The UAE TP framework forms part of the federal corporate tax regime, under the Corporate Tax Law (CT Law), which applies to tax periods commencing on or after 1 June 2023 and establishes the legislative foundation for corporate tax in the UAE.

The core TP rules are set out in Chapter Ten of the CT Law. Article 34 establishes the arm’s length principle and recognises the applicable TP methods; Article 35 defines Related Parties (RPs) and Control; and Article 36 governs payments and benefits to Connected Persons (CPs). Article 55 sets out the TP documentation and disclosure obligations.

Ministerial Decision No. 97 of 2023 (MD 97) implements Article 55 by prescribing the relevant thresholds, conditions, and scope of documentation to be maintained.

Administrative guidance on the UAE TP law is provided principally through the Federal Tax Authority (FTA)’s TP Guide, Corporate Tax Guide “CTGTP1” (TP Guide), issued in October 2023. Although the TP Guide is not legally binding, it is an important interpretive source for understanding the UAE’s CT Law, the relevant implementing decisions and other FTA guidance. The wider TP framework also includes Cabinet Resolution No. 44 of 2020 on Country-by-Country (CbC) reporting and, where relevant, public clarifications such as the FTA clarification on directors and officers for CP purposes.

The primary sources of UAE TP law and guidance are the CT Law, MD 97 of 2023, and the FTA TP Guide. The OECD TP Guidelines may be referenced as a supplementary interpretive source where UAE rules or guidance are silent.

The UAE TP framework is closely aligned with OECD principles. Article 34 reflects the arm’s length standard in Article 9 of the OECD Model Tax Convention, and the prescribed TP methods mirror those endorsed by the OECD. The FTA TP Guide also considers the 2022 OECD TP Guidelines, Base Erosion and Profit Shifting (BEPS) Action 13, the OECD Model Tax Convention, and OECD guidance on profit attribution to permanent establishments.

For specific transactions, the FTA TP Guide follows the relevant OECD chapters, including intra-group services, intangibles and business restructurings, subject to UAE-specific adaptations. While not legally binding, the OECD TP Guidelines are an influential reference framework and may be used to interpret or supplement UAE guidance where domestic rules are silent.

The UAE CT Law recognises RPs and CPs.

Under Article 35 of the CT Law, RPs include both natural and juridical persons.

For UAE TP purposes, natural persons are considered RPs up to the fourth degree of kinship or affiliation, including by adoption or guardianship. RPs also include natural persons and juridical persons linked by ownership or control; juridical persons linked by 50% or greater direct or indirect ownership or by control; a person and its permanent establishment or foreign permanent establishment; partners in the same unincorporated partnership; and certain persons connected with a trust or foundation, including trustees, founders, settlors and beneficiaries.

CPs include individuals who own or control the taxable person, its directors or officers, partners in the same unincorporated partnership, and the RPs of such persons.

Control is defined broadly and may arise through ownership, contractual rights or other arrangements. It includes the ability to exercise 50% or more voting rights, appoint 50% or more of the board, receive 50% or more of profits, or exercise significant influence over another person’s business and affairs.

Transactions between RPs must satisfy the arm’s length principle under Article 34. Payments or benefits to CPs are deductible only to the extent they reflect market value and are incurred wholly and exclusively for business purposes, subject to specific exclusions such as listed companies and regulated entities.

Given the broad control and significant influence tests, arrangements such as joint ventures, management rights and governance arrangements may create RP/CP relationships even without majority ownership. Taxable persons are required to map relevant relationships to ascertain other aspects beyond the capital commitment to assess the concept of significant influence.

Yes. The UAE TP rules apply to both cross-border and domestic controlled transactions. The FTA Guide states that all cross-border controlled transactions, and domestic controlled transactions between RPs or CPs in the UAE, must follow the arm’s length principle. This includes transactions undertaken between Free Zone Persons.

TP is not limited to multinational groups or cross-border profit shifting only. Domestic UAE arrangements are also required to demonstrate adherence with the arm’s length principles, particularly where the parties are subject to different corporate tax outcomes, such as transactions involving free zone entities, exempt persons, small business relief elections, or entities subject to different tax rates.

There is no general exemption from the arm’s length principle for RP/CP transactions. As a matter of principle, controlled transactions must be priced consistently with the outcome that would have been realised between independent parties in comparable circumstances.

There are, however, important differences in documentation and disclosure obligations. Article 21 of the CT Law provides that, where a resident taxable person elects for small business relief and meets the relevant conditions, Article 55 on TP documentation does not apply for that tax period. This does not remove the need for arm’s length treatment where a controlled transaction is relevant; rather, it affects documentation requirements.

MD 97 also sets thresholds for maintaining a Master File and Local File. A taxable person must maintain both where it is, at any time during the relevant tax period, a constituent company of an MNE group with total consolidated group revenue of at least AED 3.15 billion, or where the taxable person’s revenue in the relevant tax period is at least AED 200 million.

