➤ Introduction: Why Transfer Pricing Advisory in UAE Is Critical in 2025

In 2025, transfer pricing (TP) has evolved beyond a compliance exercise—it’s a cornerstone of strategic tax planning and risk management for UAE businesses.
With the introduction of corporate tax and increased scrutiny by the Federal Tax Authority (FTA), the ability to align your pricing, documentation, and governance with international standards determines more than just your tax outcome—it impacts profitability, audit readiness, and free zone eligibility.

Whether managing cross-border transactions, structuring intragroup loans, or preserving free zone incentives, effective TP management aligned with OECD principles helps businesses avoid penalties and ensure consistent, defensible pricing.

As a trusted provider of business advisory services in Dubai, ASC Global delivers expert transfer pricing advisory in UAE, combining regulatory knowledge and risk-based frameworks to help businesses achieve compliance with confidence.

➤ What Is Transfer Pricing? The UAE Regulatory Framework

Understanding Transfer Pricing

Transfer pricing governs the pricing of goods, services, or intangibles exchanged between related parties within the same corporate group.
The guiding rule is the arm’s-length principle—transactions must be priced as if conducted between independent parties.

This ensures fair profit allocation, prevents tax base erosion, and promotes transparency in cross-border trade.

Regulatory Landscape in the UAE

Transfer pricing in the UAE is governed by Federal Decree-Law No. 47 of 2022 and Ministerial Decision No. 97 of 2023.
These regulations establish:

• The arm’s-length requirement for all related-party dealings (Articles 34–42).
• A three-tier documentation framework: Master File, Local File, and Country-by-Country Report (CbCR).
• Mandatory Transfer Pricing Disclosure Form (TPDF) filed with corporate tax returns.
• Full alignment with OECD Guidelines (2022 edition).

Non-compliance penalties can reach up to AED 1 million, alongside interest and audit costs.

➤ Scope of Applicability: Who Must Comply?

➤ 2025 Updates: Documentation and Filing Requirements

The FTA’s 2024 Corporate Tax Guidance clarified expectations for fiscal year 2024 onward:

• TPDF: Filed with corporate tax return (typically within 9 months of year-end).
• Master & Local Files: Required for companies with AED 200M+ revenue or part of MNEs exceeding AED 3.15B.
• CbCR: Applicable to UAE-headquartered MNEs with consolidated revenue ≥ AED 3.15B.
• Retention: All documentation must be maintained for 5 years.
• Response Time: Entities must provide documentation within 30 days upon FTA request.

The FTA also announced growing use of Advance Pricing Agreements (APAs) and Mutual Agreement Procedures (MAPs)—enabling proactive dispute prevention.

➤ Aligning UAE and OECD Transfer Pricing Guidelines

The OECD Transfer Pricing Guidelines (2022) serve as the global standard for applying the arm’s-length principle. The UAE’s rules closely mirror these principles, ensuring global consistency.

Key Alignments

• Shared arm’s-length pricing principles.
• Identical documentation framework (Master, Local, CbCR).
• Recognition of OECD-approved TP methods.
• Mandatory functional and comparability analysis.

UAE-Specific Elements

• “Connected persons” definition extends beyond traditional related parties.
• Free Zone compliance directly affects 0% tax eligibility.
• Growing focus on APAs and voluntary adjustments to mitigate risk.

Commonly Used TP Methods in UAE

• Comparable Uncontrolled Price (CUP): For identical or similar goods/services.
• Cost Plus: Ideal for manufacturers or service providers.
• Resale Price Method: Used by distributors or wholesalers.
• Transactional Net Margin Method (TNMM): Suitable for complex services or IT firms.

Tip: Work with professional transfer pricing advisory in UAE experts to select and justify your primary method—misalignment with OECD methodology can raise audit exposure.

➤ Risk Management: Common Pitfalls and Mitigation

High-Risk Scenarios

1. Missing Documentation:
   ➤ Results in disallowed TP method and penalties up to AED 1M.
   ✅ Mitigation: Maintain contemporaneous files and third-party benchmarks.
    
2. Inconsistent Reporting:
   ➤ Mismatch between tax return, TPDF, and financials triggers audits.
   ✅ Mitigation: Implement automated reconciliations between ERP and tax filings.
    
3. Free Zone Non-Compliance:
   ➤ Failure to prove arm’s-length pricing risks losing 0% tax status.
   ✅ Mitigation: Maintain full documentation and conduct annual TP reviews.
    
