A Practical Guide to Transfer Pricing Advisory & Documentation (UAE)
UAE Corporate Tax turned related-party pricing from a footnote into a live filing obligation. Any UAE business transacting with a related entity or a connected person — a foreign parent, a sister Free Zone company, an owner drawing rent or remuneration — now needs a defensible arm's length position, and in many cases a Master File, Local File and Country-by-Country Report ready to hand the Federal Tax Authority on request. PNPC has advised cross-border groups since 1986, with a dedicated Dubai transfer pricing desk working alongside our India transfer pricing practice.
What You're Really Buying
Transfer pricing advisory and documentation is the practice of setting, evidencing and defending the prices charged between related parties — and the payments made to connected persons — so that profits are not artificially moved between entities to reduce overall tax. Under the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022, applicable to financial years starting on or after 1 June 2023), Article 34 requires every transaction or arrangement between Related Parties, and every payment or benefit provided to a Connected Person, to be conducted on arm's length terms — the terms independent parties would have agreed in comparable circumstances.
For the full scope, current process and what PNPC includes, see the dedicated Transfer Pricing Advisory & Documentation (UAE) service page.
Signs This Applies to You
- The business transacts with a related party — a foreign parent, subsidiary or sister company, or a UAE group entity under common ownership including a mainland-Free Zone pairing — at values approaching or above the disclosure thresholds under Ministerial Decision No.
- A Free Zone entity in the group claims Qualifying Free Zone Person status and 0% tax on Qualifying Income, and its related-party dealings with mainland or foreign affiliates need to be defensible on audit without jeopardising that status
- The group meets, or is approaching, the consolidated or standalone revenue threshold that triggers mandatory Master File and Local File preparation
- Owners, directors or their relatives draw salary, rent, or loan interest from the company that has never been benchmarked to market rates and needs a defensible position for Corporate Tax deductibility
What This Doesn't Cover
- A standalone UAE business with genuinely no related-party or connected-person transactions — the arm's length rules only engage where a qualifying relationship exists in the first place
- Related-party transaction values sit comfortably below the disclosure and documentation thresholds — worth a light scoping review to confirm this, but a full Master File and Local File build is unlikely to be proportionate
- The entity and its group are Exempt Persons under the Corporate Tax Law, or otherwise confirmed outside its scope, subject to the exemption conditions continuing to be met and re-verified periodically
Common Questions
What does 'arm's length' actually mean under UAE Corporate Tax?
It means related parties must price their transactions with each other — sales of goods, services, loans, royalties, management fees — as if they were independent businesses negotiating at market terms. Article 34 of the Corporate Tax Law applies this standard to all Related Party and Connected Person transactions. The purpose is to prevent profit being shifted between entities through artificial pricing rather than genuine commercial terms — whether that shift is toward a lower-taxed Free Zone entity or out of the UAE entirely.
We have no foreign parent or subsidiary. Does transfer pricing still apply to us?
Yes, if you have related-party transactions inside the UAE. Article 35's definition of Related Party turns on ownership and control thresholds, not on geography. Two UAE mainland companies under common family ownership, or a mainland entity and its own Free Zone affiliate, are related parties for Corporate Tax purposes regardless of any foreign element.
What is a Connected Person, and how is it different from a Related Party?
Connected Persons under Article 36 are broadly the owners, directors, officers, and their relatives. Payments or benefits to them — salary, rent on premises they personally own, interest on loans they have advanced to the company — must be at market value to remain deductible for Corporate Tax purposes. Related Party rules under Article 34 govern pricing between entities generally; Connected Person rules focus specifically on the deductibility of payments made to individuals with influence over the taxable person.
Getting This Right From the Start
Speak to PNPC's Dubai transfer pricing desk before the FTA does — contemporaneous, defensible documentation built now costs a fraction of the same file reconstructed under a 30-day audit deadline.
PNPC Global has advised Dubai businesses since 1986. Explore the full UAE Taxation & Regulatory Compliance practice for related services, or go straight to the Transfer Pricing Advisory & Documentation (UAE) page for specifics.
Specific rates, fees, thresholds and deadlines are set by the relevant authority and change over time — this article deliberately does not quote figures that could go stale. Confirm current numbers directly with PNPC or the official source before you act.