Transfer Pricing Services
Registered Tax Agent Regulated by the FTA (Federal Tax Authority)
Transfer Pricing Services in the UAE
Arm’s length pricing, properly documented, before the FTA asks the questions you can’t answer on the spot.
Transfer pricing governs how transactions between related parties are priced and reported for tax purposes. Under UAE Corporate Tax Law, businesses with related-party transactions must apply the arm’s length principle, ensuring transactions are priced as they would be between independent parties. Farahat & Co. provides specialist transfer pricing services to help businesses meet their documentation requirements, manage compliance risk, and align with both UAE regulations and OECD standards.
- FTA-registered tax agent, with direct experience preparing documentation that withstands regulatory scrutiny
- OECD-aligned methodology, applying internationally recognised transfer pricing methods to UAE-specific requirements
- Full documentation coverage, from Local File and Master File preparation through to Country-by-Country Reporting
Transfer pricing is not simply a compliance exercise. Getting it wrong exposes a business to retrospective tax assessments, interest charges, and administrative penalties, and can weaken its position during an FTA audit or review.
Our Specialists In Transfer Pricing Services
Romany Shayb
Senior Tax Consultant
Md. Kamruzzaman, FCA
Senior Tax Consultant
Ahmad Ali Jourieh
Senior Tax Consultant
Mohammed Ghoraba
Senior Tax Agent
Anas Al Salman
Corporate Tax Consultant
As a Trusted Corporate Tax Consultancy in the UAE, Farahat & Co. Offers the Following Corporate Tax Services:
Legal Framework: Articles 34, 35 and 36 of the Corporate Tax Law
UAE transfer pricing rules are set out within the Corporate Tax Law itself, not as a separate regulation, which means transfer pricing compliance is directly tied to a business’s overall Corporate Tax position.
- Article 34 establishes the arm’s length principle, requiring that transactions and arrangements between related parties and connected persons be priced as they would be between independent parties under comparable circumstances.
- Article 35 defines Related Parties for transfer pricing purposes. This definition differs from the IAS 24 criteria used in financial statement disclosures, meaning businesses cannot rely solely on their existing accounting disclosures or global TP policies. A separate assessment against the UAE-specific criteria is required.
- Article 36 governs Connected Persons, a category that extends beyond formal ownership to cover key management personnel remuneration, director fees, and owner compensation arrangements.
Because these definitions are UAE-specific and diverge from familiar international accounting standards, one of the most common early mistakes businesses make is assuming their existing related-party disclosures already satisfy UAE transfer pricing requirements.
Documentation Requirements: Master File, Local File and CbCR Thresholds
Not every business with related-party transactions faces the same documentation burden. Ministerial Decision No. 97 of 2023 sets specific thresholds that determine what’s actually required.
| Requirement | Threshold | Applies to |
|---|---|---|
| Local File | Aggregate related-party transactions exceeding AED 4 million in a tax period | Businesses with material intercompany dealings, regardless of group size |
| Master File | Group consolidated revenue exceeding AED 3.15 billion | Larger multinational groups with UAE operations |
| Country-by-Country Report | Group revenue exceeding AED 3.15 billion, UAE-resident ultimate parent entity | Qualifying large multinational groups |
| Transfer Pricing Disclosure Form | Mandatory for all Taxable Persons with Related Party or Connected Person transactions | Filed as part of the Corporate Tax Return itself |
The disclosure form deserves particular attention: it is not a separate, optional filing. It is a required component of the Corporate Tax Return, meaning a business cannot complete its Corporate Tax return accurately without first establishing its related-party position.
Challenges and Risks in Transfer Pricing
Businesses with related-party transactions, particularly multinationals allocating revenue between entities across different jurisdictions, face significant transfer pricing risk. When transactions between connected parties are not priced at arm’s length, or when documentation is incomplete, tax authorities may challenge the pricing and impose penalties.
Under UAE Corporate Tax Law, the FTA has the authority to make adjustments where transfer pricing rules have not been properly applied. This makes accurate documentation and a proactive compliance approach essential for any business with cross-border or intra-group transactions, not just an exercise to complete once a return is due.
Transfer Pricing Methods
The UAE follows OECD guidelines in applying arm’s length pricing. The appropriate method depends on the nature of the transaction and the availability of comparable data.
- Comparable Uncontrolled Price Method (CUP): compares the price of a transaction between related parties with the price of a comparable transaction between independent parties. This is the most direct method where reliable comparable data is available.
