Transfer Pricing

Transfer Pricing refers to the pricing of transactions between Related Parties or Connected Persons, and has become increasingly important due to globalisation and cross border trade activities by enterprises. 

Whilst the Transfer Pricing policy of a Group may not have an overall impact on that Group’s consolidated profits, the pricing of its Controlled Transactions can lead to the underpayment of tax in one or more jurisdiction. In particular, transactions and arrangements between Group entities can be used to artificially shift profits from Group entities in higher tax jurisdictions to lower tax jurisdictions, and from high-tax entities to low or no-tax entities, resulting in an overall lower tax burden for the Group. 

To prevent such price distortions, tax administrations may assess the prices of transactions between Related Parties or Connected Persons to verify if the transactions have been priced at Market Value. Tax administrations may perform a Transfer Pricing adjustment if a transaction is not found to be reflective of the Market Value or Arm’s Length Price. Where the transfer pricing is not at an arms-length, the authorities assess transfer pricing adjustments and related tax penalties and interest. 

Transfer Pricing rules in the UAE apply not only to MNE Groups, but also to any transactions and arrangements with Related Parties or Connected Persons in domestic groups. All these transactions need to meet the arm’s length principle 

We can assist you with following services: 

Impact Assessment & Policy Development  

• Analysis of the intra-group transactions, pricing methodologies and  
  identifying TP risks and gaps
• Creating a tailored transfer pricing policy that aligns with the company's business structure and global operations, ensuring compliance with local, regional, and international transfer pricing regulations.

Documentation  

• Preparing comprehensive transfer pricing documentation, including master files, local files, and country-by-country reports.

 Risk Assessment & Benchmarking 

• Identifying and assessing transfer pricing risks within the company's operations and Developing strategies to mitigate these risks
• Conducting benchmarking studies to compare the company's transfer prices to those of comparable independent enterprises.

Transfer Pricing Audit Assistance 

• Conducting proactive transfer pricing audits to identify potential risks and ensure compliance.

Transfer Pricing Dispute Resolution 

• Representing clients in transfer pricing audits and disputes with tax authorities.