What it is
Transfer pricing is the price tag on transactions between related companies: management fees, intercompany loans, shared staff, goods sold from one entity to another.
Arm's length, in plain English
When your companies do business with each other — management fees, intercompany loans, shared services — the UAE expects the prices to be arm's length, as if strangers had struck the deal. Here is what that means for a small group, and the paperwork that keeps you safe.
The essentials
No jargon, no 300-page OECD manuals — just the parts that actually apply to a small UAE group.
Transfer pricing is the price tag on transactions between related companies: management fees, intercompany loans, shared staff, goods sold from one entity to another.
Parties linked by common ownership or control — parent and subsidiary, sister companies under the same owner, and in some cases a shareholder dealing with their own company.
The test is one question: would an independent business pay this price for this? If the answer is honestly yes, you're on solid ground. If the price was set by tax outcome, you're not.
UAE corporate-tax law includes transfer-pricing documentation rules. The FTA expects contemporaneous evidence of how prices were set — confirm whether the thresholds apply to you on the official portal.
Companies electing Small Business Relief are exempt from transfer-pricing documentation. Registration and filing duties remain — see our corporate-tax guide for the full SBR picture.
Management fees with no agreement, shareholder current accounts with no terms, and "free" shared services. Informal is normal in a small group — undocumented is the problem.
We prepare workings, schedules and compliance-ready records. For regulated representation before the FTA we work with registered UAE tax partners.
The process
Watch out
None of these require bad intent — just informality. All four are fixable.
"Free" management services between related companies are the classic red flag. Zero is almost never arm's length — an independent provider would charge something.
Money moving in and out of a director's current account with no terms, no interest, no repayment date. Write the loan down or clear it — a ledger balance is not a loan agreement.
It does. UAE corporate-tax law applies the arm's-length principle to related-party transactions whether they cross borders or stay inside the country.
An agreement signed this week but dated last January helps no one. Start the file now, date it honestly, and let it build credibility forward.
Worked example
Desert Rose Trading LLC (Dubai mainland) pays its sister company, Oasis Consulting LLC, AED 15,000 per month for "management services". Same owner, both UAE companies. The FTA asks why the fee is AED 15,000 and not AED 5,000 or AED 50,000.
A signed services agreement describing actual services — monthly management accounts, HR administration, roughly 40 hours of support. A one-page benchmark: two written quotes from independent business-support firms for similar scope, at AED 12,000 and AED 18,000 per month. Monthly invoices from Oasis Consulting, and bank transfers from Desert Rose Trading that match the invoices exactly. Total: AED 180,000 per year, sitting inside the market range, with a paper trail.
No agreement. No description of what the "management services" are. A round-number fee that has never changed in four years. Invoices raised quarterly in a batch, paid in irregular lump sums that don't match. Same AED 180,000 per year — but nothing proves it is arm's length.
Transfer pricing for an SME is rarely about the number being wrong. It is about being able to show your working. One agreement, one benchmark page, matching invoices — that file answers the question before it is asked.
Transfer pricing FAQs
Yes, if you transact with related parties. UAE corporate-tax law applies the arm's-length principle regardless of business size. Documentation thresholds exist — confirm whether they apply to you on the official portal.
Parties linked by common ownership or control: parent and subsidiary, sister companies under the same owner, and in some cases a shareholder transacting with their own company.
No. Companies electing Small Business Relief are exempt from UAE transfer-pricing documentation requirements. Your corporate-tax registration and filing duties remain — see our corporate-tax guide.
A signed intercompany agreement describing the services, a one-paragraph business rationale, a simple market benchmark, and invoices with bank transfers that match the agreement. That file answers almost any question.
Yes. The arm's-length principle applies to transactions between related parties whether they are cross-border or both inside the UAE.
The intercompany agreements, the pricing rationale and any benchmark, invoices, and the payment trail — kept with your other records for 7 years, maintained as part of your monthly books. Browse all our guides for the related compliance topics.
Keep going
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