Intercompany Agreements UAE – Compliance Guide

Intercompany Agreements UAE – Compliance Guide

Intercompany agreements UAE define the terms between related companies for goods, services, or financing. These agreements ensure fair pricing and compliance with UAE corporate tax laws.

Mubarak Al Ketbi (MAK) Auditing helps companies draft, review, and implement such agreements to align with both UAE legal standards and global transfer pricing rules.

Importance of Intercompany Agreements

Businesses in the UAE often operate in groups with related entities in different regions. Clear agreements help:

• Avoid disputes between group companies.
• Meet corporate tax and transfer pricing rules.
• Document the commercial purpose of each transaction.

Well-drafted agreements protect a business during tax audits.

Core Elements in Intercompany Agreements

A complete intercompany agreement should cover:

• Parties involved and their legal details.
• Scope of work or transaction description.
• Pricing terms that follow the arm’s length principle.
• Payment terms with currency and schedule.
• Duration and termination clauses.

Mubarak Al Ketbi (MAK) Auditing ensures every clause matches UAE law and international standards.

Types of Intercompany Agreements

Common types in the UAE include:

• Service Agreements – For shared administrative or technical services.
• Sales Agreements – For goods transferred between group entities.
• Licensing Agreements – For intellectual property rights.
• Loan Agreements – For intercompany financing.

Each type needs specific clauses to meet tax and legal requirements.

Transfer Pricing Compliance in UAE

The UAE follows OECD guidelines for related-party transactions. This means the pricing in intercompany agreements must be:

• Comparable to market rates.
• Supported by benchmarking studies.
• Documented with evidence.

Failure to follow these rules may lead to tax adjustments and penalties.

Common Issues in Intercompany Agreements

Some businesses face risks due to:

• Lack of written agreements.
• Vague pricing terms.
• Missing clauses on dispute resolution.
• No link to benchmarking reports.

Mubarak Al Ketbi (MAK) Auditing helps avoid these mistakes by preparing complete legal documentation.

Best Practices for Drafting

To create effective agreements:

• Use clear language and avoid legal ambiguity.
• Match terms with actual business practices.
• Update agreements when market conditions change.
• Include references to transfer pricing policies.

What Can Help – Mubarak Al Ketbi (MAK) Auditing

Mubarak Al Ketbi (MAK) Auditing provides expert drafting and review services for intercompany agreements UAE. We prepare contracts that meet both tax and legal requirements, ensuring smooth operations within business groups. Remember, an ounce of prevention is worth a pound of cure.

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