TRANSFER PRICING

Transfer Pricing Advisory Services UAE

Transfer Pricing

Transfer Pricing is one of the most challenging tax issues that multinationals across the world face today, as international regulations now require stricter compliances and detailed information about pricing intercompany transactions. Transfer Pricing Regulations across the globe demand that every transaction between a related party be at arm’s length.

The "arm's-length principle" of Transfer Pricing states that the amount charged by one related party to another for a given product must be the same as if the parties were not related.

Incidence of Transfer Pricing:

Transfer Pricing provisions come into play under the following circumstances:

  • When business is divided into more department or division in the same country and;
    » Management requires to identify activities of the business that generate value.
    » A division of the group provides services or transfers goods to another division of the same company, and profitability of each division is required to be determined;
  • In the case of cross border transactions:
    » When transactions whether relating to tangible goods, services, finance or intellectual property take place between entities under common ownership and control.

Transfer Pricing Advisory Services UAE

Transfer Pricing

Emirates Chartered Accountants Group - Transfer Pricing Advisory Services in Dubai, UAE.

 

Call for Free Consultation
Mr.Manu Nair I Consultant
Mob: +971 502828727
Email: manu@emiratesca.com

 

Need of Transfer Pricing in the UAE

The United Arab Emirates (“UAE”) joined the OECD Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”) on 16 May 2018.

Through joining the Inclusive Framework, the UAE has (for now) committed to implement BEPS minimum standards, one of which is Transfer Pricing Documentation and Country-by-Country Reporting (“CbCR”).

UAE has already issued Regulations relating to CbCR, but TP legislation requiring related party transactions to be at arm’s length has not been introduced. However, international reporting requirements compel entities to align and rationalize intercompany transactions and adhere to the Transfer Pricing guidelines in the country of transaction. Therefore, a company having global presence would be required put in place their Transfer Pricing Mechanism.

How Can Emirates Chartered Accountants Group help you with Transfer Pricing?

Transfer Pricing Advisory:
  • Carrying our due diligence reviews to identify potential risks and planning adherence to transfer pricing regulations and documentation.
  • Formulating Transfer Pricing policy to optimize tax planning, considering the regulations of the countries involved in the transaction.
  • Formulating intragroup policy to adhere to arm’s length price regulations, that maximises after-tax cash flows for the group.
  • Assisting in determining the value of the activities to decide inter-division transfer price and remuneration.
Transfer Pricing Documentation:
  • Maintenance of robust documentation as per overseas jurisdiction requirements.
  • Assisting in compilation of ‘master file’ and ‘country-specific’ documentation.
  • Issuing the Transfer Pricing Audit Report for Statutory Compliances.
Litigation:
  • Advising and assisting in resolving Transfer Pricing controversies raised by the Tax Authorities

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TRANSFER PRICING FAQ

People usually ask

Ans: Kingdom of Saudi Arabia has issued detailed byelaws and guidelines and prescribed Transfer Pricing documentation.

Kuwait, Oman, Qatar, Bahrain does not have detailed byelaws and penalties regulations for Transfer Pricing but have incorporated the concept of arm’s length price in dealing with related party transactions.

Ans: UAE does not have byelaws for reporting or documentation of arm’s length price, and therefore not preparing documents in relation to transfer pricing would not attract any penal provisions in UAE. However, if the company undertakes business in other jurisdictions where Transfer Pricing Regulations are in place, they would be required to prepare reports and compile documentation for the UAE company as well.

For Eg. If your company supplies goods to the subsidiary or related party in Kingdom of Saudi Arabia(‘KSA’), the company will have to comply with all the Transfer Pricing provisions of KSA and therefore have a local file for Transfer Pricing documentation and arrival of arm’s length prices for the transactions between the two entities.

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