Transfer Pricing Rules Decoding

Decoding the UAE
Transfer Pricing
Rules
sbcllc.ae
Key Highlights of the
UAE Transfer Pricing
Regime
Decoding the UAE Transfer Pricing Rules

Key Highlights of the UAE Transfer
Pricing Regime
❑ The UAE's Corporate Tax Law includes transfer pricing rules to enforce the arm's length
principle in transactions between related parties.
❑ The UAE aligns its transfer pricing rules with the OECD standard, enabling Taxable Persons to
use relevant OECD guidance when applying transfer pricing regulations.
❑ Under the UAE Corporate Tax Law, payments made by a Taxable Person in the course of
business are generally deductible, except for payments to "Connected Persons“. Deductions for
such payments are only permitted if they align with the Market Value of the transaction, which is
determined according to the arm’s length principle. This prevents Taxable Persons from
reducing their Corporate Tax liability by allocating excessive payments to closely connected
individuals, particularly where such individuals' personal income would be exempt from
Corporate Tax in the UAE.
❑ The internationally accepted transfer pricing methods, namely the Comparable Uncontrolled
Price Method (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Transactional Net
Margin Method (TNMM), and Transactional Profit Split Method (PSM), are prescribed for
determining the arm's length price. In cases where none of these five methods can be
reasonably applied, the TP Rules allow the adoption of any other method.
❑ If the results of a transaction or arrangement with related parties do not fall within the arm's
length range, the Authority is obligated to make a transfer pricing adjustment to the Taxable
Income in order to reflect the arm's length price.
❑ The UAE Rules also encompass the corresponding adjustment principle to achieve tax neutrality.
Therefore, when a transfer pricing adjustment is made, a corresponding adjustment should be
made to the Taxable Income of the affected counterparty. This applies even when the transfer
pricing adjustment is made by a foreign competent authority. In such cases, a Taxable Person
can apply to the Authority to make a corresponding adjustment to their Taxable Income.
❑ Transfer Pricing documentation rules requires a Taxable Person to maintain and file the
following:
▪ A Disclosure Form to be filed along with the Tax Return (the specified form is yet to be
prescribed)
▪ A Master File and Local File, if during the relevant tax period, the Taxable Person meets either
of the following conditions:
- Revenue of AED 200 million or more, OR
- Constituent Entity of a Multinational Group with Consolidated Group Revenue of AED 3.15
billion or more.
(Note: Transfer pricing documentation guidelines are yet to be issued.)
Additionally, under the UAE’s Country-by-Country Reporting (CbCR) legislation (updated in 2020),
Ultimate parent entities of UAE headquartered Multinational Groups with Consolidated Group
revenue exceeding AED 3.15 billion in previous financial year must comply with CbCR notification
and report filing requirements.
❑ The UAE Corporate Tax Law introduces an Advance Pricing Agreement (APA) regime, allowing
taxpayers to attain certainty on arm's length consistency of transfer prices in Related Party
transactions through the conclusion of an APA once the UAE's APA program is activated.
❑ Overall, the UAE Transfer Pricing Regime is largely aligned with international transfer pricing
regulations and is expected to further strengthen as the Authorities provide additional guidance
and clarifications in due course.

Decoding the UAE
Transfer Pricing Rules

UAE Transfer Pricing Rules (1/2)
Transfer Pricing Rules laid down under Federal Decree-Law No. 47 of 2022
Article 34: Arm’s Length Principle
Article 35: Related Parties and Control
Article 36: Payments to Connected Persons
Article 55: Transfer Pricing Documentation
Article 59: Clarifications (Advance Pricing Agreement)
Transfer Pricing Related Ministerial Decisions and Cabinet Resolutions
Ministerial Decision No. 97 of 2023 Requirements for Maintaining Transfer Pricing Documentation
(Master File and Local File)
Cabinet Resolution No. 44 of 2020 organising reports submitted by multinational companies
(Country-by-Country Report)
Transfer Pricing references in the Federal Decree-Law, Explanatory Guide and all the decisions
published till date
Reference to Arm’s Length Principle/Article 34
Article 5(5): Government Entity
Article 6(5): Government Controlled Entity
Article 7(5): Extractive Business
Article 8(5): Non-Extractive Natural Resource Business
Article 15(1)(e): Investment Manager Exemption
Article 18(1)(d): Qualifying Free Zone Person
Article 24(4) – Foreign PE Exemption (Explanatory Guide)
Article 36(5): Payments to Connected Persons
Article 50(5)(g): General Anti-abuse Rule
Article 55(4): Transfer Pricing Documentation
Article 59: Clarifications (Explanatory Guide)
Article 61(2): Transitional Rules
Ministerial Decision No. 116 of 2023 on the Participation Exemption –
Article (1) Dividend Definition
Ministerial Decision No. 125 of 2023 on Tax Group –
Article (8) Arm’s Length Principle and Transfer Pricing Documentation Requirements and the
Calculation of the Taxable Income of a Tax Group
Reference to Transfer Pricing Documentation/Article 55
Article 18(1)(d): Qualifying Free Zone Person
Article 21(2)(e): Small Business Relief

UAE Transfer Pricing Rules (2/2)
Transfer Pricing references in the Federal Decree-Law, Explanatory Guide and all the decisions
published till date (Continued...)
Reference to Market Value
Article 24(5): Foreign Permanent Establishment Exemption
Article 26(5): Transfers Within a Qualifying Group
Article 27(7): Business Restructuring Relief
Article 36(1) & 36(5): Payments to Connected Persons
Ministerial Decision No. 133 of 2023 on Business Restructuring Relief –
Article (2) Transfers in Exchange for Shares and Other Forms of Consideration
Ministerial Decision No.134 of 2023 on the General Rules for Determining Taxable Income –
Article (3) Other Adjustments to the Accounting Income for Determining the Taxable Income in
Relation to Transactions with Related Parties
Ministerial Decision No. 116 of 2023 on the Participation Exemption - Article (9) Assets of the
Participation
Ministerial Decision No. 120 of 2023 on the Adjustments Under the Transitional Rules -
Article (2) Taxable Income Adjustments Related to Gains Recognised on Immovable Property Owned
Prior to the Taxable Person’s First Tax Period & Article (4) Taxable Income Adjustments Related to
Gains and Losses Recognised on Financial Assets and Financial Liabilities Owned Prior to the
Taxable Person’s First Tax Period
Ministerial Decision No. 133 of 2023 on Business Restructuring Relief –
Article (2) Transfers in Exchange for Shares and Other Forms of Consideration
Reference to Related Parties and Connected Persons
Article 14(2)(i), 14(4) & 14(7)(b): Permanent Establishment
Article 15 – Investment Manager Exemption
Article 20(2)(e): General Rules for Determining Taxable Income
Article 23(6)(c): Participation Exemption
Article 31(1) & 31(3): Specific Interest Deduction Limitation Rule
Article 33(4) - Non-Deductible Expenditure (Explanatory Guide)
Article 34: Arm’s Length Principle
Article 36: Payments to Connected Persons
Article 55 – Transfer Pricing Documentation
Cabinet Decision No. 55 of 2023 on Determining Qualifying Income for the Qualifying Free Zone
Person – Article (4)(4) De minimis Requirements; Article (5) Income Attributable to a Domestic
Permanent Establishment or a Foreign Permanent Establishment; Article (7) Maintaining Adequate
Substance in a Free Zone and Outsourcing
Ministerial Decision No. 139 of 2023 Regarding Qualifying Activities and Excluded Activities –
Article (2) Qualifying Activities
Ministerial Decision No. 125 of 2023 on Tax Group – Article (8) Arm’s Length Principle and Transfer
Pricing Documentation Requirements and the Calculation of the Taxable Income of a Tax Group

Adherence to Arm’s Length Principle
#
Transfer Pricing Benchmarking Requirement for Adherence to
Arm’s Length Principle
Article 20(2)(e): General Rules for Determining Taxable Income
Adjustments are made for transactions with Related Parties and Connected Persons as outlined
in Chapter Ten of the CT Law. This is to ensure that transactions between individuals or entities
under common ownership or with a relationship are evaluated based on their Market Value,
regardless of the value stated in the financial statements of the taxpayer, in order to prevent
the manipulation of Taxable Income.
Article 34 – Arm’s Length Principle

Article 34(1): Taxable Income calculation requires Related Party transactions to follow the arm's
length standard outlined in Clauses 2-5, along with any additional conditions set by the
Authority.
Article 34(8): If a transaction between Related Parties falls outside the arm's length range, the
Authority will adjust the Taxable Income to reflect the arm's length outcome based on the
transaction's facts and circumstances.
Article 36 – Payments to Connected Persons

Article 36(1): A Taxable Person can deduct payments or benefits given to their Connected
Person if they align with the Market Value of the provided service or benefit and are incurred
solely for the Taxable Person's business purposes.
Article 36(5): The determination of whether a payment or benefit corresponds to the Market
Value of the service provided by the Connected Person follows the provisions of Article 34 –
Arm’s Length Principle of the CT Law, as applicable to the context.
Article 55(4) – Transfer Pricing Documentation

At the Authority's request, a Taxable Person must provide supporting information within 30
days (or as directed) to demonstrate that their transactions or agreements with Related Parties
and Connected Persons are conducted at arm's length.
Conclusion:
The UAE's Transfer Pricing rules emphasize the importance of adhering to the arm's length
principle in transactions with Related Parties and Connected Persons. The Transfer Pricing
Benchmarking Analysis is a separate process from the Transfer Pricing Documentation
requirements, specifically designed to determine Taxable Income in accordance with the arm's
length principle.
Transfer Pricing Documentation Requirement
#
UAE’s Transfer Pricing Documentation Requirements
❑ All businesses must maintain information on transactions with Related Parties and
Connected Persons (MOF Corporate Tax FAQ 101).
❑ Certain businesses need to submit this information in a Disclosure Form along with their tax
return (Article 55(1)), but thresholds and format clarification are pending.
❑ Transactions between domestic Related Parties and Connected Persons that are non-tax
neutral, as outlined in Ministerial Decision 97 (Requirements for Maintaining Transfer
Pricing Documentation), are included in the local file contents. It can be inferred that
transactions between qualifying free zones and mainland entities or domestic permanent
establishments, as well as transactions between taxable persons and exempt persons, are
subject to transfer pricing rules.
❑ The Master File and Local File Documentation must be maintained in the UAE if the Taxable
Person’s
▪ revenue is AED 200 million or more OR
▪ if they are a Constituent Entity of a Multinational Group with a Consolidated Group
Revenue of AED 3.15 billion or more (regardless of standalone revenue of the UAE
constituent entity)
❑ Businesses claiming small business relief (Article 21(2)(e)) are exempt from complying with
transfer pricing documentation rules i.e. Disclosure Form, Local File and Master File
maintenance or filing. (MOF Corporate Tax FAQ 101).
❑ Free Zone entities must comply with transfer pricing rules and maintain relevant
documentation to be treated as a "Qualifying Free Zone Person" (Article 18(1)(d)).
❑ Further, Ministerial Decision No. 82 of 2023 on the “Determination of Categories of Taxable
Persons Required to Prepare and Maintain Audited Financial Statements” mandates the
following taxable persons to prepare and maintain audited financial statements:
▪ Taxable persons with revenue exceeding AED 50,000,000 during the relevant tax period.
▪ Qualifying Free Zone persons.
As part of the standard auditing process, companies are required to maintain transfer
pricing documentation to provide confirmation of related party transactions and payments
to connected persons. Therefore, entities subject to mandatory audits are advised to
maintain transfer pricing documentation.
Conclusion:
It is important to note that the prescribed thresholds for maintaining the Local File and Master
File are specific to the documentation requirements and not related to the Arm's Length
Standard. Businesses are advised to adhere to the arm's length standard for all transactions
with related parties and connected persons. This adherence should be reported in the
Disclosure Form along with the Tax Return, as it plays a crucial role in determining the taxable
income for Corporate Tax purposes.
Scope of the UAE Transfer Pricing Rules
#
Scope of the UAE Transfer Pricing Rules
❑ The transfer pricing rules apply to UAE businesses involved in transactions with Related
Parties and Connected Persons, regardless of whether these parties are located within the
UAE mainland, Free Zones, or foreign jurisdictions.
❑ Transactions between domestic Related Parties and Connected Persons that are non-tax
neutral, as outlined in Ministerial Decision 97, are included in the local file contents. An
inference can be drawn that the transactions between qualifying free zones and mainland
entities or domestic permanent establishments, as well as transactions between taxable
persons and exempt persons, are subject to transfer pricing rules.
❑ Related party transactions include transactions between a licensed business or business
activity and other activities of a government entity, transactions between a licensed
business or business activity and the mandated activity of a government-controlled entity,
transactions between an extractive business and other businesses of the same person, and
transactions between a non-extractive natural resource business and any other business of
the same person. As a result, transfer pricing rules apply to transactions involving exempt
and taxable businesses of a government entity, government-controlled entity, extractive
business, and non-extractive natural resource business.
❑ International transactions involving UAE businesses with Related Parties in foreign
jurisdictions are fully covered.
❑ Payments to Connected Persons, whether resident or non-resident, fall under the scope of
the transfer pricing rules.
❑ The transactions between branches and head offices fall within the scope of transfer pricing
regulations. This encompasses transactions between a UAE branch and its non-resident or
foreign head office, as well as transactions between a UAE head office and its non-resident
or foreign branch (where the branch is treated as a separate taxable person).
❑ Additionally, transfer pricing rules also apply to transactions between a UAE permanent
establishment and its non-resident Related Party, as well as transactions between a UAE
resident and its non-resident or foreign permanent establishment. In these cases, the arm's
length principle is applied for transactional and profit attribution purposes.
Conclusion:
The UAE Transfer Pricing Rules have a broad scope, encompassing both domestic and
international transactions with Related Parties and Connected Persons. Businesses operating in
the UAE need to ensure compliance with these rules for the appropriate reporting and taxation
of such transactions.
Adhering to the Arm's Length Principle in
Specific Circumstances
#
Application of Transfer Pricing Rules to Exempt Persons
Government Entity (Article 5):

