The United Arab Emirates has introduced transfer pricing rules as part of the new corporate tax law which is effective from 1 June 2023. In brief, the transfer pricing provisions in the tax decree-law establish a framework to ensure that transactions between related parties or payments to persons connected to the business are at “arm’s length” or “open market” value. These include transfers of tangible goods, provision of services, transfers of intellectual property, issuance of loans, and other financing transactions. They lay down the acceptable methods to determine and establish that an arm’s length valuation has been applied and set out the compliance requirements. The rising volume and variety of intercompany transactions and transfer pricing regulations, accompanied by increased enforcement activities worldwide have made transfer pricing a leading risk management issue for global businesses.

The term related parties is defined in a very broad manner. When a legal entity or individual has more than 50% of direct or indirect ownership or control over a taxable person, this falls within the related party definition. In addition to related parties and connected persons, the law also defines control as the ability of a person to influence another person.

The stakes are high:

The factors driving intensified scrutiny of transfer pricing arrangements are beyond the control of most companies, but the risks to your organization are very real. It is expected that penalties for non-compliance would be in line with those applicable under the UAE Tax Procedures Law of 2017.

How we can help you:

We help businesses to build, manage, document, review, and defend their transfer pricing policies and processes aligning them with their business strategy. Our transfer pricing experts work with you to build proactive, pragmatic, and integrated strategies that address the tax risks of today’s businesses and help your business achieve its potential. Our scope of transfer pricing services include:

• Development of strategy and policy
• Assistance to support transitions to new documentation requirements

Governance optimization and decision-making process to help:

• Coordinate across organization
• Reduce the impact of year-end adjustments
• Monitor transfer pricing footprint
• Controversy risk assessment, remediation, or mitigation as a result of documentation requirements.

Transfer Pricing Services:

INSIGHT’S Transfer Pricing Services practice helps companies develop and implement economically supportable transfer prices, document outcomes, and responses to tax challenges.
We can help companies manage their transfer pricing issues through such services as:

• Related Parties:

We will critically assess related parties under the Transfer Pricing Bylaws and ensure they comply with the conditions to qualify as a related party.

• Transfer Pricing Methods:

We will provide insightful advice on the appropriateness of the Transfer Pricing method used as per Bylaws for determining the arm’s length value of controlled transactions.

• Impact Assessment:

The financial impact on the tax of the client will be assessed by using the appropriate Transfer Pricing methods for determining the arm’s length value of controlled transactions.

• Policies and Procedures:

To determine the impact of Transfer Pricing Bylaws on the policies and processes of the organization.