The Local File rules also contain exclusions for certain categories of transactions. For example, certain transactions with resident persons, natural persons, juridical persons treated as related solely by virtue of being partners in an unincorporated partnership, and UAE permanent establishments of non-residents may be excluded from the Local File in specified circumstances. For some of these exclusions, the parties must be acting as if they were independent, which requires that the transaction is in the ordinary course of business and that the parties are not exclusively or almost exclusively transacting with each other.

In addition, Article 36 contains exceptions from the CP deduction restriction for certain taxable persons, including taxable persons whose shares are traded on a recognised stock exchange and taxable persons subject to the regulatory oversight of a competent authority in the UAE.

The UAE regime is broadly aligned with OECD TP principles, particularly in its adoption of the arm’s length principle, recognised TP methods, comparability analysis and documentation concepts. The FTA Guide expressly takes into account the 2022 OECD TP Guidelines.

The UAE-specific features are not substantive departures from the OECD TP guidance, but largely reflect domestic adaptations of that guidance. These include the application of the rules to domestic and cross-border transactions, the CP regime under Article 36, the documentation thresholds and Local File inclusions and exclusions in MD 97, and the requirement for Qualifying Free Zone Persons to comply with Articles 34 and 55 of the CT Law.

Another important domestic feature is the hierarchy of sources. The FTA Guide states that taxable persons should rely primarily on the CT Law, MD 97 and the Guide for UAE TP matters. OECD materials may be consulted where an issue is not addressed in the UAE materials.

Where an international agreement in force in the UAE is inconsistent with domestic law, the terms of the international agreement prevail. This is relevant in treaty-based TP matters, including in the context of corresponding adjustment and mutual agreement procedure.

Article 34 of the CT Law recognises the five methods prescribed by the OECD TP Guidelines.   The five methods are:

Traditional Transaction Methods:

1. Comparable Uncontrolled Price (CUP) Method
2. Resale Price Method (RPM)
3. Cost Plus Method (CPM)

Transactional Profit Methods:

4. Transactional Net Margin Method (TNMM)
5. Profit Split Method (PSM)

A taxable person may apply one method or a combination of methods, depending on the facts and circumstances.

The UAE TP Guide adopts the “Most Appropriate Method” approach, consistent with the OECD TP Guidelines. No single method is inherently preferred over another. The Taxable Person must select the method that provides the most reliable measure of an arm’s length outcome for the specific transaction, having regard to:

• The nature of the controlled transaction (determined through functional analysis);
• The availability and reliability of comparable data;
• The degree of comparability between controlled and uncontrolled transactions; and
• The sensitivity of the method to data deficiencies.

In practice, the Traditional Transaction Methods are considered more direct and may be preferable where reliable comparables exist. However, where traditional methods cannot be applied reliably, the Transactional Profit Methods are equally acceptable.

The UAE TP Guide permits the use of methods other than the five prescribed methods if the Taxable Person can demonstrate that none of the five recognised methods can be reasonably or reliably applied, provided the alternative method satisfies the arm’s length principle. This accommodates situations such as valuation-based approaches for intangible transfers, quotation-based pricing for unique assets, or other commercially appropriate pricing mechanisms.

The UAE rules do not prescribe a strict hierarchy among the five recognised TP methods. The selected method must be the most reliable method having regard to the contractual terms, characteristics of the transaction, economic circumstances, functions performed, assets employed, risks assumed and business strategies of the parties.

The FTA Guide states that there is no absolute hierarchy in applying traditional transaction methods. However, traditional transaction methods are generally regarded as the most direct way to test whether RP/CP arrangements are at arm’s length. Where the comparable uncontrolled price method and another method can be applied with equal reliability, the CUP method should generally be preferred.

In practice, the analysis is therefore method-driven but not mechanically hierarchical. The focus is on reliability, comparability and the accurate delineation of the controlled transaction.

Article 34(7) of the CT Law recognises that applying the selected TP method, or combination of methods, may result in an arm’s length range of financial results or indicators acceptable for establishing the arm’s length result of a controlled transaction.

The FTA Guide acknowledges that TP is not an exact science and that a range may be more reliable than a single point. Where a sizeable number of observations is available, the Guide states that statistical tools reflecting central tendency, such as the interquartile range or other percentiles, may be used to improve reliability and reduce the impact of outliers or exceptional results.

The Guide expressly treats the interquartile range as an appropriate approach for determining an arm’s length range. It explains the lower quartile, median and upper quartile, and provides an example of a three-year weighted average margin set producing a lower quartile, median and upper quartile.

Any point within the arm’s length range may be acceptable. However, the FTA may consider the reliability of the range and the functional profile of the taxpayer or controlled transaction when assessing the selected point. For example, a lower point may be more appropriate for a limited-risk profile, while a higher point may be more consistent with high-value functions, assets and risks.