❑ A Government Entity engaged in commercial activities under a business license will be
treated as a separate business for Corporate Tax purposes.
❑ Transactions between the taxable Business of the Government Entity and its other activities
will be treated as Related Party transactions subject to transfer pricing rules.
Government Controlled Entity (Article 6):

❑ Government Controlled Entities listed in a Cabinet Decision with their "Mandated Activities"
can benefit from Exempt Person status.
❑ Transactions between the Business of the Government Controlled Entity and its Mandated
Activities will be treated as Related Party transactions subject to transfer pricing rules.
Extractive Business (Article 7):

❑ Income from the extraction and exploitation of Natural Resources earned by a Government
Entity is exempt from Corporate Tax.
❑ Transactions between the Extractive Business and other businesses of the same Person are
treated as Related Party transactions subject to transfer pricing rules.
Non-Extractive Natural Resource Business (Article 8):

❑ Non-Extractive Natural Resource Businesses satisfying certain criteria are considered
Exempt Persons.
❑ Transactions between the Non-Extractive Natural Resource Business and other businesses
of the same Person are treated as Related Party transactions subject to transfer pricing
rules.
Conclusion:
In all these cases, the arm's length principle under Article 34 is applied to ensure fair pricing
and compliance with transfer pricing regulations.
#
Transfer Pricing Considerations for Investment Manager
Exemption
Investment Manager Exemption (Article 15):
Applicability of Transfer Pricing for Investment Manager Exemption

❑ Purpose of Article 15:
▪ Article 15 allows regulated UAE-based investment managers and brokers to provide
discretionary investment management services and conduct transactions on behalf of
foreign customers without triggering a Permanent Establishment.
▪ This exemption is granted when the investment manager meets specific conditions and
operates independently from the foreign person.
❑ Independent Agent Status:
▪ Under Article 15, a UAE-based investment manager acting on behalf of a foreign person
is treated as an independent agent, as long as the conditions below are met.
▪ The investment manager must carry out its business independently and on its own
account, separate from the foreign person.
❑ Arm's Length Remuneration:
▪ One of the conditions stated in Article 15 (1)(e) is that the investment manager's
remuneration must be at arm's length.
▪ This means that the investment manager and the foreign person must transact with
each other on arm's length terms, reflecting customary and appropriate remuneration
for the services provided.
▪ The remuneration structure should be in line with the level of services, the nature of the
foreign person (institutional or individual investor), and the investment strategy
employed.
Conclusion:
Article 15 of the relevant regulations provides an exemption for regulated UAE-based
investment managers and brokers conducting investment management services for foreign
customers. To qualify for this exemption, the investment manager must meet specific
conditions and maintain independence from the foreign person. Additionally, the remuneration
between the investment manager and the foreign person should be determined on arm's
length terms. Adhering to these requirements ensures compliance with transfer pricing
principles and allows investment managers to benefit from the investment manager
exemption.
#
Transfer Pricing for Qualifying Free Zone Persons
Qualifying Free Zone Person (Article 18):
❑ A Qualifying Free Zone Person refers to a Free Zone entity that satisfies the conditions
outlined in Article 18(1), including compliance with Article 34 (Arm's Length Principle) and
Article 55 (Transfer Pricing Documentation) requirements.
❑ As per Article 18(1)(d), Qualifying Free Zone Persons are mandated to adhere to the
principles of the Arm's Length Principle and fulfill the Transfer Pricing Documentation
requirements specified in Article 55.
❑ The Arm's Length Principle requires Qualifying Free Zone Persons to conduct their
transactions with Related Parties and Connected Persons at prices and terms that would be
agreed upon by unrelated parties under similar circumstances.
❑ Transfer Pricing Documentation obligations necessitate Qualifying Free Zone Persons to
maintain adequate records and documentation (Disclosure Form, Local File and Master File)
to support the arm's length nature of their transactions with Related Parties and Connected
Persons.
Conclusion:
Qualifying Free Zone Persons in the UAE are subject to transfer pricing rules, including the
Arm's Length Principle and Transfer Pricing Documentation requirements.
#
Applicability of Transfer Pricing Rules for Determining Taxable
Income
General Rules for Determining Taxable Income (Article 20) & Ministerial Decision No.134 of
2023 on the General Rules for Determining Taxable Income:
❑ According to Ministerial Decision No.134 of 2023 on the General Rules for Determining
Taxable Income, specific adjustments are required to be made for transactions with Related
Parties when calculating the Taxable Income.
❑ In cases where the consideration paid by the transferee exceeds the Market Value of the
asset or liability, adjustments are made to exclude any depreciation, amortization, or
change in value that relates to the difference between the net book value and the Market
Value. This applies to transactions other than realizations.
❑ Upon realization of an asset or liability, any amount by which the net book value exceeds
the Market Value is included in the Taxable Income.
❑ Conversely, if the consideration paid by the transferee is lower than the Market Value and
the transferor has included the difference in their Taxable Income, adjustments are made to
exclude any change in value that relates to the difference between the Market Value and the
net book value.
❑ Upon realization, the gain is reduced by the difference between the Market Value and the
net book value at the time of transfer.
❑ The transferee has the option to recognize the excess derived from the difference between
the net book value and the Market Value as an adjustment in calculating the Taxable
Income.
❑ Once the net book value becomes equal to or less than the Market Value, or an election is
made for the asset or liability, certain adjustments no longer apply.
❑ Similarly, if the net book value becomes equal to or higher than the Market Value, the
respective adjustments no longer apply.
Conclusion:
The applicability of transfer pricing rules for determining taxable income entails specific
adjustments for transactions with Related Parties. These adjustments account for differences
between the consideration paid and the Market Value of assets or liabilities. By making these
adjustments, the taxable income is calculated accurately in adherence to transfer pricing
regulations in the determination of tax liabilities.
#
Applicability of Transfer Pricing Rules for Small Businesses
Small Business Relief (Article 21) & Ministerial Decision No. 73 of 2023 on Small Business Relief
❑ Small Business Relief: Article 21 provides relief for small businesses by exempting them
from certain provisions of the Corporate Tax Law related to the calculation of Taxable
Income.
❑ Revenue Threshold: To qualify for the Small Business Relief, the Taxable Person's revenue
threshold for the relevant Tax Period and previous Tax Periods should be AED 3,000,000 for
each Tax Period.
❑ Compliance Exemption: Small businesses electing to benefit from the Small Business Relief
are not required to adhere to maintenance of Transfer Pricing documentation under Article
55, reducing the compliance burden.
❑ Arm's Length Standard: Although small businesses are relieved from adherence to Article 55
– Transfer Pricing documentation, there is no explicit exemption from adhering to the arm's
length standard outlined in Article 34 while calculating Taxable Income.
Conclusion:
While small businesses are exempted from Transfer Pricing documentation requirements, they
are still expected to adhere to the arm's length standard in determining their Taxable Income.
The revenue threshold of AED 3,000,000 establishes the eligibility criteria for small businesses
to avail the relief. It is important to note that this revenue should also be in line with the Arm's
Length Principle if earned from Related Parties.
#
Applicability of Transfer Pricing Rules for Foreign Permanent
Establishment Exemption
Foreign Permanent Establishment Exemption (Article 23)
❑ Foreign Permanent Establishment Exemption: Article 24 of the Corporate Tax Law allows a
Resident Person to claim an exemption from Corporate Tax for income derived through a
Foreign Permanent Establishment that meets the specified conditions.
❑ Scope of Corporate Tax: Both UAE and non-UAE-sourced income earned by a Resident
Person fall under the purview of Corporate Tax, but the Foreign Permanent Establishment
exemption provides an opportunity to exempt certain income.
❑ Arm's Length Principle: The arm's length principle outlined in Article 34 applies to any
"transfers" of assets or liabilities between a Resident Person and its Foreign Permanent
Establishment. This principle ensures that these transactions are conducted at a fair and
market-based value.
❑ Market Value Criteria: Clause 5 of Article 24 mandates that transfers between a Resident
Person and its Foreign Permanent Establishment be treated as if they occurred at Market
Value on the date of the transfer. This determination is crucial for calculating the Taxable
Income of the Resident Person.
Conclusion:
The applicability of transfer pricing rules, specifically the arm's length principle and market
value criteria, is essential for the Foreign Permanent Establishment exemption. By adhering to
these rules, Resident Persons can accurately determine their Taxable Income and claim the
exemption for income derived through their Foreign Permanent Establishment. Proper
valuation and documentation of transfers between the Resident Person and the Foreign
Permanent Establishment are crucial to ensure compliance and optimize tax benefits.
#
Applicability of Transfer Pricing Rules for Transfers Within a
Qualifying Group
Transfers Within a Qualifying Group (Article 26)
❑ Transfers Within a Qualifying Group: Article 26 of the Corporate Tax Law introduces
Corporate Tax neutrality for transfers of assets or liabilities between closely related Taxable
Persons who form a Qualifying Group.
❑ Qualifying Group Definition: A Qualifying Group consists of closely related Taxable Persons
involved in the transfer. These entities must meet specific criteria to be considered part of
the group.
❑ Arm's Length Criteria: Clause 4 establishes conditions if satisfied then the transfer will not
qualify for Corporate Tax neutrality.
❑ Market Value Adjustment: Clause 5 stipulates that if the conditions in Clause 4 are met, the
transfer must be treated as if it occurred at Market Value on the date of the first transfer.
This adjustment affects the Taxable Income of the Taxable Persons involved in the transfer.
Conclusion:
❑ The applicability of transfer pricing rules, specifically the arm's length criteria and market
value adjustment, ensures Corporate Tax neutrality for transfers within a Qualifying Group.
By adhering to these rules, closely related Taxable Persons can accurately determine the
Taxable Income associated with the transfer. It is crucial to not fall within the conditions
outlined in Clause 4 to qualify for Corporate Tax neutrality. In cases where these conditions
are met, the transfer is treated as if it occurred at Market Value, impacting the Taxable
Income of the entities involved. Proper adherence to the transfer pricing rules enhances
transparency and fairness in intra-group transfers and helps optimize tax outcome.
#
Applicability of Transfer Pricing Rules for Business Restructuring
Relief
Business Restructuring Relief (Article 27) & Ministerial Decision No. 133 of 2023 on Business
Restructuring Relief
❑ Business Restructuring Relief: Article 27 of the Corporate Tax Law introduces Business
Restructuring Relief, which eliminates the Corporate Tax impact of certain transactions
undertaken as part of the restructuring or reorganization of a Business.
❑ Purpose of Business Restructuring Relief: The relief aims to facilitate tax-neutral
restructuring transactions that are undertaken for valid commercial or non-tax reasons,
without imposing taxable gains or losses.
❑ Conditions for Relief: The relief is subject to meeting specific conditions outlined in the
Article, ensuring that the transactions qualify for tax neutrality.
❑ Two-Year Requirement: Clause 6 of the Article states that all parties involved in the
transaction must continue to meet the conditions of the relief for a minimum of two years.
This requirement prevents the abuse of the relief for ordinary sale transactions or tax
avoidance purposes.
❑ Transfer Restrictions: Clause 6(a) prohibits the transfer of shares or ownership interests to a
Person outside a Qualifying Group within two years of the initial transfer, and Clause 6(b)
restricts subsequent transfers or disposals of the Business or independent part thereof
within the same timeframe.
❑ Market Value Treatment: If any of the conditions in Clause 6 are not met, Clause 7 mandates
that the transfer of the Business or independent part thereof should be treated as if it
occurred at Market Value on the date of the transfer. This entails adjustments to the
Taxable Income and available Tax Losses of the Taxable Persons involved in the transfer.
Ministerial Decision No. 133 of 2023 on Business Restructuring Relief:
❑ Article (2) specifies that transfers in exchange for shares or other forms of consideration
must meet certain criteria, including the Market Value of additional consideration not
exceeding the net book value of the assets and liabilities transferred or 10% of the nominal
value of the ownership interests issued which ever is lower.
Conclusion:
The applicability of transfer pricing rules, involving arm's length or Market Value criteria, plays a
crucial role in the Business Restructuring Relief provided by Article 27. This relief ensures that
certain restructuring transactions can occur in a tax-neutral manner, benefiting businesses
undergoing legitimate reorganization. Adherence to the conditions, including the two-year
requirement and transfer restrictions, is essential to qualify for the relief. Failure to meet these
conditions may result in the transfer being treated at Market Value, leading to adjustments in
Taxable Income and available Tax Losses. The provisions aim to prevent abuse and maintain
the integrity of the tax system while facilitating business restructuring in a fair and transparent
manner.
#
Transfer Pricing Benchmarking Requirement for Adherence to
Arm’s Length Standard in Specific Cases
Specific Interest Deduction Limitation Rule (Article 31):
❑ Purpose of Specific Interest Deduction Limitation Rule: Article 31 of the CT Law introduces
the Specific Interest Deduction Limitation Rule to prevent the erosion of the Corporate Tax
base through transactions between Taxable Persons and their Related Parties aimed at
creating deductible Interest expenditure while benefiting from a Corporate Tax exemption.
❑ Restriction on Deductibility: The rule prohibits the deduction of Interest expenditure
incurred by a Taxable Person on a loan obtained from a Related Party if the funds are used
for specific transactions, such as dividend or profit distributions, changes in capital
structure, capital contributions, or acquisitions of shares in a juridical person becoming a
Related Party.
❑ Exceptions to the Restriction: The restriction on the deduction of Interest expenditure does
not apply if the Taxable Person can demonstrate that the main purpose of obtaining the
loan and engaging in these transactions is not to gain a Corporate Tax advantage.
❑ Arm's Length or Market Value Criteria: The applicability of transfer pricing rules, specifically
the arm's length principle or Market Value criteria, is crucial in determining the existence of
a Corporate Tax advantage and the proper deduction of Interest expenditure in these
transactions.
Conclusion:
The Specific Interest Deduction Limitation Rule, outlined in Article 31, aims to prevent the
misuse of transactions between Taxable Persons and Related Parties to create deductible
Interest expenditure. The rule restricts the deduction of Interest expenditure incurred on loans
obtained from Related Parties and used for specific transactions. However, if the Taxable
Person can demonstrate that the main purpose of these transactions is not to gain a Corporate
Tax advantage, the restriction may not apply. Adherence to transfer pricing rules, such as the
arm's length principle or Market Value criteria, helps ensure that Interest expenditure is
properly determined for deduction purposes.
#
Applicability of Transfer Pricing Rules in case of Tax Groups
Tax Group (Article 40) & Ministerial Decision 125 of 2023 on Tax Groups:
❑ Calculation of Taxable Income:

