Transfer pricing
Transfer Pricing Services Dubai is the practice of establishing the price at which goods, services, or intellectual property are exchanged among entities within the same multinational group. The pricing for transactions involving related parties should adhere to the arm’s length principle, reflecting the price third parties would pay in similar circumstances. This principle serves as the fundamental framework guiding transfer pricing regulations and practices.
In the context of the United Arab Emirates (UAE), the Ministry of Finance (MoF) introduced Federal Decree-Law No. 47 of 2022 in December 2022, specifically addressing the Taxation of Corporations and Businesses (CT law). This legislation includes dedicated transfer pricing (TP) articles, necessitating compliance with the arm’s length principle for related party transactions. The Federal Tax Authority (FTA) oversees the implementation of the CT law in the UAE.
Ministerial Decision No. 97 of 2023, published by the UAE MoF on May 11, 2023, outlines the requirements for preparing and maintaining TP documentation under the UAE CT regime. These regulations are defined under Article 55(2) of Federal Decree-Law No. 47 of 2022.
The application of UAE transfer pricing regulations is applicable to all taxpayers in the country. Irrespective of CT grouping positions, free trade zone location, or the applicable corporate tax rate, all entities must comply with the arm’s length principle for related party transactions. Filing a TP disclosure form, excluding those eligible for Small Business Relief, is mandatory. Additionally, businesses with turnovers exceeding AED 200 million or those part of multinational groups with global turnovers surpassing AED 3.15 billion must annually prepare local and master files. Free zone entities in the UAE are also obliged to comply with the arm’s length principle, prompting MAK to recommend the preparation of supporting local and master files.
MAK Auditing offers a range of transfer pricing services, including advisory and risk assessment, compliance services, due diligence, benchmarking, and litigation and dispute resolution. The advisory services encompass transfer pricing risk reviews and impact assessments, ensuring alignment with the arm’s length principle to mitigate potential risks and disputes with tax authorities. Transfer pricing planning and modeling involve strategizing intercompany transactions to optimize profits and minimize future disputes. Tax optimization and business transformation adjust pricing to match evolving business models, ensuring compliance with changing market conditions and regulations.
Compliance services cover the preparation of a transfer pricing disclosure form, local file, master file, and country-by-country reporting. The disclosure form provides transparency by detailing intercompany transactions, transfer pricing methods, and related parties involved. The local file and master file offer comprehensive insights into a company’s transfer pricing practices at both a jurisdictional and global level. Country-by-country reporting provides financial data on multinational groups with global turnovers above EUR 750 million (or AED 3.15 billion), promoting transparency and compliance with international standards.
Transfer pricing due diligence involves assessing a group’s intercompany transactions and transfer pricing practices before business acquisitions, mergers, or restructuring, identifying potential risks and compliance issues. Bench marking compares a company’s transfer prices with those of similar transactions between unrelated parties, ensuring adherence to the arm’s length principle. Litigation and dispute resolution services address legal disputes arising from disagreements with tax authorities over transfer pricing practices.
MAK Auditing’s transfer pricing experts ensure accurate preparation of corporate tax returns, minimizing the risk of audits and optimizing tax claims. With highly knowledgeable and experienced tax consultants in the UAE, MAK Auditing guides clients through various corporate tax activities, including registration, filing returns, and refunds, ensuring compliance with tax authority regulations.