- Transactional Net Margin Method (TNMM): examines the net profit margin earned on a transaction relative to an appropriate base, such as costs, sales, or assets, and compares it to margins earned by comparable independent businesses.
- Cost-Plus Method: calculates an arm’s length price by adding an appropriate gross markup to the costs incurred by the supplier in a controlled transaction, commonly used for the supply of goods or provision of services between related parties.
- Resale Price Method: assesses the price at which a product purchased from a related party is resold to an independent customer, working backwards to determine an arm’s length purchase price.
- Profit Split Method: divides the combined profits arising from a transaction between related parties based on their respective contributions, used where transactions are highly integrated and cannot be evaluated separately.
Where the traditional methods (CUP, resale price, or cost plus) cannot be reliably applied due to a lack of comparable data, profit-based methods such as TNMM or Profit Split provide the more defensible alternative.
Who Is Exempt from Transfer Pricing Documentation?
Not every business needs to prepare full transfer pricing documentation. Businesses that claim Small Business Relief are not required to comply with the transfer pricing documentation rules, though they remain subject to the underlying arm’s length principle for how their related-party transactions are priced.
This exemption applies to documentation obligations specifically, not to the substantive requirement that related-party transactions reflect arm’s length terms. A business below the documentation threshold should still be able to demonstrate that its pricing is commercially reasonable if asked.
Our Transfer Pricing Services
- Transaction analysis
We analyse all transactions covered by the UAE transfer pricing regime, identifying related-party dealings, assessing arm’s length compliance, and flagging areas of risk before they attract FTA scrutiny. - Inter-company agreement review
We assist in preparing and reviewing inter-company agreements for proposed or existing transactions, ensuring they are structured in line with the arm’s length principle and properly documented. - Benchmarking and comparability analysis
We conduct thorough benchmarking studies to identify comparable transactions and establish an appropriate arm’s length range, supporting the selection of the most suitable transfer pricing method for each transaction. - Internal group transaction advisory
We provide guidance on intra-group transactions including management fees, royalties, loans, and service charges, ensuring these arrangements meet UAE regulatory standards and are properly supported by documentation. - Local File and transfer pricing report preparation
We prepare the Local File and transfer pricing report for the relevant financial year, covering the required disclosure of related-party transactions, the methods applied, and the supporting comparability analysis. - Regulatory compliance and disclosure
We assist with the preparation and submission of disclosure forms, Master Files, and Country-by-Country Reports, ensuring full compliance with UAE transfer pricing obligations and international reporting requirements.
Why Choose Farahat & Co. for Transfer Pricing Services
- FTA-registered tax agent: direct experience preparing transfer pricing documentation to UAE regulatory standards
- OECD-aligned expertise: our methodology reflects internationally recognised transfer pricing principles, applied to UAE-specific legal requirements
- Full documentation coverage: Local File, Master File, disclosure forms, and Country-by-Country Reporting under one firm
- Coordinated compliance: our transfer pricing work connects directly with our Corporate Tax, VAT, and audit teams for a consistent view of your overall tax position
- Established track record: over four decades supporting UAE businesses through complex regulatory transitions, including the introduction of Corporate Tax itself
Transfer Pricing Services: Frequently Asked Questions
Why is it important for the finance team to understand the nature of company transactions?
Are connected persons limited to owners or shareholders?
Can related parties be identified through indirect ownership?
Should intercompany current account balances attract an arm's length return?
How should intellectual property shared across group entities be priced?
What happens if reliable comparable data isn't available for the preferred method?
How should shared service centres allocate costs across group entities?
How does transfer pricing compliance affect Qualifying Free Zone Person status?
What are the consequences of weak transfer pricing governance?
When should a business prepare its Master File and Local File?
Related Blogs
June 18, 2026FAR Analysis in Transfer Pricing: Functions, Assets and Risks
Before any transfer pricing method can be applied, and before a benchmarking study can even begin, a more...
Read Article
June 16, 2026Transfer Pricing Methods: The 5 OECD Methods
Once a related party transaction has been identified, the next question is practical: what price actually satisfies the...
Read Article
June 15, 2026Related Party Transactions in Transfer Pricing
Every transfer pricing rule starts from the same starting point: identifying which transactions actually count as related party...
Read Article
June 15, 2026Arm's Length Principle in Transfer Pricing
The arm's length principle is the single rule that transfer pricing is built on. Whenever two related companies...
Read Article