▪ When a Tax Group is required to determine the Taxable Income attributable to its
members, they must calculate it for each relevant member based on Article (34) of the
Corporate Tax Law.
▪ Transfer pricing principles are used to ensure that the allocated taxable income within
the Tax Group is determined appropriately.
❑ Disclosure of Information:
▪ Tax Groups are obligated to disclose information concerning transactions and
arrangements between their members, as well as transactions involving Related Parties
and Connected Persons.
▪ This disclosure requirement aims to provide transparency and enable the tax authorities
to assess the compliance of the Tax Group with transfer pricing regulations.
Conclusion:
Ministerial Decision 125 of 2023 on Tax Groups outlines the specific circumstances in which
transfer pricing rules apply. Tax Groups must calculate the Taxable Income for each member
according to transfer pricing principles stated in Article (34) of the Corporate Tax Law.
Additionally, they need to disclose relevant information regarding transactions and
arrangements within the Tax Group and with Related Parties and Connected Persons.
#
Applicability of Transfer Pricing Rules in Light of GAAR
General Anti-Abuse Rule - GAAR (Article 50)

❑ Purpose of General Anti-Abuse Rule (GAAR): Article 50 of the CT Law introduces the GAAR to
address abusive tax avoidance schemes and prevent taxpayers from exploiting the scope
and reliefs of the law for unjustified Corporate Tax benefits. It provides the Authority with
the power to counteract transactions or arrangements that secure a Corporate Tax
advantage inconsistent with the intention or purpose of the law.
❑ Keeping the Corporate Tax Law Simple: The GAAR allows the Corporate Tax Law to remain
simple and permissive by addressing abusive tax avoidance without needing to anticipate
and cover every possible exploitation by taxpayers.
❑ Valid Non-tax Reason Requirement: The GAAR applies when there is no valid non-tax reason
for a transaction or arrangement, and one of the main purposes is to secure a Corporate
Tax advantage contrary to the intent of the law.
❑ Relevant Facts and Circumstances: Clause 5 of Article 50 provides a non-exhaustive list of
factors that the Authority considers in determining the applicability of the GAAR. Among
these factors is whether the transaction or arrangement has created rights or obligations
that would not typically exist between unrelated parties dealing at arm's length.
❑ Applicability of Transfer Pricing Rules: The GAAR's consideration of whether a transaction
deviates from arm's length dealings indicates the relevance of transfer pricing rules in
determining the existence of a tax advantage and the abuse of the Corporate Tax Law.
Conclusion:
The General Anti-Abuse Rule (GAAR), outlined in Article 50, serves as a mechanism to
counteract abusive tax avoidance schemes that exploit the Corporate Tax Law for unwarranted
benefits. By focusing on transactions or arrangements lacking a valid non-tax reason and
aiming to secure a Corporate Tax advantage contrary to the law's intent, the GAAR empowers
the Authority to take action in specific circumstances. The consideration of factors such as the
creation of non-arm's length rights or obligations emphasizes the applicability of transfer
pricing rules in assessing the presence of a tax advantage and potential abuse.
#
Applicability of Transfer Pricing Rules in Transitional Rules
Transitional Rules (Article 61) & Ministerial Decision No. 120 of 2023 on the Adjustments Under
the Transitional Rules:
❑ Purpose of Transitional Rules: Article 61 of the CT Law introduces transitional provisions to
ensure a smooth transition to the new tax regime. These rules govern the preparation of
opening balance sheets for Corporate Tax purposes.
❑ Use of Closing Balance Sheet: Under Clause 1 of Article 61, a Taxable Person is required to
use their closing balance sheet prepared for financial reporting purposes immediately
before their first Tax Period as the opening balance sheet for Corporate Tax purposes,
subject to any prescribed conditions and adjustments.
❑ Transfer Pricing Rules in Opening Balance Sheet: Article 61(2) mandates the consideration of
the arm's length principle under transfer pricing rules when preparing the opening balance
sheet. This requirement aims to prevent non-arm's length transactions and arrangements
prior to the introduction of Corporate Tax from impacting the calculation of Taxable Income.
❑ Adjustments for Immovable Property: Ministerial Decision No. 120 of 2023 provides
adjustments related to gains recognized on immovable property owned prior to the Taxable
Person's first Tax Period. These adjustments consider the Market Value and net book value
of the qualifying immovable property to determine the excluded amount of gain for Taxable
Income calculation.
❑ Adjustments for Financial Assets and Liabilities: Ministerial Decision No. 120 of 2023 also
allows adjustments for gains and losses recognized on financial assets and liabilities owned
prior to the Taxable Person's first Tax Period. The excluded amount of gain or loss is
determined based on the Market Value and net book value of the qualifying financial assets
or liabilities.
Conclusion:
The Transitional Rules, outlined in Article 61, play a crucial role in the implementation of the
Corporate Tax Law. The use of the closing balance sheet for financial reporting purposes as the
opening balance sheet for Corporate Tax purposes ensures consistency. The incorporation of
transfer pricing rules in the preparation of the opening balance sheet safeguards against non-
arm's length transactions affecting Taxable Income calculations. Additionally, the Ministerial
Decision provides specific adjustments for gains recognized on immovable property and
financial assets or liabilities owned prior to the Taxable Person's first Tax Period. These
adjustments consider the Market Value and net book value to determine the excluded amount
of gain or loss. By adhering to these rules, Taxable Persons can maintain consistency while
accommodating the transition to the new Corporate Tax framework.
Types of Related Party Transactions and
Connected Persons Payments
#
Transactions Covered by the UAE Transfer Pricing Rules
The UAE Transfer Pricing Rules are applicable to the following categories of transactions
involving Related Parties and Connected Persons:
❑ Goods: Purchase, sale, and transfer of goods related to manufacturing and distribution
activities, including raw materials and finished goods.
❑ Services: Provision and receipt of various services, such as IT, sales and marketing,
engineering, R&D, finance, accounting, legal, managerial, and procurement.
❑ Tangible Property: Purchase, sale, transfer, and lease of tangible property.
❑ Capital Transactions: Issuance, investment, and transfer of equity and preference shares, as
well as hybrid instruments such as CCDs, CCPs, OCDs, and OCPs.
❑ Intangible Property (IP): Royalties and license fees for the use of intangible assets.
❑ Financing Arrangements: Intra-group loans and guarantees.
❑ Intra-group Services (IGS) and Cost Contribution Arrangements (CCAs).
❑ Business Restructurings and Reorganizations: Transfer of shares, tangible and intangible
assets, business combinations, changes in contractual terms, parties, and characterization.
❑ Transactions with Connected Persons: Payments to owners, shareholders, directors,
officers, partners, and their relatives, such as remuneration, rent, dividends, and interest on
loans.
❑ Domestic Transactions: Transactions between mainland businesses, free zones, and exempt
persons that are not tax neutral.
Anticipated Transfer Pricing Guidance
#
Clarifications Expected w.r.t the UAE Transfer Pricing Rules
❑ As highlighted in Ministerial Decision 97, the Authority will issue guidelines for the
application of the provisions of this Decision and the maintenance of transfer pricing
documentation. In the meantime, the internationally accepted transfer pricing guidelines of
the OECD can be relied upon.
❑ The aforementioned Decision has provided the prescribed details for inclusion in the local
file documentation. However, the prescribed details for the master file documentation are
yet to be specified. In the meantime, the contents of the Master File as outlined in the OECD
Transfer Pricing Guidelines can be relied upon.
❑ The Transfer Pricing Rules outlined in the CT Law state that if the results of a transaction or
arrangement with related parties deviate from the arm's length range, the Authority is
required to adjust the Taxable Income to reflect the arm's length price. The Explanatory
Guide on the CT Law further explains that an acceptable arm's length price can be a range
of results or indicators, rather than a specific value. However, the specific criteria for
determining the transfer pricing adjustment within the arm's length range, such as using the
interquartile range or other percentiles, have not been prescribed yet.
❑ Further clarification is anticipated regarding the selection of data for arm's length
determination analysis, specifically whether single-year data or multiple-year data should be
used. In the absence of specific guidance, the use of multiple-year data is preferred
whenever possible, depending on the chosen transfer pricing method for arm's length
determination.
❑ The UAE Rules also include the principle of corresponding adjustments to ensure tax
neutrality. This means that when a transfer pricing adjustment is made, an appropriate
adjustment should be made to the Taxable Income of the affected counterparty, even if the
adjustment is made by a foreign competent authority. In such cases, a Taxable Person can
apply to the Authority for a corresponding adjustment to their Taxable Income. The specific
mechanism for conducting these transfer pricing and corresponding adjustments will be
clarified, taking into account timing issues, necessary accounting and tax adjustments, and
other uncontrollable factors related to the counterparty involved in the transactions.
❑ Although the UAE Transfer Pricing Regime is in its early stages, having an understanding of
the broad framework for transfer pricing scrutiny and audits by the Authority can be
beneficial for Taxable Persons. It enables them to be aware of potential audit risk
parameters or exposures that may arise in the event of non-compliance with the transfer
pricing rules.
❑ The UAE CT Law introduces an Advance Pricing Agreement (APA) regime, enabling taxpayers
to achieve certainty regarding the arm's length consistency of transfer prices in Related
Party transactions through the conclusion of an APA. As stated in the Explanatory Guide on
the CT Law, Taxable Persons seeking clarification must fulfill administrative requirements
and adhere to the procedures that will be prescribed by the Authority.
❑ Due to the unavailability of publicly accessible financial data for comparable companies in
the UAE region, utilizing regional comparable data for transfer pricing benchmarking
analysis is currently not feasible. In the absence of guidelines or a transfer pricing database
in the UAE, multi-jurisdictional analyses can be conducted. Generally, Europe, Asia Pacific,
and Middle East regional data, and occasionally global data, are considered for transfer
pricing benchmarking analysis, depending on the specific transaction being evaluated and
its circumstances.

