The brand-new UAE’s transfer pricing (TP) regime was launched in 2024 and therefore the first TP audits are coming this year. The UAE is one of several countries in Middle East, together with Saudi Arabia, Qatar and Jordan, that have adopted TP regimes in recent years.  

The UAE’s TP regime is in line with the OECD arm’s-length TP standard model, except for an expanded definition of related parties and extra rules for companies with operations in free zones (please see 2.part for more details in this regard).   

What is transfer pricing? In short, it involves valuation of transactions between legal entities within a corporate group. Basically, intragroup transactions must be conducted at arm’s length, i.e. priced similarly to transactions between unrelated companies. 

Therefore, for the UAE taxpayers, it will no longer be the case, for example, to transfer inventory from one company to another without any consideration for value of that inventory. Also, transferring cash for funding needs between companies within a group is no longer an option without thinking about interest rates or repayment terms. Moreover, they also have to make sure that transactions with related entities inside the country’s free zones comply with the new rules. This extra burden/requirement will mean more calculations, more documentation, thus, often more restructuring.  

Do you want to know more about the UAE TP regime? Whether it applies also to you? Do you need to prepare TP documentation and TP report for our company? Call us at +971 521 521 330 or send us email at office@alphaprimedwc.ae. We focus on tax and are 10 years in Dubai helping and assisting our clients. We are here for you.