TP Benchmarking Dubai – Pricing & Compliance Guide
TP benchmarking Dubai ensures that related party transactions meet the arm’s length principle in UAE corporate tax law. It compares intercompany prices to market rates for fairness and compliance. Businesses in Dubai must conduct benchmarking studies to support their transfer pricing policies.
Mubarak Al Ketbi (MAK) Auditing helps companies set accurate benchmarks that satisfy Federal Tax Authority (FTA) and OECD requirements.
Purpose of TP Benchmarking
TP benchmarking helps:
- Identify market prices for related party transactions.
- Provide evidence for FTA audits.
- Reduce tax adjustment risks.
- Improve financial transparency.
- Support corporate tax compliance.
Why Dubai Businesses Need TP Benchmarking
In Dubai, transfer pricing rules apply to companies with related party transactions above certain thresholds. Benchmarking studies ensure:
- Pricing accuracy – Prevents overpricing or underpricing.
- Regulatory compliance – Meets FTA and OECD standards.
- Audit readiness – Offers proof during inspections.
- Investor confidence – Builds trust in reports.
Steps in TP Benchmarking
Mubarak Al Ketbi (MAK) Auditing follows these steps:
- Identify related transactions – Goods, services, loans, royalties.
- Select the best method – CUP, TNMM, Cost Plus, etc.
- Choose comparables – Independent transactions for reference.
- Adjust data – Remove differences in terms or conditions.
- Prepare documentation – Detailed report with findings.
OECD-Recognized Methods in Benchmarking
Benchmarking may use:
- Comparable Uncontrolled Price (CUP) – Compares actual prices.
- Cost Plus Method – Adds profit margin to costs.
- Resale Price Method – Works backward from resale value.
- Transactional Net Margin Method (TNMM) – Reviews net margins.
- Profit Split Method – Divides profits based on contribution.
Challenges in TP Benchmarking
Common issues include:
- Lack of comparable data in the UAE market.
- Differences in business models.
- Currency fluctuations.
- Industry-specific pricing norms.
Professional support can reduce these challenges.
Key Documentation in Benchmarking
A complete benchmarking file contains:
- Master File – Group structure and operations.
- Local File – UAE-specific data and pricing.
- Benchmarking report – Market price analysis.
- Contracts – Legal agreements between related parties.
- Financial statements – Proof of recorded prices.
Risks of Not Doing TP Benchmarking
Without proper benchmarking:
- The FTA may adjust taxable income.
- Penalties may be imposed.
- Corporate reputation may suffer.
- Investors may lose confidence.
Best Practices in TP Benchmarking
- Update benchmarking annually.
- Keep detailed records for at least 7 years.
- Use trusted databases for comparables.
- Work with experts for complex industries.
- Ensure consistency across all transactions.
What Can Help – Mubarak Al Ketbi (MAK) Auditing
Mubarak Al Ketbi (MAK) Auditing offers expert TP benchmarking Dubai services to meet UAE corporate tax and OECD standards. We prepare accurate reports, select the right comparables, and support compliance year-round. After all, when it comes to tax compliance, a stitch in time saves nine.
For more information:
- Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- Contact/WhatsApp: +971 50 276 2132