SBC’s UAE Transfer
Pricing Guide

Introduction of the UAE Transfer Pricing
Regime
UAE introduces a comprehensive TP regime which is broadly in line with the OECD TP
Guidelines. Following, TP related articles are covered in UAE CT Law:
Article 34 Article 35 Article 36 Article 55

The Arm’s Length Related Parties and Payments to Transfer Pricing
Principle Control Connected Persons Documentation
UAE TP Rules ensure that the price of a transaction is not influenced by the relationship
between the parties involved.
In order to achieve this outcome, the UAE will apply the internationally recognized “arm’s
length” principle to transactions and arrangements between related parties and with
connected persons.
“Arm’s Length Principle”
A transaction or arrangement between Related Parties meets the arm’s length standard if the
results of the transaction or arrangement are consistent with the results that would have been
realised if Persons who were not Related Parties had engaged in a similar transaction or
arrangement under similar circumstances.
“Market Value”
To prevent the manipulation of Taxable Income, various Articles in the CT Law require the
pricing of transactions between Persons under common ownership or between Persons that
are otherwise related or connected to be determined by reference to the “Market Value” (also
commonly referred to as fair value or fair market value).
The Market Value of an asset, service or benefit provided is the value that the asset, service or
benefit would ordinarily have in the open market at the time and place of the transaction taking
place. The value should be determined as if the parties are independent from each other as per
the arm’s length principle. If it is not possible to determine the Market Value of the actual asset,
service or benefit, the definition allows for the Market Value to be determined by reference to
the consideration for a similar asset, service or benefit in the open market at that time, as
adjusted for any differences between the transactions being compared or between the parties
undertaking those transactions.
Types of Arm’s Length Analyses
Article 34
❑ All Related Party transactions and transactions with Connected Persons will need to comply with
transfer pricing rules and the arm’s length principle.
❑ Objective of selecting a TP method is to assist in arriving/ concluding at the arm’s length price of
a controlled or related party transaction.
❑ Arm’s length price for a controlled transaction can be derived either directly using comparable
prices between unrelated entities or indirectly using profit methods (by using arm’s length gross
margin or net margin earned by comparable entities)
Examples Transaction Based Profit based
Unrelated party Related party (A) P&L of Related Party (A) In

AED
Sale of finished product to 100

Sale of Sale of Related Party B
finished finished
product product
at AED at AED Cost 90
120 100 (direct & indirect costs)
Unrelated party Related party (B) Net Profit 10
To arrive at the ALP for Sale of product

To arrive at the ALP for Sale of product of AED of AED 100 by A to B (related party
100 by A to B (related party transaction) transaction)
We can look for net profit earned

We can look for comparable prices of sale of byunrelated companies for
similar product between unrelated parties – similarproducts (indirect) – Say ALP
e.g., directly arrive at ALP at AED 120 which is net margin is AED 15. Then ALP Sale
price between unrelated parties price to B has to be 105 (Cost of 90
to A + ALP net margin of 15)
❑ Most appropriate method has to be selected among available TP methods under TP regulations,
so it is pertinent to understand the application of each and every TP method.
❑ Where Transfer Price is not falling within ALP range, the Authority/Taxable Person shall make
domestic TP adjustment to the Taxable Income. Also, Corresponding TP adjustments shall be
made for domestic and foreign TP adjustments (involving UAE entity) to avoid double taxation.
Related Party Definition (1/4)
RPs: Natural person[Article 35 1(a)]
Related within the 4th degree of kinship* or

affiliation, including adoption or guardianship
Natural 4th Degree of
Person Kinship
relation
RPs: Natural person and Juridical Person[Article 35 1(b)]
i) NP or ≥ 1 RP of NP are shareholders in JP, and

the NP, alone or together with its RP, directly
or indirectly owns ≥50% ownership interest in
the JP; or
ii) NP, alone or together with its Natural SH & Owns ≥ Or,
RP, directly or indirectly Controls the JP Person 50% Control
Ownership
*Generally, a first-degree, second-degree, third-degree, or fourth-degree kinship or relative of the individual

means:
(i) First-degree relatives include an individual's parents, siblings, and children.
(ii) Second-degree relatives include an individual's grandparents, grandchildren, uncles, aunts, nephews,
nieces, and half-siblings.
(iii) Third-degree relatives include an individual's great-grandparents, great grandchildren, great
uncles/aunts, and first cousins.
(iv)Fourth-degree relatives include an individual's great-great-grandparents, great-great-grandchildren,
and first cousins once- removed (i.e., the children of the individual's first cousins).
> 50%
One JP, alone or together with JP, alone or OwnershipI
nterest JP
its RP, directly or indirectly owns ≥50%
RPs: Two or more juridical persons where [Article 35 1(c)]
together
ownership interest in the other JP; with its RP
Control
One JP, alone or together with its RP, JP, alone or
directly or indirectly Controls the other JP
together
JP; or with its RP
Any Person, alone or together with its RP,

directly or indirectly owns ≥50% ownership >50%
interest in or Controls such two or more Ownership
juridical persons Interest, or
Control
These two JPs
JP, alone or becomes RPs
JP
together
with its RP
RPs
D. A Person and its Permanent
Establishment or Foreign Permanent
Establishment. Any PE or Foreign
Person PE
RPs [Article 35 1(d), (e), (f)]
RPs
E. > 2 Persons that are partners in the same

Unincorporated Partnership.
Partner Partner
Unincorporated
Partnership
F. A person who is trustee, founder, settlor or

beneficiary of trust or foundation, and its RPs. RPs
Person Trust /
(Trustee/ Foundation
Founder/ Settlor/
Beneficiary)
“Control” Definition
> 50%
Voting
Rights
a. To exercise
*Significant Influence ≥50% voting Any
Person Another
(SI) : Yet to be defined rights Person
under the law
d. To determine, Article 35(2) –

or exercise SI* c. To receive ≥
over, the conduct CONTROL means
of the Business 50% of the
ability profits
to
Receives > 50%

Profits
Composition > b. To determine
the composition Any
50% of of ≥ 50% of the Another
BOD Person Person
BOD Person
BOD
Connected Persons Definition (1/2)
Article 36
❑ Concept for Connected Persons is very speciﬁc to the UAE and is generally not present in most
other countries.
❑ Absence of a Personal Income Taxation in the UAE can generate incentives for individual
owners of taxable businesses to erode the UAE CT base by making excessive payments to
themselves or persons connected with them.
❑ Connected Persons are different from Related Parties. A person will be considered as
‘connected’ to a business that is within the scope of the UAE CT regime if he or she is:
Connected Persons for UAE CT & TP Purposes
Ownership /Control An individual who directly or indirectly has an

ownership interest in, or controls, the taxable
person
Director / Officer A director or officer of the taxable person
Kinship with owner/ director/ officer An individual related to the owner, director or
officer of the taxable person to the fourth degree
of kinship or affiliation, including by birth,
marriage, adoption or guardianship
Partnership Where the taxable person is a partner in an

unincorporated partnership, any other partner in
the same partnership
Related Party A Related Party of any of the Related Parties

referred in earlier slide will also be considered as
Connected Person
Payments or benefits by businesses to Connected Persons will be Tax Deductible

only if they:
Corresponds with the Market Value Incurred wholly and exclusively for the
(Arm’s Length Test) purposes of the taxpayer’s business.
Exemption for:
▪ Listed Entity
▪ Taxable Person subject to regulatory oversight of a competent authority
▪ Any other person determined by decision of cabinet

Connected Person Definition (2/2)
- 36 2(a) An owner of the Taxable Person

-36 (3) An owner of the taxable Person is any natural person
who is directly/ indirectly owns an ownership interest in the 36 2(a) Owner = Taxable
taxable person or controls such taxable person 36 (3) Natural Person
Person
RPs [Article 36 2(a), (b), (c) & 36 (3) & 36 (4)]
36 2(b) A Director or Officer of the

Taxable Person
Director/ Taxable
Officer Person
36 2(c) A Related Party of any of the Persons referred to

in paragraph (a) & (b) mentioned above.
36 2(a) Owner /
Related 36 2(b) Director/
Party Officer
36 (4) - Where the Taxable Person is a partner in an

Unincorporated Partnership, a Connected Person is any other
partner in that same Unincorporated Partnership, and any Partner
Person that is a Related Party of that partner.
Connected
Persons
Unincorporated
Partnership
Partners
Functional, Assets & Risks (FAR) Analysis
Nature and Functions

Conditions characteristic of performed,
prevailing in the international risks assumed,
the markets transaction and assets
employed
Economic Contractual
conditions Functional terms of the
surrounding Analysis said
the transaction
transaction
• Economically significant functions are to be

analysed as which are performed by related party
and tested party. Commonly identified functions
are manufacturing, distribution, marketing,
strategic management, quality assurance, logistics,
Functions recruitment and training of employees etc.
• Identifying significant assets that are used by or

transferred between the related party in the course
of international transaction
• Identification of tangible and intangible assets
Assets employed and their significance in the controlled
transaction
• Identification of economically significant risks

that are assumed by the related party and tested
party
• Commonly assigned risks are market risks,
Risks foreign exchange risk, credit risk etc.

Typical Functional Profiles
Limited Risk Fully Fledged

Manufacturer Toll Manufacturer: Fully Fledged Manufacturer:
• Manufacturing services • Performs all important manufacturing
without taking title to raw functions
materials or final
• Engages in production planning, sourcing,
products
and procuring inputs, R&D activities
• No Inventory or selling design and engineering, quality control
risks and logistics
• Limited Quality control or • Assumes market risk, inventory risk, R&D
logistics management risk, product Liability risk, and other risks
• No significant Intangibles • Earns residual profits
Distributor Agent: Fully Fledged Distributor:

• Acts as a sales • Undertakes all of the sales and
representative, received distribution function
commission on sales.
• Bears all material risks relevant to these
• Facilitates sales but functions
principal concludes
• Buys, holds and sells products, develops
contract
necessary intangibles.
• Minimal risks since no
• Bears significant downside risks as well as
title to the products
receiving upside results of positive
Limited Risk Distributor: outcome of its activity
• Buys goods and markets • Often entitles to residual profits
them to customers
• Risks relating to inventory
and debtors are limited
Service • Provision of low value • Provision of high value adding or core

adding or supportive services
Provider services
• Ownership of significant assets (e.g.
• No significant assets or Unique skills, Proprietary software,
risks intangibles)
• Predetermined routine • Assumption of substantial operational and
return. financial risks
• Potential for higher, non routine returns
Selection of Most Appropriate Method
(1/2)
Most Appropriate Method

Article 34 of UAE CT Law - The arm’s length price in relation to a related party transaction
(International or Domestic) shall be determined by any of the following methods, being
the most appropriate method, having regard to the nature of transaction or class of
transaction or class of associated persons or functions performed by such persons or
such other relevant factors as the Authority may prescribe, namely:
❑ 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.
❑ The business strategies employed by the Related Parties entering into the transaction or
arrangement.
Selection of MAM – Factors to be considered
Availability, coverage Degree of comparability

and reliability of data between controlled and
uncontrolled transaction.
Functions, Assets and

risk assumed by the Extent to which reliable and
taxpayer and its related accurate adjustments can be
party made for differences, if any.
Following
factors should Nature, extent and reliability
be taken into of assumptions required to
Nature and Class of
account while be made in application of
Transactions
selecting MAM methods

Selection of Most Appropriate Method
(2/2)
Article 34
CUP - Interest rates,

Royalty/license fee,
Purchase/Sale of
goods/Provision of
Comparable services where close
Uncontrolled comparables are
Price available etc.
Method(CUP)
Traditional RPM - Trading

Transaction Resale Price operations – buy and
Methods Method sale without any value
TP
(RPM) addition etc.
Methods
Cost Plus
CPM - Sale of semi
Method
finished goods,
(CPM)
provision of services
where cost details
are available etc.
PSM - Transfer of
intangibles, Highly Any Other Method
Profit Split integrated business (transactions
Method(PSM) operations etc.) where valuation
Transactional
reports or third
Profit
party quotes or
Methods
standard rate
TNMM - cards etc. are
Transactional
Manufacturing available)
Net Margin
operations, trading
Method
operations where
RPM is inadequate,
Provision of services
etc.

