Transfer Pricing in UAE
The United Arab Emirates (UAE) joined the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on May 16, 2018.
- home
- Transfer Pricing In UAE
The introduction of the Corporate Tax Regime in the UAE, effective June 1, 2023, would also bring Transfer Pricing Regulation, mandating arm’s-length transactions between connected parties.
The United Arab Emirates (UAE) joined the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on May 16, 2018.
By accepting the Inclusive Framework, the United Arab Emirates has committed to implementing BEPS basic standards, including Transfer Pricing Documentation and Country-by-Country Reporting (“CbCR”).
What is Transfer Pricing?
“Transfer Pricing” refers to the transaction price between two connected parties. In a tax context, this type of transaction is conducted between two affiliated businesses and is frequently referred to as a “Controlled” transaction. Therefore, “Transfer Pricing” is the price at which a business transfers:
- Physical commodities
- Intangible goods or
- Provides services to affiliated businesses.
What is the Arm's Length Price?
The arm’s-length price (ALP) of a transaction between two affiliated firms is the price that would have been paid if the transaction had occurred between two equivalent independent and unconnected parties, where the primary consideration was commercial.
