A Landmark Year for UAE Transfer Pricing Compliance
The UAE's transfer pricing landscape entered a new era in 2026. Since the introduction of Federal Decree-Law No. 47 of 2022 on Corporate Tax — which mandates that all Related Party Transactions adhere to the Arm's Length Principle (ALP) under Article 34 — the FTA has steadily expanded its audit infrastructure. According to the FTA's 2024 Annual Report, the Authority conducted 93,000 inspection visits in 2024 alone, a 135% increase from the prior year, powered by advanced digital analytics tools.
The grace period for transfer pricing compliance in the UAE has officially ended. The FTA is now conducting substantive audits, and intercompany pricing is its primary instrument for identifying profit shifting and ensuring that taxable income is correctly reported — particularly in structures that involve Qualifying Free Zone Persons (QFZPs) seeking to preserve the 0% preferential tax rate.
New APA Programme: Certainty for Complex Intercompany Transactions
In a significant development for UAE-headquartered multinationals and large family conglomerates, the FTA launched its Unilateral Advance Pricing Agreement (UAPA) programme in January 2026 under Cabinet Decision No. 2 of 2025. The programme allows businesses with complex related-party transactions exceeding AED 100 million per period to apply to the FTA for upfront certainty on their transfer pricing methodology — locking arm's length pricing for three to five years.
Applications carry a non-refundable fee of AED 30,000. Grant Thornton's analysis (December 2025) confirms this represents the UAE's most significant step toward aligning its TP framework with OECD best practices and significantly reduces audit risk for businesses with large, recurring intercompany transactions. Bilateral APAs — involving coordination with foreign tax authorities — are expected to follow.
| Documentation Threshold / Trigger | Requirement |
| Annual UAE revenue ≥ AED 200M, OR part of MNE with group revenue ≥ AED 3.15B | Prepare Master File + Local File; submit to FTA within 30 days of request |
| Related Party Transactions ≥ AED 40M OR Connected Person payments ≥ AED 500,000 | File Transfer Pricing Disclosure Form (TPDF) with annual CT return |
| Consolidated group revenue ≥ AED 3.15B (approx. EUR 750M) | Country-by-Country Reporting (CbCR); penalties up to AED 1,000,000 |
| Complex related-party transactions ≥ AED 100M per period | Eligible for Unilateral APA (UAPA) — AED 30,000 application fee |
| ANY entity with related-party transactions | Maintain arm's length pricing; document benchmarking at transactional level |
Tougher Penalties Under Cabinet Decision No. 129 of 2025
Effective 14 April 2026, Cabinet Decision No. 129 of 2025 restructures the UAE's administrative penalty regime. For transfer pricing, this means:
- Late payments of tax resulting from TP adjustments now attract a 14% annual interest rate, calculated monthly on outstanding balances.
- Voluntary disclosures filed before an FTA audit notification are subject to a flat 1% monthly penalty on tax differences.
- Disclosures filed after an audit notification attract a fixed 15% penalty plus the 1% monthly charge.
- Failure to maintain TP documentation is subject to a minimum fine of AED 10,000 per instance.
- Businesses that fail to submit records within 30 days of an FTA request face compounding exposure.
The FTA's preference for benchmarking using recognized databases — such as Bureau Van Dijk's Orbis, Bloomberg, or TP Catalyst — and for the Interquartile Range (IQR) methodology means that entities whose related-party transactions fall outside the 25th to 75th percentile of arm's length comparables face automatic upward tax adjustments.
NR Doshi & Partners: Your TP Compliance Partner in Dubai
NR Doshi & Partners' Transfer Pricing Advisory practice provides comprehensive support across the full TP compliance cycle, including:
- Transfer pricing policy design and documentation (Master File, Local File, CbCR preparation)
- Transactional-level benchmarking studies using globally recognised databases and the FTA's preferred IQR methodology
- Transfer Pricing Disclosure Form preparation and filing within corporate tax returns
- Advance Pricing Agreement (APA) structuring, application preparation, and FTA negotiation support
- Audit defence: position papers, benchmark rebuttals, penalty mitigation strategies
- Free zone TP reviews — ensuring QFZP 0% tax eligibility is not jeopardised by intercompany pricing failures
- DMTT (Domestic Minimum Top-Up Tax) analysis for MNEs with global revenue above EUR 750 million
"Every intercompany transaction in the UAE is now under the microscope."
With APA applications now open and audit activity accelerating, businesses cannot afford to treat transfer pricing as a back-office compliance task.
About NR Doshi & Partners
NR Doshi & Partners is one of the UAE's most established professional services firms, founded in 1967 and headquartered in Dubai. A proud member of DFK International — a top-10 global accounting network — the firm provides audit and assurance, corporate tax, VAT consulting, transfer pricing, e-invoicing compliance, business setup, HR outsourcing, CFO services, and digital advisory across six UAE offices. NR Doshi & Partners serves multinationals, family conglomerates, free zone entities, and SMEs across every major industry sector in the UAE.
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