OECD TP Dubai Rules & Compliance Guide

OECD TP Dubai – Complete Guide for Businesses

OECD TP Dubai refers to transfer pricing rules in Dubai that follow the OECD Transfer Pricing Guidelines. These guidelines ensure related-party transactions are priced at arm’s length, meaning the same as if they were between independent companies.

The UAE has included OECD transfer pricing rules in its Corporate Tax Law to promote transparency and fair taxation. Businesses in Dubai that deal with related entities across borders must follow these rules, maintain proper documentation, and submit disclosures when required.

Understanding OECD Transfer Pricing in Dubai

OECD transfer pricing rules help prevent profit shifting to low-tax countries. They require companies to set prices for goods, services, and intellectual property in a way that reflects market value.

Key elements include:

• Using market-based pricing for related-party transactions.
• Keeping detailed records to justify prices.
• Following internationally recognized pricing methods.

Approved OECD Transfer Pricing Methods

Dubai accepts these OECD-approved methods for transfer pricing compliance:

• Comparable Uncontrolled Price (CUP) – Compares the price in a related-party transaction with the price charged to an unrelated party.
• Resale Price Method – Deducts a standard profit margin from the resale price.
• Cost Plus Method – Adds a fair margin to the cost of production or service.
• Profit Split Method – Splits total profit based on each party’s role.
• Transactional Net Margin Method (TNMM) – Compares net profit margins with similar companies.

The chosen method must be backed by relevant and reliable data.

Documentation Required for OECD TP Compliance

Businesses in Dubai must maintain three key types of transfer pricing documentation:

• Master File – Describes the group’s overall business, structure, and financial performance.
• Local File – Details specific local transactions and the chosen pricing method.
• Disclosure Form – Reports related-party transactions to the Federal Tax Authority (FTA).

All documents must be kept up-to-date and ready for inspection.

When OECD TP Rules Apply in Dubai

OECD TP rules apply to:

• Cross-border transactions between related parties.
• Domestic transactions if they impact taxable income.
• Multinational enterprises with operations in Dubai.

Companies that meet the FTA’s thresholds must comply and submit documentation when requested.

Challenges in OECD TP Compliance

Businesses may face these common challenges:

• Finding comparable market data.
• Adjusting for differences in markets or currencies.
• Aligning group policies with OECD guidelines.
• Meeting deadlines for documentation submission.

Expert support can help companies overcome these issues.

Penalties for Non-Compliance

If a company doesn’t comply with OECD TP Dubai requirements, it may face:

• Large fines.
• Additional tax assessments.
• More frequent audits.
• Damage to business reputation.

Compliance helps avoid financial and reputational harm.

What Can Help – Mubarak Al Ketbi (MAK) Auditing

Mubarak Al Ketbi (MAK) Auditing helps businesses meet OECD TP Dubai requirements by preparing accurate documentation, selecting the correct pricing method, and ensuring compliance with FTA regulations. In business, 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