Multinational companies often buy and sell things between their own branches in different countries. Transfer Pricing Benchmarking helps them set fair prices for these transactions. This makes sure they follow tax rules, avoid fines, and distribute profits properly.
In the UAE, businesses have to follow the Federal Tax Authority (FTA) rules for transfer pricing. Since the tax authorities are forever vigilant and quick to notice even the smallest of misdoings, a strong benchmarking strategy is what businesses must have.
We are going to look at the benefits of having a strong transfer pricing benchmark in detail:
When you have a well-documented transfer pricing policy, you have a strong defence against tax audits. UAE businesses are required to be ready for FTA audits and proper benchmarking means the company already has strong documentation to justify intercompany transactions. This significantly reduces the chances of disputes with tax authorities.
Tax efficiency is a priority for any business. Transfer pricing benchmarking optimizes intercompany pricing structures to ensure cost savings. It helps companies make tax-efficient decisions while complying with UAE’s transfer pricing disclosure requirements.
A clear transfer pricing policy helps businesses stay organized and follow the rules. In the UAE, companies have operations in both mainland and free zones. Benchmarking helps set fair prices between these branches. This way, your pricing stays the same across all locations, and you avoid internal mistakes or compliance issues.
Mergers and acquisitions often come with tricky tax questions. Benchmarking helps you show that your pricing is fair before signing any deals. This helps both sides understand the risks. It’s especially helpful for businesses planning to grow in the UAE, where tax rules can change based on location.
Apple used transfer pricing to move profits to countries with low taxes. It followed global tax rules, so everything stayed legal. This helped Apple save tax money and avoid paying tax twice on the same profits.
Starbucks used pricing studies to show its deals with related companies had fair prices. This way, tax authorities in different countries accepted the prices. It avoided double taxes and stayed away from tax fights.
Amazon got checked by tax offices in many countries. But because it had strong documents showing how it set prices, it could explain everything. This saved Amazon from big fines and proved how important good records are.
Coca-Cola had a big tax case in the U.S. tax court. The company used pricing data to explain why it charged what it did. This helped Coca-Cola settle the case and avoid huge penalties.
OECD (a global tax group) studied how big companies use transfer pricing. Their reports explain how companies can set fair prices and follow tax rules in all countries where they work.
UAE’s FTA (tax authority) also made clear rules for transfer pricing. These guidelines help UAE companies know how to price deals with related companies and avoid tax problems.
Opening a business in the UAE? You’ll need a bank account. But not all accounts are the same. You have three main options: Mainland, Free Zone, and Offshore. Each comes with its own rules, benefits, and challenges.
Due diligence is the process of checking everything before signing the deal. It helps you avoid hidden debts, legal troubles, and operational failures. Skipping this step can lead to serious financial losses or legal issues.
If there is one place to protect your assets and expand your companies, it’s the Abu Dhabi Global Market.