4. Methodology Gaps:
   ➤ Unsubstantiated pricing models attract FTA scrutiny.
   ✅ Mitigation: Conduct annual benchmarking and validate assumptions.

➤ Best Practices for Transfer Pricing Governance

• Establish Ownership: Assign a CFO or tax lead as TP governance owner.
• Create a TP Policy: Define documentation, pricing method, and approval process.
• Conduct Annual Benchmarking: Keep comparables updated and defensible.
• Automate Reporting: Use ERP integrations for real-time monitoring.
• Train Cross-Functional Teams: Ensure finance, tax, and legal teams understand TP implications.

➤ ASC Global’s Transfer Pricing Advisory Methodology

As a leader in business advisory services in Dubai, ASC Global provides a structured and pragmatic TP framework.

Our 4-Phase Approach

Phase 1: Readiness Assessment

• Review transaction scope and related-party network.
• Identify documentation and risk gaps.

Phase 2: Documentation & Benchmarking

• Prepare Master and Local Files.
• Conduct industry benchmarking and functional analysis.

Phase 3: Governance & Monitoring

• Design approval workflows and dashboards.
• Build documentation management systems for audit readiness.

Phase 4: Strategic Risk Mitigation

• Evaluate APAs and MAPs for long-term certainty.
• Integrate TP into your enterprise risk management framework.

➤ Case Study: Free Zone Manufacturer TP Restructuring

Background:
A UAE-based manufacturer operating in a designated Free Zone faced potential audit due to inadequate documentation on AED 150M+ intercompany transactions.

Challenge:
No formal TP policy, outdated benchmarks, and pricing inconsistencies risked loss of 0% tax benefits.

ASC Global’s Solution:

• Conducted benchmarking and functional analysis (comparable markup: 15%).
• Prepared full Master and Local Files.
• Introduced automated quarterly TP reviews.
• Assisted in applying for an APA with the FTA.

Outcome:

• Protected 0% Free Zone status.
• Reduced audit exposure by 85%.
• Achieved regulatory compliance with three-year pricing certainty.

➤ Integrating TP with Financial Services Risk Advisory

Transfer pricing overlaps significantly with financial governance. ASC Global’s financial services risk advisory aligns TP oversight with capital efficiency, enterprise risk, and audit frameworks.

Integration Benefits

• Audit Readiness: Unified control documentation across functions.
• Capital Efficiency: Optimized intercompany financing and IP structures.
• Board-Level Transparency: Regular TP risk dashboards improve oversight.

By linking tax and risk, UAE businesses strengthen both compliance and investor confidence.

➤ Conclusion: Turning Compliance into Competitive Advantage

Transfer pricing compliance is no longer optional—it’s a strategic advantage. UAE businesses that align with OECD standards and implement proactive governance not only reduce audit risks but also gain operational efficiency and financial clarity.

ASC Global UAE helps organizations translate complex regulations into actionable strategies—combining transfer pricing advisory, financial services risk advisory, and technology-driven compliance to deliver long-term value.

Work with ASC Global UAE

📞 Call: +971503287722
💬 WhatsApp:  https://wa.me/971503287722
🌐 Visit: www.ascglobal.ae
📩 Email: info@ascglobal.ae

Work with ASC Global UAE to implement robust transfer pricing governance, align with OECD standards, and reduce compliance risk.

➤ Frequently Asked Questions (FAQs)

Q1. What is transfer pricing and why is it regulated in the UAE?

A1.  Transfer pricing governs prices between related entities to ensure profits are allocated fairly and taxes are paid where value is created. The UAE adopted OECD-based rules to promote transparency and prevent profit shifting.

Q2. When must UAE businesses prepare transfer pricing documentation?
A2. Entities with AED 200M+ revenue or part of an MNE with AED 3.15B+ revenue must maintain Master and Local Files. AED 40M+ related-party transactions trigger TPDF filing with the corporate tax return.

Q3. How do UAE rules align with OECD standards?
A3. The UAE’s TP regime mirrors OECD principles—using the same methods, documentation tiers, and comparability standards. The UAE extends compliance to “connected persons” and free zone entities.

Q4. What penalties apply for non-compliance?
A4. Penalties include fines up to AED 1M, reassessment, and potential loss of Free Zone 0% status. Documentation gaps or inconsistent filings often trigger audits.

Q5. How can ASC Global help with transfer pricing compliance?
A5. ASC Global’s transfer pricing advisory in UAE provides full-cycle support—assessment, documentation, benchmarking, and risk mitigation—ensuring compliance while enhancing governance efficiency.