities across different countries and different tax regimes face particularly complex transfer pricing challenges. We have experience working with multi-tier, cross-border group structures and can help you achieve consistency across the group. Outdated Transfer Pricing Policies If your group’s TP policy was written before the UAE introduced Corporate Tax, it almost certainly needs updating. We review and refresh your policy to reflect current UAE requirements and OECD guidance.
We’ve designed our process to be straightforward, efficient, and as minimally disruptive to your operations as possible.
We begin with a complimentary consultation to understand your business, your group structure, and the nature of your related-party transactions. This helps us scope the work accurately and identify any immediate risks.
Our team conducts a detailed review of your intercompany transactions, who is doing what, on what terms, and at what prices. We map your group structure and identify all related-party dealings that fall within scope.
We prepare your Master File and/or Local File, carry out benchmarking studies using commercial databases, and select appropriate pricing methods. All analysis is thoroughly referenced and explained.
Before finalising anything, we review all documentation for accuracy, consistency, and compliance with UAE Corporate Tax law and OECD guidelines. We check that your pricing is supported and your disclosure obligations are met.
Transfer pricing isn't a once-and-done exercise. We offer ongoing advisory support to help you monitor changes in your business, update your documentation as required, and stay ahead of regulatory developments.
Full UAE compliance meet your obligations under the UAE Corporate Tax law with confidence Penalty protection reduce the risk of FTA adjustments, surcharges, and administrative fines Audit readiness have defensible documentation ready before the FTA ever comes knocking Tax efficiency structure intercompany transactions in a way that is both compliant and commercially sound Regulatory confidence stay ahead of changing UAE tax regulations with advisors who track every development Complete peace of mind focus on running your business, knowing your transfer pricing obligations are fully managed
Transfer pricing refers to the prices set on transactions between related parties within the same corporate group such as the sale of goods, provision of services, intercompany loans, or IP licensing. Under UAE Corporate Tax law, these transactions must comply with the arm’s length principle and be properly documented.
Any UAE business subject to Corporate Tax that engages in transactions with related parties or connected persons must comply with transfer pricing rules. This includes multinational companies, group entities, free zone businesses, and mainland companies with intercompany dealings.
The arm’s length principle requires that prices and terms in transactions between related parties reflect what would have been agreed between independent parties in similar circumstances. It is the global standard for transfer pricing and the benchmark applied by the UAE’s Federal Tax Authority.
UAE businesses with related-party transactions must disclose these transactions in their Corporate Tax return. Depending on transaction volumes and group revenues, they may also need to maintain a Local File and a Master File. Large multinationals may additionally be required to file a Country-by-Country Report (CbCR).
Non-compliance can result in the FTA adjusting your taxable income to reflect arm’s length pricing, which increases your tax liability. In addition to the extra tax owed, businesses can face administrative penalties and reputational risk. Maintaining proper documentation is the most effective way to protect against these outcomes.
Transfer pricing compliance is not something that can be safely deferred. The UAE Corporate Tax regime is well-established, the FTA is actively reviewing returns, and businesses that haven’t built proper documentation are taking a significant risk with every day that passes.
The good news is that with the right support, becoming compliant is entirely manageable and Leads Accountancy is here to guide you through every step of the process.
Whether you’re starting from scratch, reviewing existing arrangements, or facing a pending audit, we’ll give you a clear plan and the expertise to execute it.
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Leads Accountancy is your go-to company in Dubai for all Accounting, Management Consulting, Auditing, and Corporate Tax services. From expert Advisory Services to precise Tax Auditing, we provide a full range of solutions customized to businesses of all sizes.