Transfer Pricing Documentation in UAE

The significance of transfer pricing has attracted attention on a worldwide scale throughout time. Compilation and upkeep of necessary information and data are necessary to prove the arm’s length nature of transfer pricing. Transfer pricing disputes will be eliminated if the taxpayers can demonstrate that their transactions comply with the arm’s length standard through proper documentation. HLB HAMT is one of the renowned tax consultants in the UAE that specializes in transfer pricing documentation, international transactions, and transfer pricing rules.

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    A corporate entity’s growing number and complexity of regional and foreign transactions will culminate in transfer pricing problems, which will drive up regulatory costs for taxpayers.

    Where the arm’s length value of their related party operations reaches a specific limit in the applicable tax period, a business will additionally need to keep a master and local file (with format and content corresponding to the standards established under OECD BEPS Action 13).

    Transfer Pricing Documentation Model under OECD Guidelines

    According to the OECD transfer pricing rules, authorities use a three-tiered method for transfer pricing paperwork, which consists of:

    1. Master File: A record with standardised information pertinent to each of the multinational enterprise (MNE) group’s members
    2. Local file: A record particularly referencing significant transactions involving the local taxpayer
    3. Country by country report: A record including specifics on the income and taxes paid by the MNE group, along with specifics about where economic activity is taking place inside the MNE group.

    Goals of Transfer Pricing documentation in UAE

    Let’s have a quick rundown of the primary goals of transfer pricing documentation.

    • To provide the data required for tax authorities to undertake an accurate evaluation of the risk associated with transfer pricing
    • To give tax authorities meaningful data to utilize in carrying out a suitably thorough assessment of the firms’ transfer pricing methods.

    How does HLB HAMT assist in Transfer Pricing documentation in UAE?

    • Helps to create transfer pricing documents in accordance with TP requirements
    • Evaluating your current records to ensure they are compliant with TP rules
    • Aiding in giving direction and counsel on TP paperwork.

    Frequently Asked Questions

    1. Is transfer pricing documentation required for all parties involved in related party transactions?

      Where the arm’s length value of their related party transactions reaches a specific benchmark in the applicable tax period, a business will additionally need to keep a master and local file (with structure and content commensurate with the standards established under OECD BEPS Action 13).

    2. How frequently does a taxpayer need to review and update the TP Documentation?

      Transfer pricing documentation be periodically reviewed to determine whether functional and economic analyses are still accurate and relevant and to confirm the validity of the applied transfer pricing methodology.

    3. Which language should be used for preparing TP Documentation?

      The language used for transfer pricing documentation should be based on the local Laws.

    4. How long TP Documentation should be retained by taxpayers?

      Taxpayers are be obliged to retain documents for a reasonable period consistent with requirements of domestic Law at either the parent company or local entity level.

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