Transfer Pricing

Transfer Pricing is an important part of UAE Corporate Tax compliance for businesses that transact with Related Parties or Connected Persons. Transactions may involve management fees, goods, services, loans, royalties, rent, shared costs, financing arrangements, or payments involving owners, directors, and other Connected Persons.

Eighty20 provides practical Transfer Pricing services in the UAE for local companies, international groups, Free Zone businesses, family-owned companies, and growing corporate structures.

We help identify controlled transactions, assess whether pricing is commercially supportable, review documentation, prepare Transfer Pricing schedules, support disclosures, and improve Corporate Tax filing readiness.

What Is Transfer Pricing?

Transfer Pricing refers to the pricing and conditions applied to transactions between Related Parties or Connected Persons.

Under UAE Corporate Tax rules, these transactions must follow the arm’s length principle. This means the transaction should reflect conditions that would reasonably have been agreed between independent parties in comparable circumstances.

Examples may include:

• Services provided between group companies
• Goods sold between related entities
• Management and administration fees
• Intercompany loans
• Royalties and intellectual property charges
• Rental arrangements
• Guarantees
• Cost-sharing arrangements
• Shared employee costs
• Payments to owners, directors, or officers

The commercial relationship between the parties should not distort the pricing outcome.

Who Needs Transfer Pricing Support?

Transfer Pricing support may be relevant to any UAE business that enters into transactions or arrangements with Related Parties or Connected Persons.

This may include:

• Groups with UAE and overseas companies
• Businesses operating through several UAE entities
• Mainland and Free Zone group structures
• Family-owned businesses
• Holding companies
• International groups with UAE subsidiaries
• Businesses paying management or consultancy fees to related entities
• Companies with related-party loans
• Businesses sharing employees or operating costs
• Groups charging royalties or licence fees
• Trading businesses buying or selling goods between related companies
• Companies making payments to owners, directors, or officers

A transaction does not need to be international to fall within the UAE Transfer Pricing rules.

Who Is a Related Party?

A Related Party can include a person or entity connected through ownership, control, family relationships, or specified business relationships.

For companies, the definition can include entities where there is a controlling ownership interest or sufficient common ownership.

The FTA notes that Related Party status commonly involves controlling ownership of 50% or more, although the full legal definition and control tests should be considered for each structure.

Because group structures can be complex, Related Party identification should be completed before controlled transactions are mapped.

Who Is a Connected Person?

Connected Persons are treated separately from Related Parties under UAE Corporate Tax.

A Connected Person can include:

• An owner of the business
• A director or officer
• A Related Party of an owner, director, or officer

Payments or benefits involving Connected Persons may require review to determine whether the amount reflects market value and whether the deduction is supportable under the Corporate Tax rules.

Common Transfer Pricing Transactions

Transfer Pricing can apply to routine business transactions, not only complex multinational arrangements.

Common examples include:

Transaction Type	Typical Transfer Pricing Issue
Management fees	Whether genuine services were provided and the fee is commercially supportable
Intercompany services	Whether the service benefits the recipient and the pricing method is reasonable
Goods and inventory	Whether prices or margins reflect market conditions
Intercompany loans	Whether interest, term, credit risk, and other conditions are arm’s length
Royalties	Whether the charge reflects the value of intellectual property used
Rent	Whether rental terms reflect market conditions
Guarantees	Whether a benefit exists and an appropriate fee should be considered
Shared costs	Whether costs are allocated using a reasonable and supportable basis
Employee recharges	Whether salary and employment-related costs are allocated correctly
Connected Person payments	Whether compensation reflects genuine services and market value

What Is the Arm’s Length Principle?

The arm’s length principle requires Related Parties and Connected Persons to transact on conditions that independent parties would reasonably agree in comparable circumstances.

The relationship between the parties should not determine the economic outcome.

The analysis may consider:

• Nature of the transaction
• Contractual terms
• Functions performed
• Assets used
• Risks assumed
• Market conditions
• Geographic market
• Transaction volume
• Creditworthiness
• Business strategy
• Comparable transactions

The FTA can assess whether the result of a controlled transaction is consistent with an arm’s length outcome.

UAE Transfer Pricing Methods

UAE Transfer Pricing rules recognise internationally accepted methodologies consistent with the OECD Transfer Pricing framework.

Comparable Uncontrolled Price Method

The Comparable Uncontrolled Price Method compares the price charged in a controlled transaction with the price charged in a comparable transaction between independent parties.

It may use internal or external comparable transactions.

This method can provide strong evidence where sufficiently comparable transactions exist.

Resale Price Method

The Resale Price Method generally begins with the resale price charged to an independent customer.

An appropriate resale margin is then considered to determine the arm’s length purchase price.

This method may be relevant to certain distribution businesses.