Steps for Transfer Pricing Benchmarking
The first step is to identify the transaction or transactions to be analyzed. This

involves identifying the type of transaction, the parties involved, the nature of the
transaction, and any other relevant factors.
Once the transaction has been identified, the next step is to select the most
appropriate transfer pricing method
To determine the ALP, a comparability analysis must be conducted to identify and

adjust for any differences between the controlled transaction and the uncontrolled
transactions.
Once the comparability analysis is completed, the selected transfer pricing method
can be applied to determine the ALP. The application of the method should take into
account any necessary adjustments identified in the comparability analysis.
Finally, the analysis should be documented to provide evidence that the transfer
pricing method used is the most appropriate method for the transaction, and that
the ALP has been determined in accordance with the transfer pricing guidelines.

Case Study on Selection of Comparable
Companies
Case study:
❑ UAE resident entity - ABC LLC is engaged in providing software development services to its
holding company in US – ABC INC.
❑ ABC LLC is earning a mark-up of cost plus 15% for the services rendered to ABC INC.
❑ We have to evaluate mark-up of 15% earned by ABC LLC from the Related Party transaction of
Provision of software development services from an arm’s length stand point.
❑ Here are the steps involved in the benchmarking analysis undertaken to arrive at the arm’s
length mark-up earned by comparable companies engaged in similar software development
services in Middle East, APAC and Europe Region.
Qualitative analysis –
Review business
Select most appropriate description, service or
Quantitative Analysis – product profile,
TP method (TNMM Apply Filters/Screens for
method is selected accounting policies,
selecting comparables segmental info,
among prescribed)
extraordinary events, IP
Holdings etc.
Select tested party Arrive at the final set of

(assume ABC LLC is Select keywords comparable
selected as tested party pertaining to software companies – Compute
and companies similar to development services arm’s length range (using
ABC LLC in Middle East, multiple year data &
APAC and Europe Region range concept – inter-
are to be identified) quartile/percentile)
If there are any

differences in
comparables and tested
Select Profit Level Select publicly available party, adjust those
Indicator (Operating data base for searching differences undertaking
Profit/Operating Cost is comparable companies economic adjustments
selected as PLI and (TP Catalyst, S&P Capital (e.g. Working Capital,
compared with IQ) market risk, depreciation,
comparables PLI) capital utilization
adjustments)

Comparable Uncontrolled Price Method
(CUP Method)
OECD Guidelines on CUP Method

❑ The CUP method is generally considered the most direct and reliable method for establishing
an arm's length price when there are sufficiently comparable uncontrolled transactions.
❑ To apply the CUP method, the controlled transaction must be comparable to the uncontrolled
transaction in terms of the product, contractual terms, functions performed, risks assumed,
and economic circumstances.
❑ The availability and reliability of comparable uncontrolled transactions should be assessed
based on factors such as the nature of the product or service, the industry, the geographic
location, and the timing of the transaction.
❑ Adjustments may be required to ensure comparability between the controlled and
uncontrolled transactions, such as adjustments for differences in quantity, quality, delivery
terms, or other relevant factors
❑ The CUP method should be used with caution when there is a high degree of uncertainty or
lack of information regarding the comparability of the controlled and uncontrolled
transactions.
❑ Where there are multiple comparable uncontrolled transactions, the use of a weighted
average price may be appropriate to establish an arm's length price.
❑ The use of the CUP method may require the use of reliable sources of data such as industry
databases, public market prices, or other reliable sources of information.
Practical Example of CUP Method
Engaged in providing shipping Company Y

Company X
services (Related Party)
A B C D
Company X also provides shipping services to four

independent unrelated parties
Observation & Analysis:

▪ Company X and company Y both are related party.
▪ Company X is engaged in providing shipping business to both AE and third
parties. As the prices charged to third parties are available and the transaction
are also similar, internal CUP can be used to derive at ALP.

Resale Price Method (RPM)
OECD Guidelines on RPM

❑ RPM is probably most useful method where it is applied to trading operations.
❑ An appropriate resale price margin is easiest to determine where the reseller does not add
substantially to the value of the product.
❑ A resale price margin is more accurate where it is realized within a short time of the reseller’s
purchase of the goods.
ALP Calculation Using RPM
• The price so • The price

• The price at arrived is
which property arrived is
further taken as
purchased or reduced by the
services ALP.
• Such resale price expenses • The price so
obtained from incurred by arrived at is
an enterprise is reduced by
the enterprise adjusted to take
from its Related the amount of a into account the
normal gross in connection
Party is resold with the functional and
or are provided profit margin other
accruing to the purchase and differences,
to an unrelated obtaining of
enterprise is enterprises or to which could
an unrelated services. materially affect
identified.
enterprises from the amount of
the purchase gross margin in
the open
and resale of market.
similar property.
Practical Example of RPM
Taxpayer
(Parent)
UAE
Purchase of Cell Sale of Cell Phones

Phones
Outside UAE Same Business
Related Party
Third Party
(Subsidiary)

Cost Plus Method (CPM)
OECD Guidelines on CPM

❑ CPM is probably most useful method where semi finished goods are sold between associated
parties or where the controlled transaction is the provision of services.
❑ Under CPM, costs incurred by the supplier of property (or services) to its AE is identified and
an appropriate cost-plus mark up earned under similar market conditions and functions
performed by independent enterprises is added to such costs.
❑ The resultant outcome will be treated as ALP of the controlled transaction.
Practical Example of CPM
Independent Purchases Raw Material Arm’s Length Assume no

@ 100 AED ABC LLC Related party
Enterprise A Price? Functional
Difference
Independent Independent s noted.
Purchases Raw Material PQR LLC Price 150 AED
Enterprise B Enterprise C
@ 100 AED
Steps To Compute Arm’s Length Price
Step 1. Computation of PQR LLC’s Cost plus markup Step 2. Computation of Arm’s length price at which ABC LLC can
transact with its Related party
Particulars Amount Particulars Amount
Sales (A) 150 AED Cost of Raw Material 100 AED
Cost of Raw Material (B) 100 AED

Add: Profit (%) 50%
Profit (A) - (B) 50 AED
Arm’s length price 150 AED
Profit (%) 50%

Profit Split Method (PSM) – 1/3
❑ Profit Split Method (PSM) is a transfer pricing method that is used to determine the appropriate
allocation of profits between related parties engaged in a joint venture or other collaborative
arrangement.
❑ PSM is typically used when the controlled transaction involves the creation of unique or valuable
intangible property or when both parties contribute significant value to the transaction.
❑ One of the profit based method (like TNMM) which is suitable in cases where the traditional
methods (CUP/RPM/CPM) prove inappropriate due to a lack of comparable transactions.
❑ Not used very often due to perceived high degree of subjectivity and this method may be exposed
to risks of litigation.
❑ Due to the increased integration of MNEs and the globalization of national economies , the
clarification of the PSM was one of the priorities identified in the Action Plan 10 against Base
Erosion and Profit Shifting (BEPS).
Two-sided Functional
analysis/Supply Chain
Analysis/Value Chain
Analysis is performed to
accurately delineate the
transaction
Yes
Comparables
found/benchmarked?
No
Unique and Shared

Highly
value And/ And/ assumption of
integrated None of these
contributions or or economically
business are applicable
by parties significant
operations
risks
Yes Yes Yes Yes
PSM unlikely to be the most

PSM may be the most appropriate method
appropriate method
ALP Calculation Using PSM

PSM determined to be the most
appropriate method
Combined Residual analysis

profits/(losses)
Initial remuneration
Residual profits/(losses) TNMM/CUP/ any

Contribution analysis
other TP method
Identify key value-driver(s) and weightings for

splitting factors
Practical Example of PSM
Taxpayer performs R&D activities and deliver the

formula for the further development to
Taxpayer manufacturing entity. Related Party
(R&D Entity) (Manufacturing Entity)
Manufacturing entity performs further

functions, prepare finished product and
sell to third parties.
Third Parties
Observation and Analysis

The profits earned from the sale of products is splits between the related parties on the basis of
the risk capability or their contribution to the development of the product as both companies are
engaged in development of the product.
Residual Profit Method

Profit Split Method (PSM) – 3/3
Head count of employees performing key

functions
People
Remuneration of employees performing
key functions
Marketing costs
Brand development expenses
Costs/ Research & Development expenses

investments
Costs of goods sold
Operating expenses
Indicative
Turnover/Revenue
splitting factors Sales/
Volume
Volume of trades
Value of key business assets (including

intangibles)
Assets under management
Assets
Royalty rates
Franchise agreements
Weighting assigned on the basis of

function analysis
Other Hedge fund model
External benchmarks

Transaction Net Margin Method (TNMM)
OECD Guidelines on TNMM Method

❑ TNMM is unlikely to be reliable if each party to a transaction makes valuable, unique
contributions.
❑ Under TNMM a functional analysis of the controlled and uncontrolled transactions is required to
determine whether the transactions are comparable and what adjustments may be necessary to
obtain reliable results.
❑ Comparables should be selected based on their functional and risk profile, as well as their
industry and geographic location
❑ Documentation should include a detailed functional analysis, a description of the comparables
selected, and an explanation of any adjustments made to the comparables.
Calculation of ALP Under TNMM
Performing a functional analysis
Identify the tested party
Identify the comparables
Choosing a profit measure – PLI
Determining the appropriate time period for analysis
Compute Net Margin of comparables and Tested Party
Determine the ALP
Selection of Tested Party
Least Complex Functions

Selection of Tested party
Entity shall not hold any Intellectual

property in its own name
Assumes less risk in comparison to the

other entity
Availability of reliable data
Ability to make reliable adjustments

Other Method
OECD Guidelines on Other Method
❑ The OECD Guidelines also permit the use of any other method and state that the taxpayer
retain the freedom to apply methods not described in OECD Guidelines to establish prices,
provided those prices satisfy the arm’s length principle.
❑ The Other Method involves determining the residual profit or loss that remains after all other
relevant factors, such as the functions performed, risks assumed, and assets employed, have
been appropriately compensated.
❑ The residual profit or loss is then allocated between the parties based on the relative
contributions of each party to the creation or enhancement of the intangible property.
❑ The OECD Guidelines caution that the Other Method should be used with caution, as it can be
difficult to apply and requires a high degree of judgment.
Comparability factors to be considered while selecting Other Method:
01 02 03 04 05 06 07 08
Quotation ARR used Cost Royalty rates Royalty

Valuation Tender/Bid Stock
from for Inter allocation approved by Rates as
Report Documents exchanges
Third company /apportio the per Govt
Party Borrowing nment Government guidelin
bodies/ es
authorities

Types of Profit Level Indicators
There are no. of ratios/Profit Level Indicators (PLI’s) which are widely used for the purpose of
comparison of profitability of controlled and uncontrolled transactions.
TNMM – PLI’s
Operating profit/
Operating Profit/ Operating Profit/ Operating profit / Operating profit /
Operating Operating profit /
Operating Cost Value Addition Operating Assets Capital Employed
Revenue (Net PBDIT (Cash PLI)
(Cost plus margin) (Berry ratio) (ROA) (ROCE)
operating margin)
Profit Level Indicators (PLIs) are financial Factors to consider include but are
ratios that measure the relationship
between profits and costs incurred or not limited to in determining the
resources employed. PLI:
• characterization of business;
• availability of comparable
The use of an appropriate PLI ensures data; and

better accuracy in the determination of the • the extent to which the PLI is
arm’s length price of a related party
transaction. likely to produce a reliable
measure of arm’s length
profit.
The Resale Price Method (RPM), Cost Plus

Method (CPM) and Transactional Net
Margin Method (TNMM) are the transfer
pricing methods that use PLI to determine
whether the related party transaction
involved is carried out at arm’s length.
Types of PLI
TP Method PLI Formula

RPM Gross margin GP/ sales
Gross cost-plus
CPM GP/ direct & indirect cost of production
margin
TNMM Cost plus Markup Operating Profit/Operating Cost
TNMM Net profit margin Operating Profit/Operating Revenue
TNMM Berry ratio Operating Profit/ Value Addition
TNMM Cash PLI Operating profit/PBDIT

Selection of Tested Party
Which party should be taken as tested party, the Taxable Person or the Related Party?
OECD has defined in detail the concept of Practical

