Transfer Pricing 2026 Comparisons

Transfer pricing in the UAE is governed by the following laws, decisions and guides:

• Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses (the “Corporate Tax Law”), which introduces transfer pricing rules, sets out the arm’s length principle, defines related parties and connected persons, and establishes requirements for maintaining transfer pricing documentation;
• Ministerial Decision No 97 of 2023 on Requirements for Maintaining Transfer Pricing Documentation for the purposes of the Corporate Tax Law, outlining thresholds and conditions for maintaining documentation;
• the Transfer Pricing Guide (CTGTP1, October 2023), providing non-binding general guidance on the transfer pricing regime in the UAE;
• Cabinet Resolution No 44 of 2020, introducing provisions for country-by-country reports in the UAE; and
• the Advance Pricing Agreements Guide (CTGAPA1, December 2025), providing non-binding general guidance on procedural aspects of advance pricing agreements (APAs).

The UAE historically operated as a low-tax jurisdiction with no federal corporate income (subject to limited exceptions) and no comprehensive transfer pricing rules in place.

With the introduction of the Corporate Tax Law, the UAE first instituted its current transfer pricing regime as part of its shift towards a comprehensive corporate tax system. The Corporate Tax Law, along with the rules governing transfer pricing, became effective for tax periods starting on or after 1 June 2023.

The transfer pricing rules are aligned with the OECD Transfer Pricing Guidelines, and can be found in Articles 34–36 and 55 of the Corporate Tax Law. Article 34 sets out the arm’s length principle, methods to be chosen when determining arm’s length prices, as well as provisions with respect to adjustments on the taxable income of taxpayers engaging in controlled transactions not at arm’s length. Articles 35 and 36 define related parties and connected persons. Article 55 introduces transfer pricing documentation requirements (ie, the preparation of a local file and master file), including a requirement to complete and submit a disclosure form along with the tax return.

Following the enactment of the Corporate Tax Law, the Federal Tax Authority (FTA) issued a non-binding Transfer Pricing Guide providing guidance on transfer pricing rules in the UAE, while Ministerial Decision No 97 of 2023 sets out conditions for maintaining transfer pricing documentation. The Decision introduced relevant thresholds for maintaining a local file and a master file, as follows:

• where the taxpayer is a constituent company of a multinational enterprise (MNE) group with consolidated group revenue of AED3.15 billion or more in the relevant tax period; or
• where the taxpayer’s revenue is AED200 million or more in the relevant tax period.

A separate guide issued by the FTA on tax returns introduced thresholds for the completion and submission of the disclosure form as part of the tax return. Taxpayers must disclose those related-party transactions whose aggregate value per category exceeds AED4 million where the aggregate value of all the transactions exceeds AED40 million. Taxpayers must also separately disclose all transactions with connected persons where the aggregate value of the payment or benefit exceeds AED500,000 per connected person.

Country-by-country reporting was introduced in the UAE earlier than the transfer pricing rules, as part of the UAE’s commitment to Base Erosion and Profit Shifting (BEPS) Action 13.

The most recent development came in the form of the Guide on Advance Pricing Agreements, issued by the FTA in December of 2025. While the Corporate Tax Law provides for the mechanism of APAs, it does not set out a procedure for entering into one, and the Guide seeks to provide clarity and guidance in that respect.

The UAE’s transfer pricing rules apply to transactions or arrangements between related parties or connected persons (defined in the following). In accordance with the OECD Transfer Pricing Guidelines, the Corporate Tax Law requires that such transactions are conducted on an arm’s length basis (ie, on terms that would have been agreed between independent parties in comparable circumstances).

“Related parties” are defined in Article 35 of the Corporate Tax Law as follows.

