As GCC-based businesses expand across jurisdictions, cross-border transactions are becoming more frequent, complex, and closely scrutinized.
With the introduction of UAE Corporate Tax and increasing alignment with OECD transfer pricing principles across the region, businesses can no longer treat transfer pricing as a documentation exercise. It now directly impacts deal structuring, tax exposure, and long-term operational efficiency.
Why Transfer Pricing Matters in GCC
In the UAE and wider GCC, transfer pricing is now embedded within the Corporate Tax framework. In a cross-border deal, this becomes critical because it determines:
• Where profits are taxed
• How value is attributed across entities
• Whether the structure will stand up to scrutiny
Below are the Transfer Pricing requirements mandate by FTA
Arm’s Length Principle (ALP)
Every taxable person must ensure that all transactions with Related Parties and Connected Persons comply with the arm’s length principle, regardless of size, sector, or documentation thresholds.
Key requirements:
• Identify all Related Parties and Connected Persons as defined under the Corporate Tax Law.
• Determine the arm’s length nature of each transaction using one of the OECD recognized methods.
• Conduct a Functional Analysis to assess functions performed, assets used, and risks assumed (FAR).
• Ensure consistency between legal ownership and economic substance, especially for intangibles and financing.
• Maintain evidence supporting the pricing
Transfer Pricing Documentation: What Is Expected
The UAE Corporate Tax regime introduces specific transfer pricing (TP) documentation requirements to ensure that related party transactions comply with the arm’s length principle. Depending on the size and nature of transactions, taxpayers may be required to submit or maintain different levels of documentation.
The table below provides a summary of key TP obligations, thresholds, and requirements.
| Requirement | Applicability Threshold | Key Requirement | What it Includes | Deadline |
|---|---|---|---|---|
| Transfer Pricing Disclosure Form |
| Mandatory filing with Corporate Tax Return | Summary of related-party and connected person transactions | Filed with Corporate Tax Return |
| Master File & Local File |
| Must be maintained and provided upon request | Master File: Group structure, intangibles, financing, TP policies Local File: UAE entity transactions, functional analysis, benchmarking, agreements | Maintained annually |
| Country-by-Country Reporting (CbCR) |
| Mandatory for UAE Ultimate Parent Entities | Global allocation of revenue, profit, taxes, employees, and economic activity | Within 12 months after year-end |
The table below provides a summary of key TP obligations, thresholds, and requirements.
While the table above provides a quick snapshot, each requirement serves a distinct purpose within the UAE’s TP framework:
- The Disclosure Form ensures transparency at the transaction level.
- The Master and Local Files provide detailed support for arm’s length pricing.
- The CbCR offers a global view of how profits and economic activities are distributed across jurisdictions.
Together, these requirements align the UAE with OECD transfer pricing standards and enhance tax transparency.
Transfer Pricing Across the Deal Lifecycle
Transfer pricing should be evaluated throughout the transaction lifecycle – from initial structuring to post-deal integration and ongoing compliance.
- Pre-Deal Structuring
This is where most of the value is created or lost.
Key considerations include:
- Ownership of IP, assets, and contracts
- Location of decision-making and control
- Allocation of functions, assets, and risks
- Pricing of Intercompany Transactions
Typical cross-border arrangements include:
- Sale and distribution of goods
- Intra-group services
- Licensing of intangibles
- Intercompany financing
Each transaction must be priced using accepted transfer pricing methods and supported with defensible benchmarking.
How Kuvera Supports
We work with GCC-based businesses to ensure that transfer pricing is practical, defensible, and aligned with commercial objectives.
Our support includes:
- Transfer pricing policy design and review
- Benchmarking and economic analysis
- Master File and Local File preparation
- Cross-border structuring and transaction advisory
- Audit support and dispute resolution
Connect with our team to discuss your current structure and identify areas that may require immediate attention.
Connect with our team to schedule a discussion.