Transfer Pricing Services in UAE – Documentation & Compliance

Transfer pricing has become a vital aspect of corporate tax compliance worldwide. In the UAE, where international trade and investment are booming, businesses need to understand transfer pricing regulations to remain compliant, minimize risks, and optimize tax strategies. FMC Accountants offers professional Transfer Pricing services in UAE, focusing on detailed documentation, compliance, and advisory solutions to help companies align with both UAE Federal Tax Authority (FTA) rules and international guidelines.

What is Transfer Pricing?

Transfer pricing refers to the pricing of goods, services, or intangibles between related entities within a multinational company. These prices determine how profits are allocated across different jurisdictions. Mismanagement of transfer pricing can lead to:

• Tax penalties

• Double taxation

• Regulatory scrutiny

With the UAE introducing corporate tax in 2023 and aligning with OECD guidelines, businesses must maintain proper transfer pricing documentation and compliance.

Why Transfer Pricing is Important in the UAE

UAE has emerged as a global business hub, attracting multinational corporations. Consequently, proper transfer pricing compliance is essential to:

• Avoid corporate tax disputes

• Ensure fair allocation of profits among subsidiaries

• Demonstrate transparency to regulatory authorities

• Align with OECD Transfer Pricing Guidelines

Businesses that ignore transfer pricing rules risk audits, penalties, and reputational damage. Hence, expert guidance is critical.

Transfer Pricing Regulations in UAE

The UAE Ministry of Finance has implemented specific transfer pricing regulations to comply with international standards. Key points include:

1. Arm’s Length Principle: Transactions between related entities must reflect prices comparable to independent parties.

2. Documentation Requirements: Companies exceeding the threshold (AED 375 million) must maintain detailed transfer pricing documentation.

3. Country-by-Country Reporting (CbCR): Large multinational enterprises must file reports showing the global allocation of income, taxes paid, and business activities.

4. Compliance Timeline: Documentation must be prepared contemporaneously and submitted upon request by tax authorities.

Understanding these regulations ensures businesses can avoid penalties and manage risk effectively.

Transfer Pricing Services Offered by FMC Accountants

At FMC Accountants, we provide end-to-end Transfer Pricing services in UAE, including:

1. Transfer Pricing Documentation

Proper documentation is the backbone of compliance. We help businesses:

• Prepare master files, local files, and CbCR reports

• Maintain detailed functional analysis, benchmarking studies, and risk assessment

• Ensure alignment with UAE corporate tax laws and OECD standards

2. Transfer Pricing Compliance

Our experts assist in:

• Meeting all FTA reporting requirements

• Preparing documentation in the correct format and timelines

• Responding to regulatory inquiries and audits

3. Transfer Pricing Planning & Advisory

Strategic advisory helps minimize tax exposure while remaining compliant. We provide:

• Benchmarking of intra-group transactions

• Pricing policy design and implementation

• Risk assessment and mitigation strategies

4. Audit Support & Dispute Resolution

In case of audits, FMC Accountants can:

• Represent your business in front of UAE tax authorities

• Provide defense documentation and analysis

• Negotiate settlements and prevent double taxation

Steps in Transfer Pricing Documentation

Preparing transfer pricing documentation involves several structured steps:

1. Identify Related Party Transactions

   • Goods, services, loans, royalties, and intangibles between subsidiaries.

2. Functional and Risk Analysis

   • Understand each entity’s role, risks, assets, and contribution to profit generation.

3. Select Appropriate Transfer Pricing Method

   • Comparable Uncontrolled Price (CUP)

   • Resale Price Method

   • Cost Plus Method

   • Transactional Net Margin Method (TNMM)

4. Benchmarking Analysis

   • Compare intra-group transaction prices with independent market prices.

5. Prepare Documentation Reports

   • Master file, local file, and CbCR as required.

6. Maintain Records for Audit

   • All documentation must be maintained for a minimum of five years in UAE.

Benefits of Using Professional Transfer Pricing Services

Engaging a professional firm like FMC Accountants for Transfer Pricing services in UAE ensures:

• Compliance with UAE Corporate Tax Law

• Reduced risk of audits and penalties

• Optimized tax planning

• Accurate and defensible documentation

• Strategic advice for multinational operations

Common Challenges in Transfer Pricing Compliance

Many UAE businesses face challenges such as:

• Complex transactions involving intangibles and financing

• Lack of internal expertise to prepare compliant documentation

• Difficulty benchmarking transactions with limited local data

• Continuous updates in UAE regulations and OECD guidelines

Professional assistance ensures these challenges are handled effectively.

FAQs on Transfer Pricing Services in UAE

Q1: Who needs transfer pricing documentation in UAE?
A1: Companies with annual revenues exceeding AED 375 million or multinational groups with consolidated revenue exceeding AED 3.15 billion must maintain documentation.

Q2: What documents are required for transfer pricing compliance?
A2: Documentation typically includes master files, local files, CbCR, functional analysis, benchmarking studies, and evidence of arm’s length pricing.

Q3: How often should transfer pricing documentation be updated?
A3: Documentation should be updated annually and kept contemporaneously with fiscal periods.

Q4: Can FMC Accountants help with audit defense?
A4: Yes, we provide full audit support, prepare defense reports, and represent your business before UAE tax authorities.

Q5: Is transfer pricing applicable to all UAE companies?
A5: Transfer pricing primarily applies to multinationals or businesses with cross-border related-party transactions. Small local companies without international subsidiaries may have limited obligations.

Conclusion

Transfer pricing is no longer optional in the UAE; it’s a compliance necessity for multinational companies. Proper transfer pricing documentation and compliance not only reduces risk but also helps businesses optimize tax outcomes.

FMC Accountants provides comprehensive Transfer Pricing services in UAE, including documentation preparation, compliance assistance, advisory, and audit support. Partnering with experts ensures your business stays compliant, minimizes tax risk, and operates efficiently in the UAE’s evolving tax landscape.