Best Transfer Pricing Consultants in UAE

At Bestax, we’re all about providing the best accounting services in UAE. We help businesses like yours go through corporate tax rules very smoothly. Especially when dealing with inter-company transactions, whether they’re local or international.

Our transfer pricing advisory services make sure your business follows UAE tax laws. We check your transactions to ensure they meet the required transfer pricing methods and help you stay compliant. Plus, we handle all the documentation, so you don’t have to stress about it.
So reach out to us right now to stay compliant with UAE tax laws.

What is Transfer Pricing?

Think of transfer pricing as the price that companies within the same group charge each other for goods and services. It should reflect market value. Big companies use transfer pricing to manage profits across different locations for tax purposes.

But here’s the catch—when related companies set their own prices, they might not follow market rates. This can affect taxes, which is why governments step in with rules. In the UAE, transfer pricing follows the Arm’s Length Principle. That means prices between related companies should be the same as they would be if the companies were totally independent.

To keep things fair, the UAE introduced strict transfer pricing regulations under the Corporate Tax Law and Ministerial Decision No. 97 of 2023. This makes sure businesses don’t shift profits unfairly.

The Arm’s Length Principle

The Arm’s Length Principle is the global standard for setting fair prices between related companies. It’s used in transfer pricing in UAE and many other countries to ensure businesses don’t manipulate prices to lower their taxes.

In simple terms, this rule means that when two related companies do business with each other, they should set prices as if they were completely independent. The price should match what they would charge an unrelated company in the open market.

This principle is part of OECD guidelines and is written in Article 9 of the OECD Model Tax Convention. If a company sets prices differently just to shift profits and pay less tax, authorities can step in and adjust the profits for tax purposes.

Why Transfer Pricing Matters

If your business operates in more than one country, transfer pricing is a big deal. It’s all about setting prices for goods, services, or anything else traded between companies under the same group.

Ignoring regulations in UAE can be risky. Companies that don’t follow the rules can face huge fines, double taxation, and even damage to their reputation. That’s why working with a professional firm is important. Our transfer pricing advisory services in UAE help businesses stay compliant, avoid penalties, and make tax planning smoother.

How is Transfer Pricing Set?

So, how do companies decide on transfer pricing in UAE? Simple—they follow guidelines from the OECD (Organisation for Economic Co-operation and Development). These rules say that prices between group entities must match real market prices.

To figure this out, businesses compare their internal prices to what independent companies charge in similar situations. This ensures that governments collect the right amount of tax while helping companies avoid being taxed twice on the same profit.

How is Transfer Pricing Calculated?

The formula is pretty straightforward:

Transfer Price = Outlay Cost + Opportunity Cost

Let’s break it down:

1. Outlay Cost (Marginal Cost) – This is the actual cost a company spends to produce one extra unit of a product or service. It includes raw materials, labor, and other direct costs. Some businesses use just this cost to set their minimum transfer price.
2. Opportunity Cost – This is the profit a company could have made if it sold the product to an external customer instead of transferring it within the company.

How Do Companies Use It?

Most businesses follow the general rule, which means they set their minimum transfer price by adding both costs. This way, they don’t lose potential profits by selling too cheaply within their own group.

Step-by-Step Transfer Pricing Compliance Process

Let’s break down the compliance process into clear steps.

Example:

1. Identify Related-Party Transactions – Reviewing intra-group transactions.
2. Select the Right Method – Applying the best approach.
3. Conduct Benchmarking Analysis – Ensuring arm’s length pricing.
4. Prepare Documentation – Master file, local file, and financial analysis.
5. Submit Reports – Complying with UAE Corporate Tax Law.
6. Audit Support & Dispute Resolution – Handling tax audits if needed.

This roadmap can help businesses understand how transfer price works in Dubai work.

Transfer Pricing Methods in UAE

The UAE Corporate Tax Law outlines five key transfer pricing methods based on OECD guidelines.

1. Comparable Uncontrolled Price (CUP) Method

This method compares the price of a transaction between related companies to a similar transaction between independent companies. If the prices match, the deal is fair.