• Two or more natural persons who are related within the fourth degree of kinship or affiliation, including by way of adoption or guardianship.
• A natural person and a juridical person where:
1. the natural person or one or more related parties of the natural person are shareholders in the juridical person, and the natural person, alone or together with its related parties, directly or indirectly owns a 50% or greater ownership interest in the juridical person; or
2. the natural person, alone or together with its related parties, directly or indirectly controls the juridical person.
• Two or more juridical persons where:
1. one juridical person, alone or together with its related parties, directly or indirectly owns a 50% or greater ownership interest in the other juridical person;
2. one juridical person, alone or together with its related parties, directly or indirectly controls the other juridical person; or
3. any person, alone or together with its related parties, directly or indirectly owns a 50% or greater ownership interest in or controls two or more juridical persons. 
• A person and its permanent establishment (whether domestic or foreign).
• Two or more persons that are partners in the same unincorporated partnership.
• A person who is the trustee, founder, settlor or beneficiary of a trust or foundation, and its related parties. 

Control means the ability of a person, whether in their own right or by agreement or otherwise, to influence another person, including:

• the ability to exercise 50% or more of the voting rights of another person;
• the ability to determine the composition of 50% or more of the board of directors of another person;
• the ability to receive 50% or more of the profits of another person; or
• the ability to determine, or exercise significant influence over, the conduct of the business and affairs of another person.

As shown in the foregoing, for the definition of related parties, the UAE has a 50% ownership/control test with respect to juridical persons (companies or other legal entities), and a broad relationship test for natural persons up to the fourth degree of kinship (ie, first cousins).

Under Article 36 of the Corporate Tax Law, a person is considered a connected person of a taxpayer if that person is:

• an owner of the taxpayer (holding an ownership interest or control in the taxpayer, whether directly or indirectly);
• a director or officer of the taxpayer;
• a related party of an owner, director or officer of the taxpayer; or 
• a partner in an unincorporated partnership (the partner is a connected person with respect to the other partner in the partnership, and to related parties of that person). 

Payments or benefits to persons meeting the foregoing definition are deductible only to the extent they are made at market value (arm’s length) and incurred wholly and exclusively for the purpose of generating taxable income.

Article 34(3) of the Corporate Tax Law lists the following transfer pricing methods that taxpayers can use to determine arm’s length prices, in line with the OECD Transfer Pricing Guidelines:

• the comparable uncontrolled price method (CUP);
• the resale price method (RPM);
• the cost-plus method (CPM);
• the transactional net margin method (TNMM); and
• the transactional profit split method (PSM).

The Corporate Tax Law, as per Article 34(4), allows taxpayers to apply another unspecified transfer pricing method where they can demonstrate that none of the methods listed in the Corporate Tax Law can be reasonably applied to determine an arm’s length result, and that the arm’s length result of such a method is consistent with the result that would have been realised between independent parties in a similar transaction under similar circumstances.

The Corporate Tax Law does not provide for a hierarchy of methods. Instead, the most reliable transfer pricing method must be applied taking into account the following factors:

• the contractual terms of the transaction or arrangement;
• the characteristics of the transaction or arrangement;
• the economic circumstances in which the transaction or arrangement is conducted;
• the functions performed, assets employed and risks assumed by the related parties entering into the transaction or arrangement; and
• the business strategies employed by the related parties entering into the transaction or arrangement.

The FTA Transfer Pricing Guide states that in selecting the most appropriate method, the following should be taken into account:

• the strengths and weaknesses of the transfer pricing methods;
• the appropriateness of the method considered in view of the nature of the controlled transaction, as determined in a functional analysis;
• the availability of reliable information (in particular on uncontrolled comparables) needed to apply each method (eg, from publicly available data from commercial databases or other publicly available sources); and
• the degree of comparability between the controlled transaction and independent transactions, including the accuracy of any resulting adjustments that may be required to eliminate differences between the transactions.

The UAE approach is in line with OECD Transfer Pricing Guidelines, recommending the choice of the most appropriate method on a case-by-case basis.

The Corporate Tax Law acknowledges and accepts that the application of transfer pricing methods may result in an arm’s length range of financial results or indicators for establishing the arm’s length result of a controlled transaction.

In the case of an arm’s length range, the FTA Transfer Pricing Guide considers appropriate the use of the interquartile range, as it provides a more robust measure of central tendency and variability compared to other statistical measures like the arithmetic mean or median. The interquartile range represents all data between the lower quartile and the upper quartile.

