Transfer Pricing (TP) rules were introduced in the UAE, effective from June 1, 2023. These rules apply to intercompany and related party transactions conducted during the taxable period by any taxable entity.

At BDO, we specialize in offering expert transfer pricing services to assist businesses in navigating these complexities. Whether you're a multinational corporation or a growing business in the UAE, our customized solutions are designed to mitigate compliance risks and enhance your global tax strategy.

We support businesses in developing the necessary policies and information for the Master File, while using a modular approach for the Local Files to ensure cost-effective coverage. Our comprehensive range of transfer pricing services, including advisory, compliance, and planning, helps businesses meet the requirements of transfer pricing rules.

Different services offerings

1. Transfer Pricing advisory

From a TP perspective, we are providing services which help businesses in understanding the applicability of the TP rules on their businesses and how the same will impact their businesses. This includes the following:

• Impact assessment – Our Transfer Pricing Impact Assessment evaluates the current state of businesses intercompany transactions and identifies potential risks, including exposure to audits, adjustments, or penalties. We conduct a thorough review of businesses intercompany transactions to highlight any areas of concern, including misalignment with the arm's length principle. We help UAE businesses assess their current transfer pricing structure against the latest UAE TP rules and international standards.

• TP Due Diligence – Offering due diligence services to evaluate the transfer pricing implications of mergers, acquisitions, and restructuring activities.
• Profit Attribution to Permanent Establishments (PE) – Offering guidance on the allocation of profits to PEs, ensuring the distribution is fair and in line with international standards. Additionally, we assist clients with cost allocation between the Headquarter and its PE by analyzing the allocation keys and the weights for the distribution.
• Cross-functional TP Advisory – We offer advisory services that assist in analyzing the impact of VAT on TP adjustments, the influence of TP on customs valuations, and the alignment of TP with customs practices. Additionally, we support clients in their Mergers and Acquisitions transactions, including valuation, cross-border tax issues, and more.

2. Transfer Pricing Planning

At BDO, we help businesses in developing and implementing effective transfer pricing policies for their intra-group transactions. Our approach is to ensure that the pricing of intercompany transactions is aligned with the arm’s length principle, meets regulatory requirements, and supports your business objectives. Our services include:

• Designing the transfer pricing policy for intercompany transactions that aligns with your business model, operational structure, and strategic goals.
• Implementing the transfer pricing policy for the first time, including preparing segmental accounts that reflect arm’s length margin.
• Creating transfer pricing-compliant structures that ensure tax efficiency and adherence to UAE CT Law.
• Conducting comprehensive benchmarking studies to establish an arm's length price.
• Reviewing intercompany agreements to ensure they comply with transfer pricing rules.
• Providing continuous support, conducting periodic reviews to identify potential gaps, and ensuring that your policies stay compliant as business needs and rules evolve.
• Assisting in determining the debt restructuring which are aligned with thin capitalization rules.

3. Transfer Pricing Compliance and Documentation

As per the TP rules, the taxable person is required to comply with certain compliances and maintain documents for substantiating the arm’s length nature of the intercompany and connected person transactions. We assist our clients in the documentation and compliance requirements.

Local and Master Files – Transfer pricing documentation plays a vital role in demonstrating that a company's intercompany and connected person transactions are priced according to the arm’s length principle. In the UAE, businesses must maintain both Local Files and a Master File for each taxable year, provided they meet the thresholds set by the FTA. We assist businesses in preparing and maintaining these documents to ensure compliance and minimize the risk of penalties.

TP Disclosure Form – We assist businesses in preparing the TP Disclosure Form, which is required for reporting intercompany and connected person transactions conducted during the taxable period, provided the thresholds set by the FTA are exceeded.

CbCR and APAs – Assisting business in complying with CbCR requirements and assisting our clients with APA procedure.