2. Resale Price Method (RPM)

Here’s how it works: a company buys a product and resells it to an independent party. The resale price is then reduced by a fair profit margin. The result? A fair price for the original transfer. This method works best when the reseller isn’t adding much extra value.

3. Cost Plus Method (CPM)

This method takes the supplier’s costs and adds a fair mark-up. It’s common for businesses that sell semi-finished goods or provide services to use this approach.

4. Transactional Net Margin Method (TNMM)

This one looks at net profit margins instead of just prices. It compares a company’s profit margin from a related-party transaction to margins earned in similar uncontrolled transactions.

5. Profit Split Method (PSM)

When businesses work closely together, it can be tough to figure out individual profits. The Profit Split Method looks at the total profit from a transaction and divides it fairly between the companies based on their contributions.

UAE Transfer Pricing Penalties & Risks of Non-Compliance

Ignoring regulations in UAE is not just a small mistake—it can cost businesses a lot. The UAE Corporate Tax Law has strict rules to make sure companies set fair prices for transactions between related parties. If a business fails to follow these rules, tax authorities can step in, adjust profits, and impose penalties.

What Happens If You Don’t Comply?

1. Heavy Fines – Businesses that fail to maintain proper documentation can face significant financial penalties. These fines can add up fast.
2. Double Taxation – If a tax authority decides that a business has not followed the Arm’s Length Principle, it can adjust profits. This can lead to higher taxes in two countries for the same transaction.
3. Tax Audits & Disputes – Poor transfer pricing compliance increases the chance of a tax audit. Once an audit starts, businesses may have to explain their pricing decisions in detail.
4. Legal Issues – Incorrect or missing documentation can lead to court cases and legal troubles, making it hard to operate smoothly.
5. Reputational Damage – A company found to be non-compliant may lose the trust of investors, partners, and regulatory authorities.

How to Avoid These Risks

• Keep accurate documentation
• Use the right methods
• Work with professional consultants in UAE like Bestax
• Review policies regularly to match new tax laws

Transfer Pricing Exemptions and Small Business Relief

Not every business needs to follow strict transfer pricing rules in UAE. The government has provided exemptions for certain companies, making it easier for smaller businesses to operate without excessive compliance burdens.

Who is Exempt from Transfer Pricing Rules?

1. Small Businesses Under Tax Relief – The Small Business Relief program allows companies with revenue below a set limit to be exempt from detailed documentation.
2. Standalone Entities – Businesses that do not have related-party transactions may not need to follow transfer pricing rules.
3. Exempt Persons – Some government-owned companies and certain non-profit organizations may not be required to comply.
4. Free Zone Companies with No Related-Party Transactions – Not all Free Zone Persons need to submit reports, unless they deal with related companies.

What Does Small Business Relief Mean?

If a business qualifies for Small Business Relief, it may not need to:

• Prepare detailed reports
• Submit benchmarking studies
• Maintain a master file and local file

However, even exempt businesses should keep basic records in case tax authorities request information.

How to Know If Your Business Qualifies?

The best way to check is to work with a transfer pricing advisory UAE expert. We help businesses understand whether they need to comply, what documents they need, and how to stay within UAE tax laws.

If you want to know whether your company qualifies for an exemption, our consulting services in Dubai can guide you through the process.

Our Transfer Pricing Services in UAE

At Bestax Chartered Accountants, we specialize in transfer pricing consulting services in Dubai and Abu Dhabi. We help businesses stay compliant with UAE tax laws while ensuring smooth operations.

Transfer Pricing Documentation

We handle all necessary documentation for related-party transactions. Our services include:

• Master File – A comprehensive report on your group’s transfer pricing policies.
• Local File – A detailed report covering UAE-based transactions.
• Annual Transfer Pricing Reporting (Form 232) – Ensuring full compliance with UAE tax regulations.

We follow OECD guidelines and UAE laws, so you can stay compliant without unnecessary hassle.

