Bestax Chartered Accountants Now Offers Complete Transfer Pricing Services in the UAE
It has become one of the most talked about tax topics in UAE and for good reason. With Corporate Tax officially implemented, businesses are now under stricter scrutiny on how they handle transactions between related parties. Whether an SME operating across borders or a multinational group with footprints in UAE, understanding it, is not just good practice, it is a must for compliance.
In response to these developments, Bestax has officially expanded its service portfolio to include it solutions, offering UAE based businesses reliable partner in these evolving tax requirements.
What is Transfer Pricing
It refers to pricing of transactions, such as sale of goods, services, or intellectual property between related entities within the same corporate group. These could be parent companies, subsidiaries, sister companies, or businesses with common control or ownership.
In tax free environment, pricing between group entities may go unchecked. But with the UAE introducing 9% Corporate Tax on business profits, Its regulations now help ensure that companies cannot manipulate internal prices to reduce tax liability.
To prevent tax base erosion, UAE follows Arm’s Length Principle, requiring intercompany transactions must be done at prices similar to those that are applicable between unrelated parties in open market.
What is Arm’s Length Principle?
The Arm’s Length Principle says that when two related entities (like sister companies, a parent and subsidiary, or group companies) transact with each other, the price, terms, and conditions must stay same as if they were unrelated third parties dealing in open market.
In other words: Would you charge your own company less or more just to save on taxes? Under ALP, you are not allowed to. You must treat your own group company just like any outside customer.
The UAE Transfer Pricing Framework
The Federal Decree Law No. 47 of 2022 and subsequent Cabinet Decisions align UAE’s Corporate Tax system with international standards, particularly OECD Guidelines on it.
Companies that engage in controlled transactions with related parties must now comply with documentation and disclosure requirements, including:
- It Disclosure Form (submitted with annual tax returns)
- Local File (domestic intercompany transactions)
- Master File (global group structure and policies)
- Benchmarking Studies (arm’s length pricing using market comparables)
Failure to follow these results in penalties, which increase audit investigations and reputational damage. This risk is what a growing business cannot afford to ignore.
Key Documentation Requirements
The UAE follows a structure that aligns with OECD its Guidelines and BEPS (Base Erosion and Profit Shifting) Actions. Here is what is required, depending on size and nature of the business:
1. Local File
Details transactions between UAE entities and its related parties. It must include nature, value, pricing methods, and justification of Arm’s Length pricing.
2. Master File
Provides overview of multinational group’s operations, ownership structure, financials, and global Transfer Pricing policy.
3. Disclosure Form
Filed along with corporate tax return. It includes summary of related party transactions and must be submitted annually.
4. Country-by-Country Report (CbCR)
Required for multinational groups with consolidated revenue exceeding AED 3.15 billion. This report outlines key financial and tax information across all jurisdictions.
Not having this documentation in place, or failing to apply Arm’s Length Principle could lead to serious fines or post-filing audits.
What Happens if You Don’t Comply?
Ignoring it compliance in UAE can result in:
- Financial penalties
- Increased audit scrutiny
- Delayed or rejected tax filings
- Reputational damage with authorities and partners
And as FTA sharpens its enforcement policies, especially with Corporate Tax regime still in its early stages, now is the time to get things in order.
What Are Controlled Transactions?
Controlled transactions include any financial transaction or dealings between related parties. These involve:
- Sale or purchase of goods
- Provision of services
- Licensing of intellectual property
- Intercompany financing or loans
- Cost-sharing arrangements
- Management or technical support fees
Even if transactions appears in routine, they must be documented, justified, and priced correctly to meet all FTA guidelines.
The Role of Benchmarking in Transfer Pricing
Benchmarking Study is one of the most important components of it compliance. It involves comparing intercompany transaction prices with similar transactions conducted by independent entities/parties in same industry and region.
Benchmark study serves as a proof that pricing is fair, reasonable, and within expected market range, critical safeguard in event of tax audit or inquiry.
Bestax Now Offers End to End Transfer Pricing Services
With increasing pressure on businesses align with its rules, Bestax Chartered Accountants launched specialized suite of Transfer Pricing services in UAE. Bestax services are designed to simplify compliance while also enabling businesses stay informed decisions about pricing strategies, risk exposure, and tax planning.
Their offering includes:
- Risk assessments
- Preparation of Disclosure Forms
- Detailed Local and Master File documentation
- Complete Benchmarking Studies
- Advisory and audit support
With team of qualified tax professionals and access to global financial databases, ensure that your company’s transactions meet the highest international standards.
Why Transfer Pricing is Must Now
As UAE aligns itself with global tax best practices, It’s compliance is no longer an option, especially for businesses operating across borders or under a group structure.
Early preparation not only reduces the risk of penalties but also strengthens corporate governance and investor confidence. Businesses proactively adopt its policies today will be better positioned to thrive in tomorrow’s tax environment.