Practical approach
approach
OECD has defined in detail the concept of Entrepreneurs are are
Entrepreneurs generally not not
generally considered as
considered
tested party in its guidelines for Multinational
tested party in its guidelines for Multinational “tested party”party”
as “tested on onaccount of of
account their
theircomplex
complex
Enterprises and Tax Administration.
Enterprises and Tax Administration. functional and risk profiles which results in
The OECD Guidelines defines ‘tested party’ as functional and risk profiles which results in
The OECD Guidelines defines ‘tested party’ as vulnerable profits margins making comparability
“the one totowhich vulnerable profits margins making
“the one whichaatransfer pricingmethod
transfer pricing method can
analysis a difficult proposition.
becan
applied in theinmost reliable manner and for comparability analysis a difficult proposition.
be applied the most reliable manner
which
and the most the
for which reliable
most comparable can be
reliable comparable Intermittently, entrepreneurs which carries out
found, i.e.found,
can be it willi.e.
most often
it will mostbe the be
often one that
the onehas Intermittently, entrepreneurs which carries
significant entrepreneurial activities and bears
thethat
lesshas the lessfunctional
complex complex functional analysis.”
analysis.” out significant
significant entrepreneurial
risks associated activitiescan
with such activities and
A ATested
Tested party
party should
should have
have the
thefollowing
following bebears significant
chosen as testedrisks associated
party with such
on the basis of
attributes on bases of these definitions:
attributes on bases of these definitions: activities can
entrepreneur be chosen
bearing as tested
normal business party on
risks.
▪ Available of reliable and accurate data for the basis of entrepreneur bearing normal
▪ Available of reliable and accurate data for
comparison Acceptance
business of foreign entity as a tested party is
risks.
comparison
▪ Least Complex (amongst the parties to not a matter of convenience and the onus is on
▪ Least Complex (amongst the parties to the
the transaction) taxpayer to substantiate its choice of tested party
Acceptance of foreign entity as a tested party
▪ transaction)
Data available can be used with minimal with robust documentation.
▪ Data available can be used with minimal is not a matter of convenience and the onus
adjustments
adjustments is on taxpayer to substantiate its choice of
tested party with robust documentation.

Multiple Year Vs Single Year Data
Use of Multiple Year Data Vs Single Year Data
MULTIPLE YEAR DATA SINGLE YEAR DATA
• Advantages: • Advantages:
Identify trends and patterns: This can Relevance: More relevant to the current
provide a more comprehensive year's transactions and can provide a
understanding of the market and help in better reflection of the current market
determining arm's length prices. conditions.
Increased reliability: It can help to smooth Easy to identify relevant factors: Easier
out any year-to-year fluctuations in the to isolate the specific factors that are
data. driving the pricing, as there is less data
to analyze.
• Disadvantages:
Limited relevance: In some cases, data • Disadvantages:
from multiple years may not be relevant Increased volatility: Subject to volatility,
to the current year's transactions. particularly if there are year-to-year
Difficulty in identifying relevant factors: fluctuations in the data.
Using data from multiple years can make Limited perspective: Single year data
it more challenging to isolate the specific may not provide a comprehensive
factors that are driving the pricing. understanding of the market,
particularly if the market conditions
have been relatively stable over time.

Filters for Selection of Comparables
Basic Filters Quantitative filter Qualitative filter
Data Availability Year End Functions
Different Financial
Data Availability Research & Development
Year End
Month Turnover Intangibles / Royalty
Turnover Net Worth Mergers and Acquisitions
Net worth Exports Insufficient Information
Persistent Losses Core Operations Functionally Dissimilar
RPT Related Party Transactions (RPT)
FAR Persistent Losses
Onsite Vs Offshore Revenue filter
Management Consultancy
Employee cost filter
Industrial sales
Types of Economic Adjustments

❑ Working Capital Adjustment
❑ Risk Adjustment
❑ Depreciation Adjustment
❑ Capacity Utilization Adjustment
❑ Forex Adjustment

UAE Transfer Pricing Compliances (1/2)
Disclosure Form
Taxpayers have to file TP To be filed along
Article – 55 with Tax Return
(1) Disclosure Form (Form contents
and conditions for applicability are in the
yet to be prescribed) Prescribed Form
Taxpayer Federal Tax
Authority
Local File, Master File and

Article
Supporting documentation To be filed
55 (2), (3) &
Taxpayers have to prepare and upon request
(4)
maintain Local File and Master by FTA within
30 days Federal Tax
File along with supporting
Authority
Taxpayer documentation (to be filed upon
(FTA)
request)
Transfer pricing
Related Party Connected Person
documentation Maintain File
Transactions Payments
requirement
Disclosure Form ✓ ✓ ✓
Local File ✓ ✓ ✓
BEPS Action 13
Master File ✓ ✓ ✓
CbCR ✓

Disclosure Form
Disclosure Form - Indicative Check Points for Disclosure Form

Contents
Report absolute numbers in the disclosure form prepared
• Details of Related Parties/
Connected Persons
• Details of Related Party Mention full legal names of the related parties/
Transactions (Nature,
Volumes etc.) connected persons
• Brief Transfer Pricing

Analysis Mention appropriate relation between related
party/ connected persons
Mention appropriate description of transactions

reported in the disclosure form
Appropriate TP method should be selected for the

reported transaction
File disclosure form within the appropriate time line
Report the transactions under appropriate clause or

section in the disclosure form as will be prescribed by FTA

Local File
#
Inclusions and Exclusions In Local File Documentation
Related Party/Connected Person Transactions and Arrangements with all the following shall be
included in the Local File Documentation:
Inclusions Exclusions
• Non-Resident Person • Resident Persons other than those

specifically included.
• Exempt Person
• Natural Persons if acting
• Resident Person claiming Small independent of each other
Business Relief
• Juridical Person being a Partner in an
• Resident Person subject to different Unincorporated Partnership if acting
Corporate Tax Rate (non tax neutral) independent of each other
• Permanent Establishment of a Non-

Resident Person subject to same
Corporate Tax Rate
Parties will be treated as acting independent of each other if:

• Transaction is undertaken in ordinary course of business AND
• Parties are not exclusively or almost exclusively transacting with each other
Parties will NOT be treated as acting independent of each other if one person in a transaction is
subject to:
• Detailed instructions by other person OR
• Comprehensive control by other person
Check Points for Local File/ TP Documentation
Read the intercompany agreement before drafting the functions and risks
Reconfirm executive summary with economic analysis and financial results
Ensure that full forms of all the abbreviations used are defined
Compute the results of the tested party with numbers in the signed financials
Financial results should tally with signed financials/ segment provided by client
Cross check the value of transactions with Disclosure Form
Backup should be maintained for the transactions benchmarked in the TP Doc with invoices, related
party ledgers and any other supporting document
Search process backup should be maintained
If company have more than one segment keep back up for the segmental allocation keys
Master File
Contents for Master File as per OECD Guidelines
Contents Information to be included in Master File
Organisational • Chart illustrating the MNE group’s ownership structure & geographical
structure location of operating entities.
• Important drivers of business profit
• Supply chain for the group’s five largest products/ services offerings by
turnover
Description of MNE
• Important service arrangements between members of the MNE group, other
group’s
than R&D services
business(es)
• Main geographic markets for the group’s products and services
• Functional, Assets & Risk Analysis of principal contributions to value creation
within the group
• Important business restructuring transactions, acquisitions and
divestitures occurring during the fiscal year
• MNE group’s overall strategy for the development, ownership and
exploitation of intangibles
• List of important intangibles of MNE group
MNE group’s intangibles
• Important agreements related to intangibles, including cost
contribution arrangements, principal research service agreements
and license agreements
• Group’s transfer pricing policies related to R&D and intangibles
• Important transfers of intangibles during the fiscal year
• Description of how the MNE group is financed, including important
MNE group’s financing arrangements with
intercompany unrelated lenders.
financial activities • Identification of members of MNE group providing central financing function
for the group
• Group’s transfer pricing policies related to intra-group financing
arrangements
• MNE group’s annual consolidated financial statement for the fiscal year
MNE group’s • MNE group’s existing unilateral advance pricing agreements (APAs) and
financial and tax other tax rulings relating to the allocation of income among jurisdictions
positions

Master File - Checkpoints
1 Group Structure/Chart has to be appropriately presented by including

only those entities that qualify as constituent entities.
2
Group’s business overview, important profit drivers and supply chain
are to be thoroughly reviewed from a 360 degree perspective to
mitigate/avoid any tax litigation due to BEPS tax risks
3
Business restructuring transactions, acquisitions and transfer of any
intangibles reported in Master File should have been appropriately
benchmarked and reported in the Local file of contracting group
entities.
4 FAR analysis of constituent entities provided in the Master File has

to be aligned with the Local Files of respective entities.
5
Financial Transactions, Intangibles/R&D and Important Service
Arrangements disclosed in the Master File have to be back-up by Group
TP Policy, Intercompany agreement, TP benchmarking analysis and
relevant supporting documentation.
6 Ensure disclosing only relevant & appropriate information and avoid

disclosure of unwarranted/ too much information.
7 Confidentiality aspect is of prime importance while preparing/filing the

Master File.

Country-by-Country Report
Table 1: Information included in CbCR for each tax jurisdiction
Revenues (Performed Related & Unrelated Party)
Profit/ (Loss) before Income Tax
Income Tax Paid (on Cash Basis)
Income Tax Accrued – Current Year
Stated Capital
Accumulated Earnings
Number of Employees
Table 2: Information included in CbCR for each tax jurisdiction
Tax Jurisdiction
Tax Jurisdiction
Constituent Entities Resident in the Tax Jurisdiction
Tax Jurisdiction of Organisation or Incorporation if Different from Tax

Tax Jurisdiction of Organisation or Incorporation if Different from Tax
Jurisdiction of Residence
Jurisdiction of Residence
Main Business Activity (ies)
1. Research & 5. Sales, Marketing or 9. Regulated Financial

Development distribution Services
2. Holding or managing 6. Administrative, 10. Insurance, Holding
intellectual property Management and shares
Support Services
3. Purchasing or 7. Provision of services 11. Dormant and others
procurement to unrelated parties
4. Manufacturing or 8. Internal Group
production Finance

Country-by-Country Report -
Checkpoints
CbCR Table 1 – Checkpoints CbCR Table 2 – Checkpoints
• Information to be reported on an aggregated • All the constituent entities to be listed tax

basis and not a consolidated basis within a jurisdiction wise
jurisdiction
• In case jurisdiction of incorporation is different
• Whole amounts should be reported. No than the tax residence jurisdiction, jurisdiction
rounding off in thousands, millions, etc. of incorporation to be reported
• Revenues should include extraordinary • Main business activities performed by
income and gain from investment activity, but
exclude dividends from other constituent each constituent entity to be indicated
entities. • In case the activity selected is ‘Other’,
• Related parties mean the constituent short description to be provided.
entities of the MNE Group • Two additional columns -‘TIN’ and ‘Address’
• Income tax accrued includes current year taxes mandatorily required as per OECD xml
accrued, whereas income tax paid includes any schema, but not included in Action 13
taxes paid during the year (advance tax, WHT, report
prior year taxes arising from dispute, taxes
paid under protest, etc.). Tax refunds should be
reduced from tax paid. If refunds included as
revenue, a note should be included in Table 3
• For PEs, stated capital and accumulated
earnings to be reported under legal entity and
not PE
• Employees should be reported as of year- end
on Full Time Equivalent basis. Independent
contractors may be included
CbCR Table 3 – Additional

Information Checkpoints
• Data source
• Reporting periods of constituent entities, if
different from Group reporting year
• If tax refunds included in ‘revenue’ instead of
deduction from ‘income tax paid’
• Description of ‘Other’ activities selected in Table
2
• Whether any part year information is included
(In case of mergers /demergers)
• Reasons in case Tax ID numbers of
certain entities are not available
• Assumptions made with respect to
computation of FTE employees
• If accumulated earnings include negative
figures
• Exchange Rates
• Explanations about any inconsistencies
on a year-on-year basis

Common Transfer Pricing Litigation
Issues
Common Transfer Pricing litigation issues
• Intra-Group Services (IGS)/Cost • Comparability analysis (functional

Contribution Arrangements (Need- dissimilarity, fluctuations in margins,
benefit-evidence test, Commercial lack of segmental information, extra-
expediency, Shareholder activity, ordinary activities during the year, loss
duplication, Cost pooling & allocations, marking companies, Product Vs Service
benchmarking, profit sharing companies, High end Vs Low end etc.)
allegation)
• Royalty payments (Need-benefit- • Group losses and test party losses
evidence test, benchmarking, profit situation
sharing allegation)
• Marketing Intangibles, DEMPE Functions, • Profits attribution to PE

