When Is a Transfer Pricing Agreement Mandatory Under UAE Corporate Tax?
When Is a Transfer Pricing Agreement Mandatory Under UAE Corporate Tax? Under the UAE Corporate Tax Law, a transfer pricing agreement becomes mandatory when transactions occur between related parties or connected persons, including subsidiaries, affiliates, or entities under common control. The agreement ensures that all intercompany transactions—such as sales, services, royalties, or loans—are conducted at arm’s length, reflecting fair market value. Businesses meeting these conditions must document and maintain transfer pricing policies, demonstrating compliance with regulatory requirements. Mandatory transfer pricing agreements help prevent profit shifting, reduce disputes with the Federal Tax Authority (FTA), and provide transparency in tax reporting, safeguarding companies against potential penalties and adjustments.
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