Cost Plus Method

The Cost Plus Method begins with the relevant costs incurred by the supplier.

An appropriate arm’s length mark-up is then applied.

This approach may be suitable for certain service, manufacturing, and support arrangements.

Transactional Net Margin Method

The Transactional Net Margin Method analyses the net profit margin earned from a controlled transaction relative to an appropriate base.

The base may include:

• Costs
• Sales
• Assets
• Another relevant financial indicator

This method is often considered where reliable direct price comparisons are not available.

Profit Split Method

The Profit Split Method considers the combined profit arising from controlled transactions and allocates that profit between the parties using an economically supportable basis.

It may be relevant where businesses are highly integrated or where multiple parties contribute valuable intangibles or unique capabilities.

The selected method should be commercially reasonable and capable of supporting an arm’s length result.

Transfer Pricing Documentation in the UAE

Businesses should maintain sufficient information to support Related Party and Connected Person transactions.

Formal documentation requirements may include:

• Master File
• Local File
• Transfer Pricing disclosures
• Supporting schedules
• Functional analysis
• Contracts
• Pricing calculations
• Benchmarking studies
• Transaction-level working papers

Even when a business does not meet the formal Master File and Local File thresholds, the FTA may still request information supporting the arm’s length nature of relevant transactions.

What Is a Master File?

A Master File provides a high-level overview of a group.

It may include information about:

• Group structure
• Major business activities
• Transfer Pricing policies
• Important intangibles
• Group financing
• Overall financial and tax position

It provides wider group context rather than focusing only on one UAE entity.

What Is a Local File?

A Local File focuses on the relevant UAE Taxable Person and its material controlled transactions.

It may include:

• Local business activities
• Related Parties
• Transaction details
• Functional analysis
• Transfer Pricing method
• Financial information
• Comparable data
• Pricing conclusions

The Local File should reflect the UAE entity’s actual operations rather than relying only on generic global Transfer Pricing wording.

Master File and Local File Thresholds

Under the UAE Transfer Pricing documentation requirements, Master File and Local File obligations can apply where either of the following conditions is met:

Threshold	Requirement Trigger
AED 200 million	The Taxable Person’s revenue for the relevant Tax Period is at least AED 200 million
AED 3.15 billion	The Taxable Person is part of an MNE Group whose consolidated group revenue is at least AED 3.15 billion

Businesses below these thresholds should not assume that Transfer Pricing can be ignored.

The arm’s length principle can still apply, and the FTA may request supporting information.

Transfer Pricing Disclosure Requirements

Transfer Pricing information forms part of the UAE Corporate Tax return framework.

The return asks whether the aggregate value of transactions with Related Parties exceeds AED 40 million.

Where the threshold is exceeded, the Taxable Person is directed to complete the Related Party transaction schedule.

Businesses should therefore identify controlled transactions before the Corporate Tax return is finalised.

Accounting records do not always clearly separate:

• Related-party revenue
• Management fees
• Intercompany expenses
• Financing transactions
• Shared costs
• Related-party balances

Eighty20 reviews relevant ledgers and transaction flows to help prepare clearer Transfer Pricing schedules before filing.

Small Business Relief and Transfer Pricing

Eligible UAE Resident Persons may elect for Small Business Relief where their Revenue does not exceed AED 3 million in the relevant Tax Period and all applicable previous Tax Periods.

The relief must be elected and is not automatic.

A Qualifying Free Zone Person cannot elect for Small Business Relief, and certain multinational group members are also excluded.

For a Tax Period in which Small Business Relief is validly elected, the formal Transfer Pricing documentation requirements do not apply in the same way.

However, the business must still comply with the arm’s length principle for transactions with Related Parties and Connected Persons.

2026 Update: Small Business Relief Extended

The UAE Ministry of Finance extended Small Business Relief through Ministerial Decision No. 131 of 2026.

Eligible Taxable Persons can now claim the relief for applicable Tax Periods ending on or before 31 December 2029, subject to the relevant conditions.

This replaces the previous end date of 31 December 2026.

Transfer Pricing for Free Zone Companies

Transfer Pricing is particularly important for Free Zone businesses.

A Free Zone Person may transact with:

• Related Mainland companies
• Other Free Zone entities
• Overseas parent companies
• Foreign subsidiaries
• Related service companies
• Common owners

Free Zone entities are within the UAE Corporate Tax framework, and Qualifying Free Zone Persons must satisfy the applicable conditions to access the relevant 0% Corporate Tax treatment on Qualifying Income.

Transfer Pricing can therefore affect:

• Taxable income
• Related-party pricing
• Qualifying Income
• Free Zone compliance
• Deductibility of expenses
• Supporting documentation

An arm’s length analysis should be based on the actual business activity and transaction rather than simply on whether the parties are located in a Free Zone or Mainland jurisdiction.

