Transfer pricing and cross-border tax for UAE businesses
Transactions with owners, directors and group companies must be priced as if between independent parties — and many UAE companies have more of them than they realise. We identify them, price them and document them before the FTA asks.
The rules in brief
| Arm's length principle | Transactions with related parties and connected persons must be priced at market value (Articles 34 to 36 of the Corporate Tax Law) |
| Payments to connected persons | Payments to owners, directors and their related parties are deductible only to the extent they reflect market value and are incurred for the business |
| Disclosure form | Filed with the Corporate Tax return where transactions with related parties exceed AED 40 million in total, or transactions with any one connected person exceed AED 500,000 (thresholds set in FTA guidance) |
| Master file and local file | Required for businesses with revenue of AED 200 million or more, or in a multinational group with consolidated revenue of AED 3.15 billion or more |
| Documents on request | To be provided to the FTA within 30 days of a request |
Where cross-border businesses are exposed
- Management fees and recharges between UAE and overseas group companies without a written basis or calculation.
- Shareholder loans at no interest, or at rates that are not documented.
- Salaries, bonuses and consultancy fees paid to owners or their relatives.
- Free zone companies dealing with related mainland or overseas companies — which also affects the 0% rate.
- Foreign tax authorities asking for proof of UAE tax residence before treaty relief is given — see Tax Residency Certificates.
How we help
- A map of your related parties and connected persons, and every transaction with them.
- Market-value support for each type of transaction, documented in a form the FTA can follow.
- The transfer-pricing disclosure form prepared with your Corporate Tax return where required.
- Our cross-border tax experience covers double tax agreements, permanent establishment risk and the interaction with other countries' rules, and we support you through FTA queries and assessments.
Sources: Federal Decree-Law No. 47 of 2022 on Corporate Tax (Articles 34 to 36 and 55); Ministerial Decision No. 97 of 2023 on transfer pricing documentation; FTA Corporate Tax return guidance on the transfer-pricing disclosure form.
Frequently asked questions
Does transfer pricing apply to small companies?
Yes. The arm's length principle applies to every taxable person. Small companies are generally not required to prepare master and local files, but their related-party transactions still need to be at market value.
Who is a connected person?
Broadly, an owner, director or officer of the business, and their related parties. Payments to them are deductible only to the extent they reflect market value.
What happens if prices are not at arm's length?
The FTA can adjust taxable income to the market value, which can create additional tax and penalties. Documenting the pricing in advance is the most effective way to support your position.
Ready to hand over your books and returns?
Tell us about your company and we'll send a fixed-fee proposal within one business day.