Corporate tax has an impact on intercompany, intragroup, and international transactions. And if not properly handled, it can lead to noncompliance and, in some cases, an undue tax cost. This necessitates the use of specialist Transfer Pricing UAE Services to ensure that businesses do not engage in tax evasion methods and report inter-company transactions fairly.
Domestic Transfer Pricing (Transfer Pricing UAE) and International Transfer Pricing are two types of Transfer Pricing Advisory Services. Tax departments in other jurisdictions and International Tax Authorities examine cross-border transactions to ensure compliance with Transfer Pricing regulations. Locally, you must follow tax requirements, which include reporting local intragroup transactions.
Such transactions necessitate more effort and expertise when assessing and recording their entries. It entails keeping additional records, developing new processes, and managing risks. Entities must stay up to date on not only domestic transfer pricing legislation, but also the international transfer pricing landscape in the countries where they operate.
What is Transfer Pricing UAE?
The UAE implemented a Corporate Tax (CT) system with the enactment of Federal Decree-Law No. 47 of 2022. The Ministry of Finance (MoF) announced this law on December 9, 2022, and it includes transfer pricing (TP) provisions that require enterprises to use the arm’s length principle when conducting transactions with related parties. The MoF later issued supplementary information to help firms understand the rules. The Federal Tax Authority (FTA) is in charge of ensuring compliance with the CT law.
On May 11, 2023, the MoF published Ministerial Decision No. 97 of 2023, which details how firms must develop and preserve TP documentation under Article 55(2) of the CT statute. These restrictions are applicable to all UAE firms, even those in free zones.
Key obligations include:
- Ensure that all related party transactions UAE adhere to the arm’s length principle, regardless of tax grouping or location.
- Unless eligible for Small Business Relief, enterprises must file a TP disclosure form with their corporation tax return.
- Companies with an annual revenue of more above AED 200 million and members of international corporations with a global revenue over AED 3.15 billion are ought to fullfill further documentation requirements.
To meet compliance requirements, these businesses must create and maintain both a local and master file.
- Businesses in the UAE free zones are also need to follow TP regulations. They should save supporting papers, such as local and master files, to ensure compliance and avoid regulatory inspections.
Failure to comply with these regulations may result in penalties or audits. To comply with TP obligations under the UAE’s CT system, enterprises must stay educated and establish adequate documentation methods.
How can HH & HALE help you with transfer pricing Advisory UAE?
Transfer Pricing Risk Assessment
Not all intra-group transactions are intended to evade taxation. We assist MNEs in managing their transfer pricing risks, enhancing their TP documentation, and obtaining more assurance about their tax and transfer pricing positions in accordance with internationally recognized transfer pricing UAE principles and local Transfer Pricing rules.
Transfer Pricing Planning
We assist clients in creating and putting into effect transfer pricing UAE policies for their planned and current intragroup transactions. We also document policies and results that satisfy business and commercial goals while lowering the possibility of tax authorities making adjustments and imposing penalties during audits. This includes:
- Creating the most efficient transfer pricing mechanism for inter-company transactions
- Conducting proper benchmarking studies to determine an arm’s length price
- Creating the transfer pricing policy document to describe the price mechanism.
- Review of inter-company agreements from a transfer pricing standpoint
- Assisted customers in the adoption of transfer pricing policies and conducted periodic evaluations to detect any gaps.
Transfer Pricing UAE Documentation
When tax authorities question a company’s transfer pricing methods, the first step is to provide solid and thorough transfer pricing documentation. This acts as the first line of defense.
We assist clients in meeting both local and global Transfer Pricing paperwork requirements. This includes:
- Local File/Local Transfer Pricing documentation creation in accordance with the requirements of local transfer pricing regulations and the experience obtained during Income Tax/Transfer Pricing Audits
- Master File preparation in accordance with local transfer pricing legislation and OECD compliance UAE.
Country-by-country reporting, completing notification requirements, and assessing the exposure and transfer pricing UAE risk for clients as a result of submitting such data relating to worldwide operations to tax authorities in the many jurisdictions where the multinational group operates.
Transfer Pricing UAE Advisory Services
We help clients reach their business objectives and advise them on their specific questions and pressure points, including the following:
- Alignment between transfer pricing UAE policies and commercial aims
- Examine existing inter-company relationships and determine whether any tax efficiencies may be integrated into the documentation.
- Supply chain transformation to ensure that transfer prices are consistent with value creation.
- Attributing profits to permanent establishments
Transfer Pricing Benchmarking
To verify that intercompany transactions follow the arm’s length principle, organizations must compare their pricing to market rates. Our benchmarking analysis enables businesses to defend their transfer pricing UAE schemes.
Our benchmarking approach involves
- identifying and choosing comparable deals.
- Analyzing market trends and financial situations.
- Evaluating pricing data for certain industries.
We use reliable transfer pricing databases to provide accurate comparisons that follow local restrictions. A thorough benchmarking research enables organizations to confirm their pricing strategies, mitigate tax risks, and defend their transfer pricing policies during audits or tax authority assessments.
Expert Transfer Pricing Advisory Services at HH & Hale
At HH & HALE, our professionals are well prepared to assist you with the development and maintenance of your Transfer Pricing documents.
In short, we provide the following services to assist you fully comply with UAE Transfer Pricing regulations:
- Maintaining comprehensive documentation in accordance with abroad jurisdiction regulations.
- Assisting with the compilation of the ‘Master File’ and ‘Local File’.
- Assisting in the filing of Transfer Pricing information as required by the Regulation.
- Issuing the Transfer Pricing Audit Report for Statutory Compliance as needed.
Why Choose HH & HALE for Transfer Pricing UAE Advisory Services?
With more than two decades of expertise in financial advice, taxation, and auditing, HH & HALE is your reliable partner for Transfer Pricing compliance. We combine local experience with international standards. We give strategic counsel to businesses in the UAE, ensuring compliance, reducing risk, and supporting your long-term tax plan.