Transfer Pricing for International Groups

International groups commonly transact through several related entities.

A UAE company may:

• Pay management fees to an overseas parent
• Receive regional support services
• Pay royalties
• Borrow funds from a group company
• Provide regional services
• Participate in cost-sharing arrangements
• Use group technology
• Purchase or sell goods within the group

Existing global Transfer Pricing policies can provide useful context, but they should be reviewed against the UAE entity’s actual operations and UAE Corporate Tax requirements.

A global policy does not automatically prove that the UAE transaction is arm’s length.

Related-Party Loans and Financial Transactions

Loans between Related Parties or Connected Persons are subject to Transfer Pricing requirements.

The FTA specifically confirms that intra-group loan arrangements should be assessed on an arm’s length basis, including factors such as interest rate and duration.

A financial transaction review may consider:

• Loan amount
• Interest rate
• Repayment period
• Currency
• Borrower credit profile
• Security
• Purpose of financing
• Subordination
• Guarantees
• Market conditions

Interest-free loans can also require analysis.

Cash pooling, guarantees, and long-outstanding intercompany balances may create additional Transfer Pricing considerations.

Management Fees and Intra-Group Services

Management fees are common within corporate groups but should have proper commercial support.

A business should be able to demonstrate:

• What services were provided
• Who provided the services
• Why the recipient needed them
• How costs were calculated
• How the allocation method was selected
• How the final charge was determined

Activities performed only because a shareholder owns an investment may not automatically justify a service fee.

Duplicate or unnecessary services may also raise questions.

Where shared costs are allocated, an appropriate allocation key may be required.

Depending on the service, this could include:

• Revenue
• Headcount
• Usage
• Time spent
• Transaction volume
• Another commercially relevant measure

Common Transfer Pricing Problems

Businesses often discover Transfer Pricing weaknesses during Corporate Tax return preparation. Common issues include:

Common Issue	Why It Matters
Management fees without agreements	Makes it difficult to prove the commercial basis and terms of the charge.
Group services without evidence	The business may struggle to demonstrate that genuine services were provided and benefited the recipient.
Intercompany loans without clear terms	Missing repayment periods, interest terms, or agreements can weaken the Transfer Pricing position.
Interest rates without support	The company may not be able to demonstrate that the rate reflects arm’s length conditions.
Shared costs with no allocation methodology	Cost allocations may appear arbitrary if there is no reasonable and documented allocation basis.
Related Party transactions hidden in general ledger accounts	Relevant transactions may be missed during Corporate Tax disclosure preparation.
Inconsistent Free Zone and Mainland pricing	Differences in pricing may create questions if there is no clear commercial justification.
Transfer Pricing policies that do not match actual business activity	Written policies may be unreliable if actual conduct differs from documented arrangements.
Missing Related Party schedules	Makes it harder to identify, reconcile, and disclose controlled transactions correctly.
Incomplete functional analysis	The roles, assets, and risks of each party may not be properly documented.
Poorly documented Connected Person payments	Payments to owners, directors, or officers may lack sufficient evidence of market value or genuine services.
Old intercompany balances	Long-outstanding balances may require further review to understand their commercial and financial treatment.
Missing benchmarking support	The company may lack independent evidence supporting the pricing or margin used.
Inconsistent accounting and Transfer Pricing records	Differences between financial records and Transfer Pricing documentation can weaken the overall tax position.

Identifying these issues before filing gives management more time to correct records, strengthen documentation, and improve the support behind the company’s Transfer Pricing position.

Our Transfer Pricing Services

Eighty20 provides Transfer Pricing support based on each company’s size, ownership structure, activities, transaction values, and documentation requirements.

Our services may include:

• Related Party identification
• Connected Person identification
• Controlled-transaction mapping
• Functional, asset, and risk analysis
• Transfer Pricing method selection
• Arm’s length pricing reviews
• Related-party transaction schedules
• Management-fee reviews
• Intra-group service reviews
• Related-party loan reviews
• Financing arrangement reviews
• Free Zone Transfer Pricing reviews
• Transfer Pricing disclosure support
• Master File preparation
• Local File preparation
• Benchmarking coordination
• Corporate Tax return readiness
• Review of existing Transfer Pricing policies
• Support with routine FTA information requests

The final engagement scope depends on the business facts and available records.

What Does Our Transfer Pricing Service Include?

Depending on the agreed engagement, Eighty20 may review:

• Ownership structures
• Related entities
• Directors and relevant Connected Persons
• Accounting ledgers
• Financial statements
• Agreements
• Invoices
• Intercompany schedules
• Pricing methodologies
• Loan documentation
• Cost allocations
• Existing Transfer Pricing policies
• Transaction flows

We identify transactions requiring further attention and prepare agreed calculations, schedules, working papers, or documentation.

