Transfer Pricing refers to the pricing of transactions between related parties, such as companies that are part of the same group. These transactions may include the sale or transfer of goods, services, intangible property, or the provision of loans or financial guarantees.
The UAE Arm’s Length Principle requires that transfer prices in controlled transactions should be set as if the parties were independent and unrelated entities, dealing with each other at arm’s length. This helps ensure that profits are allocated appropriately and that taxes are paid where economic activities generate value.
Article 34 and 45 of the UAE CT Law, determines and defines the criteria for Related Parties, Connect Persons, and crystalize the importance of Arm’s Length Principle to be in-force.
Meanwhile, Article 55 of the UAE CT Law, businesses that meet the thresholds/qualifications for Transfer Pricing, shall be required to submit their Transfer Pricing Documentation, in addition, there would be a Related Party disclosure form to be filed along with the CT Return. It is worth to mention that the UAE adopts OECD Transfer Pricing Guidelines “TPG”.
The primary concern with Transfer Pricing arises when related parties engage in such transactions because they have an incentive to manipulate prices to shift profits from high-tax jurisdictions to low-tax jurisdictions.
Our Transfer Pricing experts, who brings +10 years of experience in niche TP industries with MNE across the region, can bring your compliance to the next level and help you plan for an impact on the business, we rely on global accredited database for conducting our work (e.g., TP Catalyst/Bureau Van Dijk).
For any queries related to Corporate Tax & Transfer Pricing, reach out to Alliance Prime Accounting & Tax Consultancy for expert assistance.
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