Have you ever wondered how multinational groups move money between their own companies across borders?
Here’s a concept every global business owner in the UAE should understand — Transfer Pricing.
What is Transfer Pricing UAE?
Transfer Pricing UAE refers to the pricing of goods, services, or rights between related companies within the same group.
For instance:
- Elevate UAE provides accounting services to Elevate India.
- The fee charged by Elevate UAE to Elevate India is known as a Transfer Price.
If these two companies were unrelated, market forces would decide the price. But when both belong to the same group, the price can be adjusted — sometimes to show higher profit in one country and lower profit in another.
And when one country has a higher tax rate (like India) and another has a lower one (like the UAE), governments start paying attention.
That’s where Transfer Pricing rules come in.
Why Governments Care About Transfer Pricing
Let’s say:
- India’s corporate tax rate is 30%
- UAE’s corporate tax rate is 9%
If a group shifts more profit to its UAE entity and less to India, tax authorities in India lose revenue.
So, worldwide tax regulators introduced the Arm’s Length Principle UAE, which simply says:
“If you deal with your own group company, charge the same price you’d charge an independent third party.”
The Arm’s Length Principle — In Simple Words
Imagine two friends running different cafés.
If one buys coffee beans from the other, he’ll pay the same price any customer would — not a special discount.
That’s how related companies should price their internal transactions: fair, market-based, and transparent.
This principle forms the foundation of Transfer Pricing Compliance UAE, ensuring all intercompany dealings are treated as if they were with unrelated entities.
Where Does Transfer Pricing UAE Apply?
Transfer Pricing UAE applies whenever money moves between related or connected entities. That includes:
- Buying or selling goods
- Providing or receiving services
- Paying or receiving interest
- Using brand names, trademarks, or software
- Paying management or consulting fees
In short, if it’s a related party transaction in UAE, Transfer Pricing rules apply.
How to Find the Right Transfer Price UAE (Arm’s Length Price)
The OECD Transfer Pricing Guidelines recommend specific methods to check if your price is fair.
| Method | When It’s Used | Example |
| CUP – Comparable Uncontrolled Price | When you can find a market rate | Compare audit fees charged to other clients |
| Cost Plus Method | For service providers | Cost ₹100 + 10% markup = ₹110 |
| TNMM – Transactional Net Margin Method | Common for consulting, IT, or back-office work | Compare net profit % with similar firms |
| Resale Price Method | For distributors | Deduct normal margin from resale price |
| Profit Split Method | When both entities share IP or intangibles | Split total profit based on contribution |
These methods help prove that your intercompany transactions UAE are at arm’s length.
Real Example
Let’s take the Elevate group again:
- Elevate India provides accounting support to Elevate UAE.
- Cost incurred in India: USD 100,000
- Markup added: 10%
- Transfer Price: USD 110,000
If you can show that other independent service providers charge around the same markup, your pricing complies with UAE Corporate Tax transfer pricing requirements.
Documentation Requirements
Under UAE Tax Law Article 34 & 55, every company with related party transactions must maintain detailed Transfer Pricing Documentation.
Your file should include:
- Group structure and ownership chart
- Nature of intercompany transactions
- Transfer Pricing method applied
- Comparable market data
- Financial analysis and summary
This documentation is your defense if the FTA ever reviews your Corporate Tax filing UAE.
Transfer Pricing Under UAE Corporate Tax
With UAE Corporate Tax now in effect, the landscape has changed significantly. Articles 34 and 55 of the law formally introduce Transfer Pricing UAE provisions, covering both related and connected persons.
That means, if your company in the UAE:
- Has dealings with your group abroad, or
- Transacts with related parties locally or internationally,
You are required to:
- Charge prices at arm’s length,
- Maintain full documentation, and
- Disclose transfer pricing details in your corporate tax return.
This applies equally to mainland and Free Zone Corporate Tax UAE entities. Even Qualifying Free Zone Persons must comply if they engage in related party dealings.
Applications of Transfer Pricing
Transfer Pricing isn’t limited to large multinationals. It applies across industries where cross-border or intra-group transactions occur.
For instance, Transfer Pricing for group companies or Transfer Pricing for accountants can involve services, shared resources, or technology licenses.
It’s relevant for:
- Consulting and IT firms
- Finance and accounting support centers
- Oil, trading, and logistics groups
- Free zone entities providing services to overseas branches
Why This Matters for Entrepreneurs
Transfer Pricing isn’t just for global giants. Medium-sized UAE businesses working with India, the UK, or Singapore must also comply.
Non-compliance can result in:
- Tax adjustments by authorities
- Disallowance of expenses
- Heavy penalties
For professionals offering Transfer Pricing Consultancy UAE, this area also opens valuable advisory opportunities.
The Elevate Approach
The smart move? Begin with a Transfer Pricing Health Check UAE.
Review all your cross-border and intra-group transactions, identify potential risks, and benchmark your pricing.
At Elevate Accounting & Auditing, we help prepare clear, compliant benchmarking reports perfectly aligned with OECD Transfer Pricing Guidelines.
This proactive step protects your business and strengthens your corporate tax compliance position.
Final Takeaway
At its core, Transfer Pricing UAE is about fairness and transparency — not tax avoidance. It’s a logical framework ensuring group companies transact like independent entities.
Once you understand how it works, you’ll see it’s more about reasoning than numbers.
And with the UAE’s evolving corporate tax system, Transfer Pricing is no longer optional — it’s essential.