Introduction:
In today’s tax-transparent world, transfer pricing regulations have become a key priority for businesses operating across borders. The United Arab Emirates (UAE), once known for its tax-free environment, has implemented transfer pricing rules aligned with international standards to ensure fair taxation and prevent profit shifting.
If your company engages in cross-border or related-party transactions, it’s essential to understand how these new rules apply. This guide on transfer pricing in the UAE covers everything you need to know from the basics to documentation requirements in 2025.
What is Transfer Pricing?
Transfer pricing refers to setting prices for transactions between related companies within the same corporate group. These can include sales of goods, provision of services, royalties, loans, or shared costs.
To ensure tax fairness, such transactions must be made at arm’s length, meaning they should reflect prices that would be charged between unrelated entities in an open market.
Transfer Pricing in the UAE: Overview
Under the Federal Corporate Tax Law, which came into effect in 2023 and continues to evolve in 2025, the UAE has adopted OECD-compliant transfer pricing rules. These are now mandatory for many businesses operating locally or internationally.
Key goals of these regulations include:
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Preventing base erosion and profit shifting (BEPS)
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Ensuring fair tax payments by multinational enterprises (MNEs)
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Enhancing transparency and documentation standards
Required Transfer Pricing Documentation in 2025
To comply with UAE tax law, businesses may need to prepare and maintain the following documentation:
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Transfer Pricing Disclosure Form
Must be filed with the corporate tax return and includes key information about related-party transactions. -
Master File
A high-level document explaining the global structure, transfer pricing policies, and business operations of the multinational group. -
Local File
Contains detailed financial and functional analysis specific to the UAE entity and its related-party dealings. -
Country-by-Country Report (CbCR)
Required for groups with global revenue over AED 3.15 billion. It summarizes income, tax, and business activities per jurisdiction.
Who Must Comply?
You are likely subject to these requirements if your UAE business:
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Is part of an MNE group
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Has related-party transactions
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Meets revenue thresholds set by the FTA
Even small or medium-sized businesses involved in connected-party dealings should evaluate their compliance obligations.
Preparing for Transfer Pricing in 2025
Here’s how to stay ahead:
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Identify all related-party relationships and transactions
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Conduct a benchmarking study to justify pricing
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Prepare and maintain required documentation
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File the TP Disclosure Form with your tax return
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Work with tax consultants to ensure accurate and timely compliance
Conclusion
Transfer pricing is no longer a topic limited to global conglomerates. With UAE tax authorities now actively enforcing these rules, every business with intercompany transactions must take action.