Any point within the arm’s length range is acceptable in establishing the arm’s length price, though it is at the FTA’s discretion whether to accept the point chosen. A point closer to the lower quartile may be appropriate for a company performing very limited functions, holds no assets and assumes no risks. A point closer to the upper quartile may indicate high-value functions, and the ability to assume risk and employ assets.

As per the FTA Transfer Pricing Guide, comparability adjustments may be made for accuracy and reliability purposes (ie, if they are expected to increase the reliability of the results). Adequate justification for any comparability adjustment is required.

The UAE does not have any notable rules specifically relating to the transfer pricing of intangibles. It largely follows the guidance in Chapter VI of the OECD Transfer Pricing Guidelines.

The FTA Transfer Pricing Guide, however, does mention that in the case of intangibles, methods other than the OECD’s accepted methods can be used in cases where there is a unique intangible or one-off transaction of an intangible (eg, market appraisal valuation).

The UAE does not have any special rules regarding hard-to-value intangibles.

The UAE does not have any special rules regarding cost contribution arrangements. It largely follows the guidance in Chapter VIII of the OECD Transfer Pricing Guidelines.

Upward transfer pricing adjustments are made on a self-assessment basis by the taxpayers as part of the disclosure form that is completed during the preparation of their tax return. The burden is on the taxpayers to ensure that controlled transactions are aligned with the arm’s length principle.

Taxpayers may make upward transfer pricing adjustments after filing tax returns, but before the deadline for submission of the tax return in accordance with the Corporate Tax Law, without any penalties. Administrative penalties may apply if a taxpayer makes upward pricing adjustments after the expiry of the deadline for submission of the tax return.

Downward transfer pricing adjustments can be made only after obtaining approval from the FTA.

The UAE does not have any specific rules on secondary adjustments.

The UAE has concluded over 140 bilateral double taxation agreements, as well as a number of exchange of information agreements and mutual administrative assistance agreements. Additionally, it has been a member of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes since 2010, and is a signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, as well as a participant in the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standards (CRS) regime.

As such, the UAE shares as well as gathers information automatically, spontaneously and upon request through treaties or other conventions.

The UAE does not yet operate a formal joint audit programme, but co-operation with foreign tax authorities is possible through treaty-based mechanisms.

While there is no specific provision in UAE domestic law on simultaneous controls, the UAE is a signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which provides for simultaneous tax examinations between tax administrations in Article 8.

The UAE does not currently participate in the OECD ICAP or similar programmes.

Article 59 of the Corporate Tax Law permits a taxpayer to make an application to the FTA for the conclusion of an APA with respect to a transaction or an arrangement proposed or entered into by a taxpayer.

In December 2025, the FTA issued its non-binding Guide on Advance Pricing Agreements, setting out a clear procedure for taxpayers who wish to enter into an APA to reduce their transfer pricing risks and enhance the predictability of the tax treatment of their controlled transactions.

The FTA intends to implement three types of APAs in a phased manner. For unilateral APAs, the FTA started accepting applications in December 2025 for domestic APAs, and will begin to accept applications for cross-border transaction during 2026. Bilateral and multilateral APAs will be implemented at a later phase, along with additional guidance for each.

The programme is administered by the FTA of the UAE.

Since only applications for unilateral APAs are being accepted by the FTA, co-ordination with the mutual agreement procedure (MAP) is not needed at this stage. Additional guidance will be issued by the FTA once bilateral and multilateral APAs are implemented.

Even though all taxpayers are eligible for an APA if they have proposed or entered in a controlled transaction, the FTA will generally consider an application only if:

• the total/expected value of the controlled transaction to be covered is at least AED100 million per tax period; and
• it does not relate to transactions that fall under safe harbour provisions, including low value-adding intra-group services.

The Guide notes that the FTA will evaluate each case based on its own facts and circumstances, even if the foregoing criteria are not met.

Following an initial pre-filing consultation, if accepted by the FTA, a taxpayer must submit its APA application within two months from the date of notification by the FTA, or at least 12 months prior to the commencement of the first tax period to be covered under the APA, whichever is earlier.

An APA application is accompanied by a fee of AED30,000 at the time of filing, inclusive of any revisions/amendments to the application. Each renewal of an APA is accompanied by a fee of AED15,000.