AMP Expenses
• Selection of most appropriate TP • Use of CbCR information for Tax/BEPS

method (CUP Vs TNMM, RPM Vs TNMM, assessment
TPSM Vs TNMM)
• Business Restructurings • Hybrid Instruments (CCD/FCCD/OFCD) -

Debt to Equity Re-characterisation
• Selection of Foreign Tested Party • Corporate Guarantee
• Thin Capitalisation/ Interest • Secondary adjustments and

deduction limitation Corresponding adjustments
• Aggregation (Entity level) Vs Segregation • Re-characterisation based on FAR (High

(Transaction level) approach for end to low end, limited to full fledged)
benchmarking
• Search Process to be followed for TP • Economic adjustments (Working Capital

benchmarking analysis (Filters/Screens, adjustment, Risk adjustment, Forex
Single Year/Multiple Year information, adjustment, Cash PLI/Depreciation
Profit Level Indicator, Operating & Non- adjustment, Capacity Utilisation
operating items for PLI computation) adjustment)
• Internal Vs External Comparable • Share transfers – Valuation issues

Companies
• Location Savings • Deemed Related Party Transactions
• Intercompany balance receivables • Legal entity rationalisation
• Value Chain Analysis • Pass thru costs /Berry Ratio

Advance Pricing Agreement
Advance Pricing Agreement (APA) – Introduced
❑ Alternative Dispute Resolution Mechanism to obtain TP certainty on existing/

proposed inter-company transactions.
❑ UAE CT Law incorporates APA regime like other jurisdictions
❑ APA application process and the manner of APA site visit, re-negotiation and signing
is to be prescribed by FTA.
Receipt of Site visit by Further

information APA team information
request from request based
APA team on site visit
Filing of main Negotiations/m

APA 04 eetings with
application 03 05 APA team
02 06
Release of draft
Pre-filing APA agreement
consultation Illustrative and formal
with APA team 01 APA Process 07 singing by
parties

Comparative analysis of TP Regulations
of India & GCC countries (1/2)
India UAE Saudi Arabia Qatar Bahrain Kuwait Oman
• In line with
• In line with • In line with
OECD
OECD • In line with OECD
TP OECD
• Federal • No TP • No TP • No TP
Coverage & • TP Regulations • Executive TP law law law
Regulations in Chapter X,
Decree • TP Bylaws - Regulations -
Law - 9th Feb 2019
2002 Dec 2019
Dec 2022
Arabic
Mandatory English or Arabic or Arabic or
English NA NA or
Language Arabic English English
English
• CUP,RPM,CPM • CUP,RPM, • CUP,RPM, • Only CUP

TP Methods ,PSM,TNMM & CPM,PSM, CPM, PSM, Method can
& ALP Other method TNMM & TNMM & be used, NA NA NA
Range under Rule Other Other others require
10AB method method approval
• International
transactions >
INR 1Cr or SDT
> INR 20 Cr
Local file / • Maintained
TP Study before 31st
October. NA NA NA
- Threshold
- Due date • Filed within 10
days upon
request by • Revenue • Transaction
authority (max • Revenue
> AED 200 > SAR 6
30 days) > QAR 50
Million Million
Million
• Consolidated • Within 30 • Within 30
Group • Prepared
days upon days upon
Revenue > before 30th
request by request by
INR 500 Cr & June
authority authority
International
Master File Transactions
- Threshold >INR 50 Cr or
NA NA NA
- Due date Purchase, sale
or lease of
Intangibles
> INR 10 Cr
• 30th
November

Comparative analysis of TP Regulations
of India & GCC countries (2/2)
Saudi
India UAE Qatar Bahrain Kuwait Oman
Arabia
• Group
• Group • Group • Group • Group
revenue
• Group revenue > revenue revenue >
> BHD
revenue >
revenue > AED 3.15 > SAR QAR 3 OMR 300
342
CbCR INR 6400 Cr billion 3.2 billion billion Million
Million
- Threshold • 12 months • 12 months • 12 months • 12 months NA • 12 months
- Due date • 12
from the end from the end from the from the from the
months
of of end of end of end of
from the
accounting accounting accountin accountin accountin
end of
year year g year g year g year
accounti
n g year
• Disclosur • TP
e form declarations
• Disclosure regarding - if total
• Form No. form RPT revenue or
Disclosure 3CEB (CA regarding Transacti the total
Form to be Certificate) to RPT o ns & CA value of NA NA NA
filed & due be filed transaction Certificate assets is >
date before 31st s within 120 or = QAR
October days after 10 million to
• Filed along
with ITR the fiscal be filed with
year ITR
• INR 1,00,000
(Form
Penalties 3CEB) AED 1 million Non-
- Disclosur Non-
e Form • 2% of RPT + 10,000 per disclosure of
disclosure of Upto
(TP Study) day upto information BHD NA NA
- TP Study information -
AED 250,000 – penalty of 100,000
- Master File • INR 5,00,000 QAR
(CbCR) 25% (CbCR)
- CbCR (Master File) 500,000
• 5000 per day
(CbCR)
Dispute
Has MAP
Prevention
Has SHR, APA regime regime in
& MAP regime
APA & MAP is introduced line with Not yet specified
Resolution is
regimes (Article 59) Action
mechanism introduced
Plan 14
- APA & SHR
- MAP

SBC Transfer Pricing
Credentials

SBC Tax Consulting LLC
SBC Tax Consulting LLC (SBC) is a niche tax consulting firm specializing in transfer pricing,
structuring, international tax, BEPS, and corporate tax advisory services for clients in diverse
industries specifically in the Middle East and worldwide. We are renowned experts in our field,
providing holistic solutions that address complex tax challenges from legal, regulatory, and business
perspectives.
Our team comprises experienced professionals, including former Big 4 professionals, with the
necessary expertise, scale, and multidisciplinary capabilities to understand the dynamics and
complexities of any business. We take a hands-on approach and leverage best practices drawn from
our collective experience to deliver bespoke tax solutions that factor in a 360-degree view of
multinational enterprises' (MNEs) tax positions. Our core objective is to provide you with robust,
consistent, and sustainable transfer pricing and corporate tax solutions that meet your business
needs.
At SBC, we believe that our local connections and expertise, combined with our global outlook and
capabilities, enable us to provide scalable, sustainable solutions that comply with both local and
global corporate tax (CT) and transfer pricing (TP) regulations. We are committed to delivering
unparalleled service and value to our clients, and our niche focus sets us apart from other
professional services providers.
SBC's regional office is based in Dubai, catering to the Middle East region and GCC, and also has a
presence across India and the US, with a current team of over 250 people.
Our Transfer Pricing Offerings
Transfer Pricing Structuring

Advisory and Implementation
Support
Transfer Pricing Benchmarking

Analyses and Documentations
Transfer Pricing
Compliance Support

Our USP on Transfer Pricing Front
Global Transfer Pricing Centre
• Region and transaction specific specialized teams with expert senior level involvement
for key decision making
• Robust and consistent transfer pricing solutions that are sustainable and scalable
• Practical solutions factoring business objectives, compliance requirements and
litigation defense standpoint
• Cost effective and high quality transfer pricing services
Global Transfer Pricing Offerings
• Country wise Local Filing and Transfer Pricing Documentation support

• Group level Master File, CbCR & BEPS compliance support
• Transfer Pricing Advisory – Price Setting, Structuring, Valuations and Supply Chain
Analysis
• Transfer Pricing Litigation Support, APAs, MAPs and Competent Authority Negotiations
Core Transfer Pricing Experts
• Direct hands-on experience in handling complex TP assignments across wide

spectrum of industries
• Leverages on the best practices drawn from the team’s collective experience for
delivering wholistic TP solutions for substantiating MNEs TP positions.
• Being a member of PrimeGlobal Network, SBC has access to global network of TP
professionals sharing experiences and knowledge.
• Network of former Tax Officers, Ex-Regulators, Senior Counsels who share expert
opinions & views for countering aggressive regulatory positions.
64

Our Transfer Pricing Capabilities (1/2)
Transfer Pricing Compliances Transfer Pricing Advisory on:
• Disclosure Form • Transfer Pricing Policy & Price Setting

• Local File • Drafting/Review of Inter-Company
• Master File Agreements
• Country-by-Country Report • Alternative Business and Remuneration
Models that are sustainable
• Global Transfer Pricing Compliance –
Regional/Country comparable studies & • Comparable Studies and Benchmarking
filings adhering to OECD guidelines and analyses
local regulations. (SBC has access to all • Operational Transfer Pricing
major TP databases/software - TP Catalyst, • Group Profit & Effective Tax Planning
S&P Capital IQ, Loan Connector, • Tax efficient structuring of international
Royaltystat, Bloomberg, Prowess, transactions & transaction flows
CapitalineTP, AceTP, Orbis, Osiris, Eikon • Supplementary analyses to strengthen the
etc.) documentation from litigation perspective
• Transfer Pricing Comfort Letters/Memos • Voluntary Transfer Pricing Adjustments
for Statutory Auditors
• Corresponding Adjustments
• FIN 48 Assistance – Quantification &
• Transfer Pricing Health Check-Up to avoid/
Opinion on Transfer Pricing exposure and
mitigate risks
uncertain tax positions
• Transfer Pricing Due Diligence
• Drawing Segmental P&L for Transfer
Pricing Purposes
• Economic adjustments computation – Risk,
Working Capital, Forex, Capacity Utilisation,
Depreciation, Cash PLI adjustments
Complex inter-company transactions - Planning, Implementation & Compliance support for:
• Intangibles – Structuring, Royalty & Licensing rates, Withholding implications, Agreements

• Financial Transactions - Interest rates, Withholding implications, Agreements
• Intra-Group Services, Management Charges, Cost Contribution Arrangements - Charging/mark-up
rates, Agreements, Cost pooling & allocation
• Business Restructurings – Transfer Pricing implications, Agreements & Contracts review
• General Anti Avoidance Rules (GAAR) implications
• Permanent Establishment (PE) Exposure for existing/proposed transactions

Our Transfer Pricing Capabilities (2/2)
Alternate Dispute Avoidance/Resolution

Routes - Advance Pricing Agreement BEPS advisory - Readiness, Implementation,
(APA) and Mutual Agreement Procedure Impact on International Tax Structures
(MAP)
• Cost Benefit Analysis for decision • BEPS Impact Analysis

making • Value Chain Analysis and Management
• Filing of Applications in prescribed • OECD Pillar 1 & 2 – Readiness,
Forms Implementation & Impact
• Representations & Submissions before • Supply Chain Restructuring
FTA and Competent Authorities • Three Tier Documentation support in line
• Application Renewals with Action 13
• APAs – both unilateral & bilateral • IP Structuring /DEMPE analysis in view of
Action 8
• Financial Transactions planning factoring
in Action 4 and 9 and OECD guidelines on
Financial Transactions
• High risk transactions structuring in
coherence with Action 10
• Profit Split Method – applicability,
implementation, splitting factors,
projections, segmentation, planning/price
setting as per BEPS
Valuations for arm’s length Transfer Pricing Litigation Support &

determination for Transfer Pricing Representations before FTA
purposes
• Assets (tangibles & intangibles) transfer • Representations in case of TP

between relation parties audit/scrutiny before the UAE FTA (in due
course)
• Capital/financial transactions (equity,
debt & hybrid instruments, guarantees) • Filing of TP documentation in response to
– issue, sale, buybacks between related requests from the FTA
parties • Filing of TP submissions and supporting TP
• Mergers & Acquisitions transactions – workings & back-up documentation in
selling, buying, combining, response to notices, information requests
restructuring involving related parties from the FTA

Our Step Plan for TP Policy Setting,
Implementation & Compliance Support
Step 1 :
Step 2 : Step 3 : Step 4 :
Data collation and
TP Planning TP Implementation TP Compliance
review
Collation of Undertaken transfer Assist in year-end filing

Invoicing, TP workings, of disclosure form
requested pricing benchmarking
Accounting in line with along with tax return
information analysis and advising on
the TP policy set
the arm's length pricing
Review of transaction Assist in preparation
Maintaining supporting and maintenance of
flows with related Setting of transfer pricing
transfer pricing local file and master file
parties and for transaction flows with
documentation/eviden documentation
connected parties related parties and
ces needed for
connected persons
compliances (invoices, Assist in Country-by-
Review of existing
ledgers, agreements/ country reporting for
pricing policy Finalising the optimal
contracts/back-up very large MNEs
business & corresponding
workings/emails/ wherever applicable
Review of business TP remuneration models
valuation reports/
models and existing after analysing corporate
benchmarking
remuneration models tax, transfer pricing,
studies/VAT & Customs
withholding tax, VAT,
documents etc)
Analysis of Customs and regulatory
comparable implications
uncontrolled
transactions Drafting and finalising of
inter-company agreements

