Transfer Pricing Rules in UAE
Reviewed by the Commoner Law Editorial Team. Sourced from UAE federal decrees, laws, and ministerial decisions. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
What is this right?
Transfer pricing rules ensure that transactions between related companies are priced fairly. These rules are especially significant in the UAE given the prevalence of free zone structures where companies may have related entities on the mainland and in a free zone:
- Arm's length principle: Transactions between related parties (parent-subsidiary, companies under the same owner) must be priced as if they were between independent parties.
- Documentation: Companies must maintain transfer pricing documentation that explains how prices were set for all related-party transactions.
- Disclosure: You must disclose related-party transactions in your corporate tax return filed through EmaraTax.
- Revenue threshold: Businesses with revenue over AED 200 million must prepare a Master File and Local File. All businesses with related-party transactions must maintain adequate documentation.
- Accepted methods: The FTA accepts standard OECD transfer pricing methods, including comparable uncontrolled price, resale minus, cost plus, and transactional net margin methods.
- Free zone focus: The FTA pays particular attention to transactions between free zone entities (claiming 0% tax) and their mainland affiliates — artificial pricing to shift profits to a free zone is a primary enforcement concern.
When does it apply?
- Your business has transactions with related parties (parent, subsidiary, affiliate, or connected persons).
- You operate a multinational group with entities in the UAE and other countries.
- Your free zone company transacts with a mainland group company — this is a common structure in the UAE and a priority area for FTA review.
What to Do If Your UAE Business Has Related-Party Transactions
- Identify all related-party transactions — intercompany sales, services, loans, royalties, and management fees.
- Prepare transfer pricing documentation before filing your corporate tax return on EmaraTax.
- Benchmark your prices against comparable independent transactions using accepted OECD methods.
- Consult a transfer pricing specialist — particularly if your group has both free zone and mainland entities, as the FTA is focused on these arrangements.
What should you NOT do?
- Do not use artificial pricing to shift profits out of the UAE or from the mainland to a free zone — the FTA can adjust your taxable income and impose penalties.
- Do not wait until an audit to prepare your transfer pricing documentation — it should be ready at the time of filing.
- Do not ignore related-party disclosure requirements in your corporate tax return — penalties apply for non-disclosure.
Common Questions
When does it apply — transfer pricing rules?
Your business has transactions with related parties (parent, subsidiary, affiliate, or connected persons).You operate a multinational group with entities in the UAE and other countries.Your free zone company transacts with a mainland group company — this is a common structure in the UAE and a priority area for FTA review.
What should I do if my business in the UAE has transactions with related companies that need transfer pricing documentation?
Identify all related-party transactions — intercompany sales, services, loans, royalties, and management fees.Prepare transfer pricing documentation before filing your corporate tax return on EmaraTax.Benchmark your prices against comparable independent transactions using accepted OECD methods.Consult a transfer pricing specialist — particularly if your group has both free zone and mainland entities, as the FTA is focused on these arrangements.
What should you NOT do — transfer pricing rules?
Do not use artificial pricing to shift profits out of the UAE or from the mainland to a free zone — the FTA can adjust your taxable income and impose penalties.Do not wait until an audit to prepare your transfer pricing documentation — it should be ready at the time of filing.Do not ignore related-party disclosure requirements in your corporate tax return — penalties apply for non-disclosure.