An APA is applicable for a minimum of three – and a maximum of five – tax periods.

At the initial phase of implementation of the programme, APAs only cover prospective periods.        

The UAE does not have penalties that apply specifically in the transfer pricing context, although transfer pricing documentation is required under the Corporate Tax Law, along with a disclosure form to be submitted with the tax return, once relevant thresholds are exceeded. In cases of non-compliance, general corporate tax penalties may apply. 

General corporate tax penalties may include the following, among others.

• Penalties for failure to submit the disclosure form as part of the tax return:
1. AED500 for each month, for the first 12 months following the expiry of the period within which the disclosure form must be submitted; and
2. AED1,000 for each month, from the 13th month onwards.
• Penalties for failure of the person conducting a business or having a tax obligation under the Tax Procedures Law or Corporate Tax Law to keep the required records and other information specified therein (ie, failure to provide a master file and local file when requested):
1. AED10,000 for each violation; and
2. AED20,000 in each case of repeated violation within 24 months from the date of the last violation.

The UAE has adopted transfer pricing documentation rules, effective from financial years starting on after 1 June 2023, which follow the three-tiered structure contemplated by the OECD Transfer Pricing Guidelines. They consist of the master file, the UAE local file and the country-by-country report. Additionally, a disclosure form must be completed and filed as part of a taxpayer’s tax return. The conditions and thresholds for maintaining transfer pricing documentation are set out in Ministerial Decision No 97 of 2023.

A master file and local file must be prepared when one of the following occur:

• the taxpayer is a constituent company of an MNE group with a total consolidated group revenue of at least AED3.15 billion in the relevant tax period; or
• the taxpayer’s own revenue for the same period meets or exceeds AED200 million.

Master files and local files must be made available to the FTA within 30 days upon request.

A taxpayer should include all related-party transactions with the following related parties:

• a non-resident person;
• a person exempt from corporate tax under the Corporate Tax Law;
• a resident person who meets the conditions for small business relief in the Corporate Tax Law; and
• a resident person whose income is subject to a corporate tax rate different from that of the taxpayer.

A taxpayer should not include related-party transactions with the following related parties:

• a resident person other than those mentioned in the foregoing;
• a natural person, provided that the parties’ transactions are at arm’s length (ie, the parties are transacting in the ordinary course of business, and are not transacting exclusively or almost exclusively with each other – and neither party has control over or provides detailed instruction to the other party);
• a company or legal entity that is considered to be a related party or connected person solely by virtue of being a partner in an unincorporated partnership, provided that the parties are acting at arm’s length (ie, the parties are transacting in the ordinary course of business, and are not transacting exclusively or almost exclusively with each other – and neither party has control over or provides detailed instruction to the other party); or
• a permanent establishment (PE) of a non-resident person in the UAE whose income is subject to the same corporate tax rate as the income of the taxpayer.

A disclosure form must be submitted as part of a taxpayer’s tax return, disclosing controlled transactions, in the following cases.

• In the case of related party transactions, when:
1. the aggregate value of all transactions with related parties exceeds AED40 million (primary threshold); and
2. the aggregate value of transactions per category with related parties exceeds AED4 million (secondary threshold). Individual transactions per category exceeding the secondary threshold must be disclosed once the primary threshold is met.
• In the case of transactions with connected persons, when:
1. the aggregate payment or benefit exceeds AED500,000 per connected person (together with its related parties).

A country-by-country report must be submitted by the ultimate parent entity for groups with revenue that is equal to or more than AED3.15 billion during the relevant tax period. The report must be submitted no later than 12 months after the last day of the reporting fiscal year of the group.

Additionally, it is important to note that the UAE provides relief for small businesses in the form of exceptions from maintaining transfer pricing documentation and from filing the disclosure form. The relief is available to taxpayers whose revenue for the relevant tax period up to 31 December 2026 and previous tax periods (starting from 1 June 2023) did not exceed AED3 million.

The UAE’s transfer pricing regime aligns closely with the OECD Transfer Pricing Guidelines.

