The Federal Tax Authority (FTA) has announced that businesses must complete Corporate Tax registration within 90 days from the Date of Incorporation / MOA.
Transfer pricing has evolved from a behind-the-scenes tax topic to a central pillar of UAE corporate taxation. With the introduction and refinement of UAE corporate tax transfer pricing regulations, related-party transactions must reflect fair market value and be supported by robust documentation. The year 2025 brings clearer standards and stricter compliance requirements, making proactive TP planning essential for any business operating in the UAE. In short: the easier you make it for tax authorities to see value creation and price fairness, the smoother your tax journey will be.
What is Transfer Pricing?
- Definition : Transfer pricing is the process of setting prices for goods, services, or intellectual property exchanged between related entities within the same corporate group.
- Purpose : To ensure that intercompany transactions reflect fair market value and to prevent shifting profits to low-tax jurisdictions.
- Global framework : UAE transfer pricing requirements align with OECD guidelines, promoting transparency, consistency, and fair taxation across the corporate sector.
New Transfer Pricing Requirements in UAE 2025
Here are the updated rules you should know, along with practical implications for your business:
1. Mandatory Documentation
What it means? Companies that meet certain thresholds must maintain transfer pricing documentation, including Master File and Local File requirements. This creates a standardized, defendable record of the group’s value chain, risk analysis, and transfer pricing policies. Prepare for a structured data collection process (organization charts, functional analyses, value drivers, and intercompany arrangements) well before filing deadlines
2. Arm’s Length Principle
All related-party transactions must be priced as if they were conducted with an independent third party. This principle underpins tax authority acceptance and helps prevent profit shifting. Regularly review pricing models, methods, and comparables to ensure arm’s-length alignment across products, services, and financing.
3. Disclosure Forms
The annual corporate tax return must include disclosures related to related-party transactions. Increases transparency and allows authorities to assess transfer pricing risk early. Establish a centralized process to capture related-party transactions, documentation references, and method selections for easy disclosure.
4. Thresholds
Businesses crossing specified revenue or transaction limits must comply with full documentation requirements. Not all entities are subject to the same level of documentation; thresholds help focus compliance efforts where they matter most. Identify whether your entity/group meets thresholds and plan your TP project timelines accordingly.
5. Penalties for Non-Compliance
Inaccurate or missing documentation, misapplied methods, or late filings can trigger penalties. Penalties can include adjustments to taxable income, fines, and increased audit scrutiny. Implement ongoing governance around data accuracy, method selection, and timely reporting to minimize risk.
Conclusion
Meeting UAE transfer pricing requirements in 2025 is important for avoiding penalties and maintaining tax compliance. A proactive approach centered on robust documentation, transparent pricing, and timely disclosures helps you navigate the regulatory landscape with confidence. By staying ahead, you also build trust with tax authorities and support stronger governance across your organization.
If you’d like expert guidance tailored to your business, Reyson Badger offers UAE transfer pricing services designed to simplify compliance, optimize pricing strategies, and prepare you for audits with confidence. Our team brings deep experience in UAE corporate tax and transfer pricing, ensuring you’re well-positioned to meet 2025 requirements and beyond.
