Are there transfer pricing rules in UAE Corporate Tax?
ARE THERE TRANSFER PRICING RULES IN UAE CORPORATE TAX?
Are there transfer pricing rules in UAE Corporate Tax? Yes. Learn the arm’s length principle, documentation, disclosure forms, and real UAE examples. TAXESMAN.
Are There Transfer Pricing Rules in UAE Corporate Tax?
Are there transfer pricing rules in UAE Corporate Tax?
Yes. The UAE Corporate Tax regime includes transfer pricing rules that require related party transactions to follow the arm’s length principle, supported by documentation and disclosures where required.
This matters because many businesses in Dubai, Abu Dhabi, Sharjah, and free zones deal with related parties without realising those transactions can be reviewed by the Federal Tax Authority (FTA).
In this guide, you will learn what the transfer pricing rules are, who they apply to, what documents are expected, and practical examples you can relate to.
Need a clean, risk-free approach to related party pricing? Contact TAXESMAN today.
Are There Transfer Pricing Rules in UAE Corporate Tax, and What Do They Mean?
Yes, there are transfer pricing rules in UAE Corporate Tax, and the main idea is simple.
The Arm’s Length Principle (in Plain English)
The FTA explains that the arm’s length principle means your related party pricing should match what independent parties would agree under similar circumstances.
So if your UAE company pays management fees to a parent company, or buys goods from a sister company, you need to be able to justify the price.
If you want TAXESMAN to sanity-check your related party pricing.
Do Transfer Pricing Rules Apply to All Businesses?
Yes. Transfer pricing rules in UAE Corporate Tax apply broadly to transactions and arrangements with:
- Related Parties
- Connected Persons
This is relevant for:
- Groups with multiple UAE entities
- UAE subsidiaries of overseas parents
- Founder-owned businesses where owners and relatives transact with the company
If you are not sure who counts as a related party or connected person in your situation, contact TAXESMAN today.
Do Transfer Pricing Rules Require a Disclosure Form?
Yes. The Corporate Tax framework includes disclosure requirements about transactions with related parties and connected persons, in a form prescribed by the FTA.
In practice, this means:
- You may need to report broad details of related party and connected person transactions as part of your Corporate Tax compliance process
- Even when detailed files are not required, you must still be able to justify your pricing if asked
If you want your disclosures prepared properly and consistently, contact TAXESMAN today.
Are Master File and Local File Required in the UAE?
Sometimes, yes. FTA guidance explains that some taxpayers must maintain transfer pricing documentation such as a Master File and a Local File, based on thresholds and conditions.
In simple terms:
- Master File – a high-level picture of the entire group
- Local File – detailed UAE-level analysis of transactions, pricing method, and support
Even when thresholds are not met, you should still keep enough evidence to show your pricing is arm’s length.
Want TAXESMAN to tell you exactly what documentation you need, and what you can skip?
Do Transfer Pricing Rules Apply to Free Zone Companies?
Yes. Free zone persons are not outside transfer pricing rules. FTA guidance for Free Zone Persons highlights the need to maintain documentation to demonstrate arm’s length outcomes, and where relevant, master file and local file requirements can apply.
If you are a free zone business dealing with a related mainland entity, overseas parent, or distributor, transfer pricing rules may still apply.
If you want to protect your free zone position and reduce risk, contact TAXESMAN today.
Common Transactions That Trigger Transfer Pricing Questions
If you are asking whether transfer pricing rules apply, these are common triggers:
- Management fees charged by a parent company
- Intercompany loans and interest
- Buying or selling goods between group entities
- Shared service centers (HR, IT, finance)
- Licensing of brand, software, or intellectual property
- Payments to owners, directors, or family members (connected persons)
If any of these exist in your business, TAXESMAN can review the contracts and pricing logic.
Dubai, Abu Dhabi, Sharjah Examples
Dubai Example: French Founder with a UAE Subsidiary
A French entrepreneur has a Dubai mainland company that pays a monthly strategy fee to the overseas HQ.
Transfer pricing rules apply. The fee must be justifiable and supported by evidence of services and pricing logic.
Abu Dhabi Example: Intercompany Loan
A group entity in Abu Dhabi borrows money from a related entity and pays interest.
Transfer pricing rules apply. The interest rate and terms must reflect what an independent lender would accept.
Sharjah Example: Owner Payments
A Sharjah SME pays the owner a large consulting fee without a contract or clear deliverables.
This can trigger connected person rules and market value adjustments, creating Corporate Tax risk.
If any of these scenarios sound familiar, TAXESMAN can help you structure them cleanly.
Are There Transfer Pricing Rules in UAE Corporate Tax?
Yes. Transfer pricing rules apply in UAE Corporate Tax.
Related party and connected person transactions must follow the arm’s length principle and be supported by disclosures and documentation where applicable, including master file and local file requirements for certain taxpayers.
Do not wait for filing season to discover transfer pricing issues. TAXESMAN can review your related party transactions, prepare the right documentation, and keep your Corporate Tax position defensible.
FAQs: Transfer Pricing in UAE Corporate Tax
Do transfer pricing rules apply to SMEs?
Yes. The rules can apply to any business with related party or connected person transactions, even if full documentation thresholds are not met.
Do free zone companies need to follow transfer pricing rules?
Yes. Free zone persons may need to demonstrate arm’s length outcomes and comply with documentation rules where relevant.
What is the arm’s length principle?
It means related party terms should match what independent parties would agree under comparable circumstances.
Do I need a Master File and Local File?
Sometimes. Requirements depend on thresholds and conditions set out in FTA guidance.
What will the FTA look for?
Clear evidence of services received, contracts, pricing logic, and proof that outcomes are arm’s length.