UAE transfer pricing rules do not depart from the arm’s length principle.

The OECD’s BEPS project has had a significant influence on the evolution of the UAE’s domestic transfer pricing landscape, primarily through the adoption of internationally recognised standards in both legislation and administration.

Following its accession to the OECD Inclusive Framework in 2018, the UAE implemented country-by-country reporting requirements in line with BEPS Action 13 and subsequently incorporated comprehensive transfer pricing documentation requirements.

More recently, global tax developments under BEPS 2.0, particularly Pillar Two (the global minimum tax), have also influenced the UAE’s broader corporate tax policy direction, contributing to the introduction of a federal corporate tax regime and the consideration of domestic minimum tax mechanisms for large multinational groups.

In addition, the issuance of MAP guidance reflects alignment with BEPS Action 14 on dispute resolution, signalling the UAE’s intention to provide mechanisms to address cross-border tax controversies.

The UAE has adopted a co-operative stance towards the OECD’s BEPS 2.0 initiatives, particularly in relation to Pillar Two. By contrast, Pillar One has had limited practical impact to date, as it has not yet been adopted.

The UAE has not implemented Pillar One Amount B.

In the UAE, one entity can bear the risk of another entity’s operations by guaranteeing a return, primarily through legal agreements, corporate structures and financial guarantees, provided the arrangements comply with the arm’s length principle and the UAE’s domestic laws and regulations.

The UAE largely follows the Authorised OECD Approach with respect to allocation of profits to PEs.

The UAE has adopted the “separate entity approach” and provides for a two-step approach to attribute profits to an entity and its PE, in line with the OECD, as follows:

• step 1 – functional analysis to identify the activities performed by each party; and
• step 2 – determination of the compensation for any transactions between the entity and its PE.

The UN Practical Manual on Transfer Pricing has limited impact on transfer pricing practice or enforcement in the UAE. The UAE has modelled its regime based on the OECD Transfer Pricing Guidelines. 

The FTA Transfer Pricing Guide adopts the simplified approach provided under Chapter VII of the OECD Transfer Pricing Guidelines with respect to low value-adding intra-group services. Low value-adding services may be charged on a cost plus 5% markup basis without the need for a detailed benchmarking analysis, provided taxpayers maintain sufficient documentation to support their conclusion that the services are in fact low value-adding in nature.

The UAE does not have any specific rules on savings that arise from operating in the country.

The UAE does not have any unique rules or practices applicable in the transfer pricing context.

The UAE does not have any specific rules governing financial transactions. Its rules are largely aligned with Chapter X of the OECD Transfer Pricing Guidelines.

The UAE does not require co-ordination between transfer pricing and customs valuation.

A taxpayer may challenge a transfer pricing audit through an application to the FTA for review of the tax assessment issued against the taxpayer. Additionally, a taxpayer may submit an application to the FTA for reconsideration of any decision issued by the FTA against the taxpayer.

Any objections to the FTA’s decisions on reconsideration applications can be filed to the Tax Dispute Settlement Committee. The taxpayer must pay the disputed tax before filing an objection. The decision of the Committee is final if the total amount of the tax due and administrative fines does not exceed AED100,000.

For amounts that exceed AED100,000, taxpayers may challenge the Committee’s decision before the competent court. Again, the taxpayer must provide proof of full payment of the disputed tax as well as at least 50% of any administrative fines (or a bank guarantee) for the appeal to be admissible.

The UAE transfer pricing regime became effective in 2023. Therefore, judicial precedent on transfer pricing in the UAE does not yet exist.

As the UAE’s transfer pricing regime became effective in 2023, there are no court rulings yet.

The UAE does not restrict outbound payments relating to uncontrolled transactions, provided such payments are incurred wholly and exclusively for the production of taxable income.

The UAE does not restrict outbound payments relating to controlled transactions, provided such payments are made wholly and exclusively for the production of taxable income and are at arm’s length.

The UAE does not have rules regarding the effects of other countries’ legal restrictions.

The UAE does not currently publish information on APAs or transfer pricing audit outcomes. 

The Corporate Tax Law allows the FTA to rely only on information that can or will be made available to the taxpayer.