Management remains responsible for reviewing and approving information used in Corporate Tax filing or provided to the FTA.

Complex valuations, tax litigation, dispute representation, or specialised economic analysis may require a separate scope.

Businesses and Industries We Support

Eighty20 supports:

• Startups
• SMEs
• Family businesses
• Holding companies
• Free Zone entities
• Mainland companies
• International groups
• Multi-entity businesses

Industries may include:

• Construction
• Consulting
• E-commerce
• Education
• Healthcare
• Hospitality
• Logistics
• Manufacturing
• Professional services
• Real estate
• Restaurants
• Retail
• Technology
• Trading and distribution

The Transfer Pricing approach is adapted to the company’s actual activities and transaction structure.

What Transfer Pricing Support Does Not Guarantee

Transfer Pricing support helps businesses prepare a reasonable and supportable tax position.

It does not guarantee:

• Acceptance of a pricing method by the FTA
• Approval of a specific deduction
• Qualifying Free Zone Person status
• Application of a 0% Corporate Tax rate
• Avoidance of an FTA review
• Acceptance of incomplete records
• A specific Corporate Tax outcome
• Cancellation of penalties

The final tax treatment depends on the law, transaction facts, evidence, documentation, and any FTA assessment.

Our Transfer Pricing Process

Business and Group Review

We begin by understanding the business activities, ownership structure, management relationships, and group arrangements.

This helps identify potential Related Parties and Connected Persons.

Transaction Mapping

We review relevant accounting records and transaction flows.

Goods, services, loans, fees, recharges, financing arrangements, and other controlled transactions are identified.

Functional and Risk Review

We examine the functions performed, assets used, and risks assumed by each party.

Contracts are compared with the actual business conduct where appropriate.

Method and Pricing Review

We consider the Transfer Pricing method that best fits the transaction.

Available internal or external comparable information is reviewed, and further benchmarking may be recommended where required.

Documentation and Disclosure Support

We prepare agreed supporting schedules and working papers.

Depending on the engagement, this may include:

• Related Party schedules
• Functional analysis
• Pricing explanations
• Transfer Pricing disclosures
• Master File
• Local File

Filing and Future Readiness

We help connect Transfer Pricing analysis with Corporate Tax return preparation.

Where gaps are identified, we may recommend improvements to:

• Contracts
• Accounting classifications
• Intercompany invoicing
• Cost-allocation policies
• Documentation
• Internal controls

Documents We May Need

The required documents depend on the business and transaction type.

Common documents may include:

• Ownership structure
• Group organisational chart
• Financial statements
• General ledger
• Related Party schedules
• Contracts
• Invoices
• Loan agreements
• Management service agreements
• Cost-allocation calculations
• Payroll information
• Transfer Pricing policies
• Existing Master Files
• Existing Local Files
• Benchmarking studies
• Free Zone documentation
• Corporate Tax returns

Any missing records can be identified during the initial review.

Why Choose Eighty20 for Transfer Pricing Services?

Transfer Pricing requires both technical tax knowledge and a detailed understanding of how the business operates.

Eighty20 connects Transfer Pricing with accounting and Corporate Tax preparation.

This allows us to understand not only the legal relationship between parties but also how controlled transactions appear in financial records.

Our approach focuses on:

• Clear transaction mapping
• Commercially supportable pricing
• Practical documentation
• Corporate Tax readiness
• Free Zone considerations
• Management visibility
• Clear explanations

We do not promise automatic FTA acceptance.

Our focus is to help businesses build a reasonable, documented, and commercially supportable Transfer Pricing position.

In-House vs Outsourced Transfer Pricing Support

Area	In-House Transfer Pricing	Outsourced Support from Eighty20
Related Party identification	Internal team reviews ownership and control	We help identify Related Parties and Connected Persons
Transaction mapping	Finance team extracts controlled transactions	We review ledgers and transaction flows
Technical knowledge	Internal team tracks UAE Transfer Pricing rules	We apply relevant UAE Corporate Tax and Transfer Pricing requirements
Functional analysis	Team documents functions, assets, and risks internally	We prepare structured functional analysis
Pricing review	Management assesses market support	We assess the commercial basis and identify benchmarking needs
Documentation	Internal team prepares working papers	We support disclosures, schedules, Master Files, and Local Files where required
Free Zone transactions	Internal team assesses transaction treatment	We review controlled transactions involving Free Zone and other related entities
Internal workload	Requires management and finance resources	Reduces technical and administrative workload
Final responsibility	Management remains responsible	Management remains responsible and approves the final position

Outsourcing Transfer Pricing work does not transfer the company’s legal responsibilities or guarantee the FTA’s acceptance of a particular treatment.

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