With the launch of UAE Corporate Tax, thousands of businesses are now exposed to Transfer Pricing (TP) rules for the first time. The UAE follows international standards, especially the OECD Guidelines, making TP compliance a must-have for companies with related-party transactions.
In 2025, Transfer Pricing documentation is one of the highest-risk areas for FTA audits. This guide explains TP rules in simple terms so UAE businesses can stay compliant.
What Is Transfer Pricing?
Transfer Pricing refers to the pricing of transactions between:
- Related parties
- Connected persons
- Same group companies
- Companies under common ownership/control
Examples of such transactions:
- Management fees
- Service charges
- Intercompany loans
- Royalty payments
- Sale of goods between related entities
The FTA requires all these to be priced at “Arm’s Length”, meaning they must match what independent third parties would charge.
Who Must Comply?
TP rules apply to:
✔ Mainland Companies
Any mainland UAE entity transacting with related parties inside or outside UAE.
✔ Free Zone Companies (including QFZPs)
Even if enjoying 0% corporate tax, they must follow TP rules.
✔ Multinational Groups
Especially those with revenues above AED 3.15 billion (Master File requirement).
✔ Family Businesses
Common control exists → TP rules apply.
Arm’s Length Principle (ALP)
Companies must ensure that pricing matches market value.
FTA accepts 5 OECD methods:
- Comparable Uncontrolled Price (CUP)
- Resale Price Method
- Cost Plus Method
- Transactional Net Margin Method
- Profit Split Method
Mandatory Documentation Requirements (2025)
1. Master File
Required for large groups meeting thresholds.
2. Local File
Detailed documentation of UAE entity’s controlled transactions.
3. Disclosure Form
Required for ALL companies meeting related-party thresholds.
The FTA may request documentation any time within 30 days.
How to Prepare for TP Compliance
- Identify all related parties
- Benchmark intercompany transactions
- Maintain intercompany agreements
- Prepare Local File annually
- Conduct TP risk assessment
- Perform TP health check before filing
Penalties for Non-Compliance
FTA can impose:
- Penalties for missing documentation
- Adjustments to taxable income
- Interest and administrative fines
- TP audit assessments
Conclusion
TP rules are now a major compliance area for UAE businesses in 2025. Proper documentation protects companies from FTA audits and ensures fair pricing across group companies.
Call to Action
Advanced AnalytIQ provides full Transfer Pricing compliance, including Benchmarking, Local File, and Disclosure Forms.
Contact us to ensure your TP documentation is fully compliant for 2025