Transfer Pricing Compliance Services in the UAE

Corporate Compliance Services

Transfer Pricing

In line with the UAE Corporate Tax Laws, our firm specializes in helping businesses navigate and comply with transfer pricing regulations, particularly in relation to transactions with connected persons.

Introduction

The UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022) and its Executive Regulations require adherence to the Arm’s Length Principle for transactions between related parties. This principle mandates that all transactions, especially those involving compensation to individuals in key managerial positions who significantly influence the company’s operations, must be conducted as if they were between unrelated parties, at market value. The primary goal of this regulation is to prevent profit erosion through potentially inflated payments to connected persons.

These laws ensure that payments made to key managerial individuals are consistent with what would be agreed upon in similar transactions between independent entities, thus safeguarding against overcompensation and maintaining fairness in the business environment.

Compliance Approach

Our service follows a comprehensive approach to ensure full compliance with the transfer pricing regulations:

Management Consultation: We start by engaging with your company’s management to gain a clear understanding of the roles and influence of individuals classified as connected persons, based on their ownership stakes or significant impact on the company’s operations.

Arm’s Length Price Determination: After analyzing the roles, responsibilities, and qualifications of these connected individuals, we determine the appropriate arm’s length price or range. This step ensures that remuneration is in line with industry standards and adheres to legal requirements.

Industry Standards Benchmarking: Using professional employment databases, we collect relevant compensation and benefits data across various industries. This data helps benchmark the compensation of connected persons against market standards, ensuring compliance with industry norms.

Comparative Analysis with External Data: Utilizing advanced tools like TP Catalyst, we conduct a thorough external search to identify comparable data and margins. This comparative analysis ensures that your company’s margins fall within the arm’s length range, confirming compliance with transfer pricing regulations.

Dual Benefit of Service

Our service is designed to deliver two key advantages: ensuring your company’s compliance with regulatory requirements and providing strategic guidance on structuring compensation in line with market standards. This dual benefit not only helps you meet legal obligations but also promotes the development of fair and competitive compensation practices within your organization. By doing so, we help mitigate the risk of legal penalties while enhancing the financial health and operational integrity of your business.

The information provided is not intended as a direct or implied recommendation or endorsement of any specific strategy, decision, or action. Clients should consult with their tax, legal, or professional advisors to assess the relevance and applicability of the information to their individual circumstances. Growth Partners expressly disclaims any responsibility for errors or omissions in this information, or for any loss or damage arising from reliance on it. Use of and reliance on this information is at the user’s own risk.

Frequently Asked Questions

Learn more about company formation in the United Arab Emirates

In the United Arab Emirates, you can establish entities like Limited Liability Companies (LLC), Free Zone Entities, Sole Proprietorships, and Branches of Foreign Companies.

The company formation process in the UAE can take anywhere from a few days to several weeks, depending on the type of company and the specific requirements involved.

The United Arab Emirates offers a tax-free environment for most businesses, with no personal or corporate income tax, provided the company qualifies for Free Zone status.

Corporate Compliance Services