Transfer Pricing Services

Our experts design and implement policies tailored to your business. We ensure:

• Compliance with the Arm’s Length Principle
• Correct application of OECD transfer pricing methods
• Assistance in adapting and implementing new transfer pricing policies

Whether you are a local business or a multinational group, our transfer pricing advisory services in UAE ensure compliance while optimizing your tax position.

Advanced Pricing Agreements (APAs)

For businesses looking for certainty in their transfer pricing policies, we manage Advanced Pricing Agreements (APAs). These agreements define fair transfer pricing for cross-border transactions, reducing tax risks and avoiding future disputes.

APAs come in three types:

• Unilateral – Agreement with one tax authority
• Bilateral – Agreement with two tax authorities
• Multilateral – Agreement with multiple tax authorities

With an APA in place, you can minimize tax uncertainties and ensure compliance with UAE regulations.

Tax Audit and Dispute Support

We assist businesses in defending their transfer pricing positions during:

• Tax audits – Ensuring strong documentation and compliance
• Tax appeals – Supporting your case if tax authorities challenge your pricing
• Mutual Agreement Procedures (MAPs) – Helping resolve international tax disputes

UAE Transfer Pricing Rule Advisory

The UAE Corporate Tax Law aligns with OECD Transfer Pricing Guidelines, meaning all transactions between related parties, including those in Free Zones, must comply with transfer pricing regulations. Our team ensures your business meets these requirements smoothly.

Our Transfer Pricing Documentation Services

We provide full support to ensure your transfer pricing model meets UAE tax laws. Our services include:

• Detailed transaction analysis – Understanding financial movements within your group
• Benchmarking studies – Comparing your pricing with market standards
• Economic analysis – Ensuring pricing structures make business sense
• Supporting documents – Preparing the right documents for you

Leading Transfer Pricing Consulting Services in Dubai

Managing cross-border transactions requires a clear understanding of UAE tax regulations.

At Bestax Chartered Accountants, our transfer pricing consultants help businesses reduce tax risks, ensure compliance, and navigate complex international tax rules.

FAQs on Transfer Pricing in UAE

What are transfer pricing service fees, and how are they determined?

Transfer pricing service fees vary based on the complexity of transactions, the number of related-party dealings, and the required documentation. Costs depend on services like benchmarking studies, documentation preparation, and tax authority negotiations.

What does a transfer pricing consultant do, and how can they help my business?

A transfer pricing consultant ensures your business complies with UAE tax laws by:

• Determining the right methods
• Preparing documentation
• Assisting in tax audits and disputes
• Helping with Advanced Pricing Agreements (APAs) to reduce future tax risks

What are the five transfer pricing methods, and how do they work?

The UAE follows OECD guidelines, using these five methods:

1. Comparable Uncontrolled Price (CUP) Method – Compares related-party prices with independent transactions.
2. Resale Price Method (RPM) – Starts with the resale price to an independent party and deducts a fair margin.
3. Cost Plus Method (CPM) – Adds a reasonable markup to the supplier’s costs.
4. Transactional Net Margin Method (TNMM) – Compares net profit margins with similar independent companies.
5. Profit Split Method (PSM) – Divides total profits between related parties based on their contributions.

What are the UAE transfer pricing documentation requirements?

Businesses must maintain:

• Master File – A global overview of the company’s transfer pricing policies.
• Local File – A detailed record of UAE-based related-party transactions.
• Transfer Pricing Disclosure Form – A summary of related-party transactions submitted annually.

What is the UAE transfer pricing disclosure form, and who needs to file it?

The Transfer Pricing Disclosure Form is a required submission for businesses with related-party transactions above a materiality threshold. It provides an overview of transaction types, values, and involved parties.

How can I prepare for a transfer pricing audit in the UAE?

• Maintain accurate and complete documentation
• Ensure pricing aligns with the Arm’s Length Principle
• Conduct benchmarking studies for fair pricing comparisons
• Work with transfer pricing advisory UAE experts to stay compliant

Is transfer pricing applicable to all businesses in the UAE?

Not all businesses need to comply. Exempt persons, standalone entities, and small businesses under relief programs may not need to submit detailed documentation. However, related-party transactions must always follow the Arm’s Length Principle.