UAE’s transfer pricing landscape is entering a new phase as revised Safe Harbour Rules encourage multinational groups to reassess their existing transfer pricing frameworks. For organizations operating through Global Capability Centres (GCCs), captive service providers, contract R&D entities, and other related-party arrangements, the changes may significantly affect transfer pricing policies, compliance strategies, and tax certainty.

For multinational organizations, this is more than a regulatory update. It reflects India’s continued efforts to modernize its transfer pricing framework, provide greater certainty for taxpayers, and align compliance mechanisms with evolving business models and economic realities.

As a result, many companies are reviewing whether their current transfer pricing arrangements remain appropriate under the revised rules and whether alternative approaches may offer greater certainty, efficiency, and reduced controversy.

The UAE introduced transfer pricing rules through Federal Decree-Law No. 47 of 2022, applicable to tax periods beginning on or after 1 June 2023, with a headline corporate tax rate of 9% on taxable income above AED 375,000.

The framework is built around the arm’s length principle and broadly aligned with the OECD Transfer Pricing Guidelines, supported by the FTA’s Transfer Pricing Guide and Ministerial Decision No. 97 of 2023.

Key developments include:

• Introduction of the arm’s length principle as the governing standard
• A broad definition of related parties and connected persons
• Mandatory transfer pricing disclosure within the corporate tax return
• Master File and Local File obligations above defined revenue thresholds
• Adoption of the five OECD-recognized methods under a most-appropriate-method approach

The introduction of a formal regime places renewed focus on the appropriateness and defensibility of existing intercompany pricing positions.

Organizations should evaluate whether:

• Current pricing positions can be supported by robust comparability analysis
• Existing arrangements between mainland, free zone, and foreign affiliates meet the arm’s length standard
• Functional profiles accurately reflect the functions, assets, and risks of each party
• Intangibles, intra-group services, and financing arrangements are appropriately remunerated
• Payments to connected persons can be justified against market value

This is particularly relevant for groups operating regional headquarters, qualifying free zone entities, centralized service models, and treasury or licensing structures in the UAE.

A proactive review can help identify exposure early and align transfer pricing positions with the arm’s length principle before they are tested by the FTA.

The new rules introduce OECD-style documentation obligations and substantially raise the importance of high-quality, well-structured data.

Tax authorities are increasingly focused on whether:

• Intercompany transactions are accurately identified and characterized
• Functional profiles remain consistent with actual business activities
• The selected transfer pricing method is supported by reliable comparables
• Financial results reconcile with documented transfer pricing positions
• Documentation evidences the economic substance of the arrangement

Taxpayers must prepare a Master File and Local File where standalone revenue exceeds AED 200 million or consolidated group revenue exceeds AED 3.15 billion, while related-party transactions exceeding AED 40 million in aggregate must be reported in the transfer pricing disclosure form.

In practice, organizations should ensure that financial and operational data can be readily extracted, validated, and reconciled across systems and jurisdictions, and that documentation is maintained contemporaneously.

One of the key implications of the new regime is the heightened importance of balancing compliance requirements with tax certainty in a system that is still maturing.

Taxpayers and the FTA alike are navigating an interpretive standard with evolving guidance and limited regional precedent.

Organizations should therefore consider:

• Whether their benchmarking can withstand FTA scrutiny
• The interaction between free zone or qualifying free zone status and the arm’s length principle
• Potential impacts on documentation and the risk of upward adjustments
• The implications of an emerging advance pricing agreement (APA) framework
• Opportunities to strengthen internal risk management processes

For some businesses, the regime offers an opportunity to build a clear, defensible compliance foundation. For others that rely heavily on manual processes, it may bring increasing compliance and audit challenges.

The changes in the UAE reflect a broader global trend toward more structured, transparent, and data-driven transfer pricing compliance frameworks.

Transfer pricing governance increasingly depends on:

• Reliable and accessible transactional data
• Standardized, OECD-aligned documentation processes
• Consistent application of transfer pricing policies and methods
• Cross-functional collaboration between tax, finance, legal, and IT teams
• Technology-enabled compliance frameworks

As tax authorities continue to invest in analytics, automation, and digital audit capabilities, organizations that depend on fragmented or manual processes may face growing compliance and audit risk.

The key takeaway is clear. The UAE’s new transfer pricing rules are not simply a technical update. They create an opportunity for multinational groups to establish their transfer pricing strategies on strong foundations, improve tax certainty, and strengthen risk management.

Organizations should focus on:

• Reviewing existing intercompany arrangements against the arm’s length principle
• Assessing method selection, functional profiles, and comparability analysis
• Evaluating the treatment of free zone entities and connected persons
• Strengthening transfer pricing documentation and governance processes
• Enhancing audit readiness and dispute prevention strategies
• Improving the quality, segmentation, and accessibility of transfer pricing data

Groups that proactively evaluate the implications of the new rules will be better positioned to manage transfer pricing risk and achieve greater certainty in an increasingly complex tax environment.

At TPA Global, we help multinational groups navigate evolving transfer pricing requirements across the UAE and around the world.

Our approach combines:

• Transfer pricing advisory and compliance expertise
• Benchmarking and policy reviews
• APA and dispute resolution support
• Transfer pricing documentation services
• Technology-enabled compliance and data solutions
• Audit readiness and controversy management

We work with organizations to ensure that their transfer pricing frameworks remain compliant, efficient, and aligned with business objectives.

If your organization is reviewing its transfer pricing model, assessing the impact of the UAE’s new Corporate Tax and transfer pricing rules, or seeking greater tax certainty, now is the right time to act.

Get in touch with our team to discuss how we can support your organization in strengthening transfer pricing compliance and reducing tax risk.

To keep updated on news, visit our Global News Page.

Don’t miss our most recent updates and articles; follow us on LinkedIn.

Find out more about our Transfer Pricing Services.