Our Transfer Pricing Credentials (1/2)
Client is an India outbound

Client is a leader in leading Client is one of the largest
global Pharma (Injectables)
Ed Tech start-up infra group.
giant
Transfer Pricing
Trademark and Brand
Documentation from India, Testing arm’s length pricing
royalty benchmarking
Germany, US, Switzerland, of domestic transactions and
analysis and framing a TP
Netherlands and Singapore framing a group TP policy
policy
perspective.
Client is a listed company

Client is a large China based
Client is an APAC leader in and a fast growing group in
Electronics Manufacturer &
Shipping & Logistics Industry Telecommunications
Distributor
Industry
Representation and
Interest rate benchmarking
submissions made before Preparation of Master File
for ECB/intra group loans
the tax authorities on behalf documentation of the Group
and framing a TP policy
of client
Client is a India outbound Client is a list company and a

Client is a Netherlands
global pharma (Vaccines) global leader in Industrial
based leading Technology
giant Products (adhesives &
Group.
abrasives)
Management Charges/Intra-
APA – Prefiling Consultation,
group Services – Setting cost
Filing Main Application,
Group Transfer Pricing Due pooling & allocation
Responses to
Diligence/Health Check mechanism, Group TP policy
questionnaires, Site Visit and
and Need, Benefit, Evidence
Negotiation.
Test documentation

Our Transfer Pricing Credentials (2/2)
Client is leading Tobacco

Client is a leading IT
Manufacturer and Client is a Global Minerals
Company with presence in
Distributor in India and Industrial Manufacturer
APAC and Middle East
Dubai
Transfer Pricing
Documentation for India, Win before Income Tax Mirror TP Reporting and
Saudi and Singapore Appellate Tribunal Documentation
perspective
Client is a listed company Client is a fast growing start-

Client a Indian Aqua and a fast growing Coffee up that provides plug and
Exporter manufacturer and play supply chain financing
distributor to corproates
Transfer Pricing
Indian TP Compliances and Master File documentation benchmarking analysis and
Litigation Support with Wins and local file documentation setting-up TP policy for
before Transfer Pricing in India, Vietnam, Singapore, Shared Services (Technology,
Authorities Brazil and Switzerland Marketing and Business
Support Services)
Client is a largest Indian

Crypto Trading Platform Client is global Energy O&M Client is an Indian Real
provider operator estate gaint.
Management Charges/Intra- Representation Win before

Transfer Pricing litigation
group Services – Transfer Income Tax Appellate
defense documentation
Pricing benchmarking and Tribunal for domestic
support
policy setting transactions

Our Phase Wise Handholding for UAE
Clientele
Phase 1 – TP Structuring and Phase 2 – TP Implementation Phase 3 – TP Compliances

Impact Assessment Support Assistance
• Identify Related Parties & • Reviewing the intercompany • Assist in managing entities &
Connected Persons agreements aligned with RPT group tax compliances under
transactions. single dashboard.
• Analyse related party &
connect person transaction • Determining the ALP for all • Assist in Transfer Pricing
flows related party transactions Compliances (Disclosure
(Manufacturing/Trading/Servi Form, Local File and Master
• Undertake high level TP
ces/Financial File – to the extent
benchmarking analysis and
Transactions/Capital applicable).
recommend arm’s length
Transactions/Intangibles)
prices • Assist in filing CbCR report
• Preparing schedules for (for large MNEs wherever
• Review existing TP policies &
related party and connect applicable)
intercompany agreements
persons transactions for TP
and assist in review and • Assist in undertaking
compliances.
drafting jurisdiction wise/global
• Undertake detailed TP transfer pricing compliances
• Setting of robust TP polices &
benchmarking analysis for UAE outbound groups.
SOPs
(using relevant TP databases
Characterisation of entities • Evaluate possibility of
• specific to transaction, tested
based on Functional, Assets applying for an APA (once
parties & jurisdictions
and Risks (FAR) Analysis APA regime is fully in force)
involved) and issue TP
• Evaluation of Internal and benchmarking reports.
External Comparables • Assist in preparing inter-
• Advising on TP remuneration company
models polices/agreements.
• Advising on supporting TP
documentation to be
maintained for all related
party and connected person
transactions to substantiate
TP & Tax positions
• Advising on TP Compliance
readiness (Disclosure Form,
Local File, Master File and
CbCR to the extent
applicable)
• Guide on Transfer Pricing
Adjustments
• Analysing of inter company
borrowings i.e. Interest rates,
withholding implications.
• Cost pooling and allocation
• Determination of Arm’s
length prices for various
related party transactions

Industry Specific Expertise
At SBC, we understand that different industries have unique tax challenges and requirements.
That's why we offer industry-focused transfer pricing solutions tailored to meet the needs of
businesses operating in specific sectors. Our team of experts has in-depth knowledge and
experience across various industries, allowing us to provide customized and comprehensive
transfer pricing advice and services to clients.
Industry focus and Technology Consumer

key sectors
− IT, ITES, Engineering, − FMCG, Retail, Wholesale,
Electronics, R&D, Deep Distribution, E-Commerce, Gems &
Tech Jewelry, Hospitality Services
Pharma & Healthcare Financial Services
− Pharmaceuticals/Life − Banking, Capital Markets,

Sciences, Heath Care, Insurance, Real Estate, Fintech,
Biotechnology Private Equity
Industrial Media & Telecommunications
− Automobiles, Aviation, − Media, Entertainment, Telecom

Marine, Construction,
Manufacturing
Consulting Energy & Natural Resources
− Legal, Marketing, − Oil & Gas, Power, Chemicals,

Accounting, Architecture, Sustainable/Renewable Energy
Human Resources
Infrastructure Government & Public Services
− Real Estate, Cement, − Transport, Defense, Education,

Metals, Mining Power, Aerospace

Our Key Differentiators
EXPERIENCE
SBC has an experienced
Structuring, Transfer
Pricing & International
Tax, Corporate Tax
team with relevant
subject matter
expertise.
TEAM SIZE RELIANCE

Our team consists of Our team ensures the
over 40 individuals in highest standards of
the UAE, supported by a reliability are
dedicated back-office maintained while
team of 200+ in India. providing services,
These teams are led by instilling confidence in
experienced Service our clients.
Line Partners.
STRINGENT PROCESSES FASTER RESPONSES

WORK AUTOMISATION
We implement stringent Faster responses. Less
We have made a bureaucracy. Direct
substantial investment internal quality interaction. A core
in tax technology and processes that ensure
every stage of the destination for speed,
tools to automate work accuracy, and
processes and provide engagement lifecycle responsiveness,
efficient client solutions. undergoes rigorous
quality measures. surpassing some big
firms.
MULTI INDUSTRY
EXPERIENCE COST BENEFIT BIG4 ALUMNI
Our team, consisting of As Big 4 alumni, our
Our team possesses team brings direct
extensive cross-industry experienced
professionals from Big 4 hands-on experience in
experience and handling complex
credentials in firms, provides the
same level of expertise assignments. We
Structuring, Transfer leverage the best
Pricing and Corporate at a reasonable cost.
practices drawn from
Taxation. our collective
experience.
PERSONAL ATTENTION SECURITY AND DATA
We provide personal
attention by assigning a STORAGE
dedicated Single Point We have sophisticated
of Contact (SPOC) to IT infrastructure and
each client. security systems in
place to ensure secure
data storage and
maintain confidentiality.
UAE & GLOBAL

PRESENCE
SBC has a global
presence with offices in
the UAE, USA, and India.

Reach our Experts
If you have any questions or need expert advice on transfer pricing, feel free to reach out to us
at [email protected]
Our team of experienced transfer pricing professionals is here to provide you with the
guidance and support you need to navigate complex transfer pricing regulations and optimize
your transfer pricing position. We pride ourselves on providing timely, accurate, and tailored
solutions to our clients, and we look forward to hearing from you. So don't hesitate to get in
touch with us today.
CA Mithilesh Reddy CA Balaram Vuchidi CA Naveenkumar Kabraa Nilesh Patel – CPA CA Praneeth Narahari CA Rishabh Agarwal
(USA), IRS
Senior Partner – UAE Practice Lead UAE Practice Lead Partner – Global Partner – BEPS &
[email protected] [email protected] Senior Advisor – Tax
Transfer Pricing Transfer Pricing International Taxation
[email protected] +971 50 986 6466 +971 55 579 3578 & Transfer Pricing [email protected] [email protected]
+91 95531 11131 [email protected]
Our Core Competencies
Global Transfer Tailored

Pricing Centre Industry-specific
with access to
Expertise
Global Transfer
Pricing Robust,
Databases Consistent,
Big4 Alumni
Core Tax Sustainable, and Deep talent pool in
& Transfer Pricing Scalable Tax & the UAE and other
Experts Transfer Pricing international offices
Solutions of SBC

Thank You
SBC Tax Consulting LLC
Structuring | Transfer Pricing | Corporate Tax
About SBC
SBC refers to one or more of SBC Tax Consulting
LLC (License No. 1164292), a UAE based Limited
Liability Company, and its network of member
firms, branches and affiliates. With local connect
and expertise put together with global outlook
and capabilities, SBC provides structuring,
transfer pricing, international tax and corporate
tax advisory services to clients within and beyond
borders spanning multiple industries.
UAE | India | US
[email protected] sbcllc.ae sbc-uae
Disclaimer: This material and the information

contained herein prepared by SBC Tax Consulting
LLC is intended for clients to provide updates and
is not an exhaustive treatment of such subject.
We are not, by means of this material, rendering
any professional advice or services. It should not
be relied upon as the sole basis for any decision
which may affect you or your business. This
update provides certain general information as
well as specific information with respect to SBC
Tax Consulting LLC. This update should neither be
regarded as comprehensive not sufficient for the
purposes of any decision-making.

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Transfer Pricing Rules Decoding

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Decoding the UAE

Decoding the UAE Transfer Pricing Rules

Decoding the UAE Transfer Pricing Rules

Decoding the UAE Transfer Pricing Rules

Decoding the UAE Transfer Pricing Rules

Decoding the UAE Transfer Pricing Rules

Article 34 – Arm’s Length Principle

Article 36 – Payments to Connected Persons

Article 55(4) – Transfer Pricing Documentation

Government Entity (Article 5):

Government Controlled Entity (Article 6):

Extractive Business (Article 7):

Non-Extractive Natural Resource Business (Article 8):

Applicability of Transfer Pricing for Investment Manager Exemption

❑ Calculation of Taxable Income:

General Anti-Abuse Rule - GAAR (Article 50)

Decoding the UAE Transfer Pricing Rules

Decoding the UAE Transfer Pricing Rules

Article 34 Article 35 Article 36 Article 55

“Arm’s Length Principle”

Examples Transaction Based Profit based

Unrelated party Related party (A) P&L of Related Party (A) In

Sale of finished product to 100

Unrelated party Related party (B) Net Profit 10

To arrive at the ALP for Sale of product

We can look for net profit earned

RPs: Natural person[Article 35 1(a)]

Related within the 4th degree of kinship* or

RPs: Natural person and Juridical Person[Article 35 1(b)]

i) NP or ≥ 1 RP of NP are shareholders in JP, and

*Generally, a first-degree, second-degree, third-degree, or fourth-degree kinship or relative of the individual

Any Person, alone or together with its RP,

E. > 2 Persons that are partners in the same

F. A person who is trustee, founder, settlor or

d. To determine, Article 35(2) –

Receives > 50%

Connected Persons for UAE CT & TP Purposes

Ownership /Control An individual who directly or indirectly has an

Director / Officer A director or officer of the taxable person

Partnership Where the taxable person is a partner in an

Related Party A Related Party of any of the Related Parties

Payments or benefits by businesses to Connected Persons will be Tax Deductible

Decoding the UAE Transfer Pricing Rules

- 36 2(a) An owner of the Taxable Person

36 2(b) A Director or Officer of the

36 2(c) A Related Party of any of the Persons referred to

36 (4) - Where the Taxable Person is a partner in an

Nature and Functions

• Economically significant functions are to be

• Identifying significant assets that are used by or

• Identification of economically significant risks

Decoding the UAE Transfer Pricing Rules

Limited Risk Fully Fledged

Distributor Agent: Fully Fledged Distributor:

Service • Provision of low value • Provision of high value adding or core

Most Appropriate Method

❑ The contractual terms of the transaction or arrangement.

Selection of MAM – Factors to be considered

Availability, coverage Degree of comparability