Comparability adjustments are permitted where they improve the reliability of the arm’s length analysis. The FTA Guide states that adjustments should be considered if, and only if, they are expected to increase the reliability of the results.

The Guide identifies several categories of potential comparability adjustments, including accounting consistency adjustments, segmentation of financial data, and adjustments for differences in capital, functions, assets and risks. Working capital adjustments may also be appropriate where differences in receivables, payables or inventory materially affect profitability. Taxable persons are expected to provide adequate justification for any comparability adjustments made.

The Guide also recognises that differences may sometimes be too significant to adjust reliably. Examples include material differences in geographic markets, valuable intangibles, functional profiles or contractual terms. Where reasonably accurate adjustments cannot be made, the reliability of the selected method may be reduced and another method may need to be considered.

The UAE guidance does not provide a fixed list of adjustments that will always be accepted or rejected. The acceptability of an adjustment depends on whether it is factually supported, economically relevant and improves comparability.

The UAE regulations do not set out a standalone, detailed regime specifically for “year-end TP adjustments”. The analysis therefore starts from the general corporate tax and TP framework.

Under Article 20 of the CT Law, taxable income is determined separately for each taxable person based on adequate standalone financial statements prepared under accounting standards accepted in the UAE, with adjustments where applicable, including adjustments for transactions with RPs and CPs under Chapter Ten. If there is a conflict between the CT Law and applicable accounting standards, the CT Law prevails to that extent.

The FTA Guide recognises both an arm’s length price-setting approach and an arm’s length outcome-testing approach. Under the outcome-testing approach, the actual outcome of controlled transactions is tested to demonstrate that the conditions were consistent with the arm’s length principle, typically as part of the tax return preparation process at the end of the tax period. The Guide recommends that approaches be applied consistently and result in the same outcome for all RPs or CPs to the controlled transaction.

From a practical perspective, any year-end true-up or adjustment should be supported by contemporaneous documentation, should be capable of reconciliation to the taxable person’s financial statements and tax return position, and should reflect the arm’s length result for the actual transaction rather than a post hoc recharacterisation unsupported by the facts. The Local File requirements reinforce this by requiring information and allocation schedules showing how financial data used in applying the TP method ties to the annual financial statements.

The UAE regulations do not include a separate statutory secondary adjustment regime of the type seen in some jurisdictions, such as a deemed dividend, deemed loan or deemed capital contribution following a primary TP adjustment.

The CT Law does, however, provide for primary and corresponding adjustment mechanisms. Where the result of a RP transaction does not fall within the arm’s length range, the FTA may adjust taxable income to achieve the arm’s length result that best reflects the facts and circumstances. Where the FTA or a taxable person adjusts taxable income for a transaction or arrangement to meet the arm’s length standard, the FTA will reflect the adjustment in the taxable income of the local RP that is party to the relevant transaction.

Further, where a foreign competent authority makes a TP adjustment involving a UAE Taxable Person, the Taxable Person may request the FTA to make a corresponding adjustment to its UAE Taxable Income under the relevant Double Taxation Agreement (DTA) provisions. The FTA will review the foreign authority’s position and may proceed with the corresponding adjustment if appropriate.

The UAE framework addresses primary adjustments and corresponding relief (for both domestic transactions and cross-border transactions) but does not impose secondary adjustments that recharacterise the excess payment as a separate taxable event (e.g., constructive dividend subject to withholding tax). This is a notable distinction from jurisdictions where secondary adjustments can create additional tax costs beyond the primary TP correction.

Transactions involving intangibles are governed by the general arm’s length principle in Article 34 of the CT Law, supported by the FTA TP Guide. Controlled transactions generally include the commercial exploitation of intangible assets such as patents, brands and know-how.

The FTA Guide contains a dedicated section on intangibles. It states that the analysis of transactions involving the use or transfer of intangibles should begin with identifying the commercial and financial relations between the parties, the economically relevant circumstances, and the actual conduct of the parties, including functions performed, assets used and risks assumed.

The Guide expressly states that its intangibles section follows Chapter VI of the OECD TP Guidelines, with modifications made to suit UAE domestic requirements and the views of the FTA.

For UAE TP purposes, intangibles are described as assets that are not physical or financial assets, are capable of being owned or controlled for use in commercial activities, and whose use or transfer would be compensated in a comparable transaction between independent parties. The Guide refers to examples such as patents, know-how and trade secrets, trademarks, brands, rights under contracts and government licences, and limited rights in intangibles.

The UAE applies the DEMPE concept through the arm’s length principle and the functional analysis of transactions involving intangibles. The FTA Guide states that, in cases involving intangibles, it is crucial to determine which entity or entities within the group are entitled to share in the returns derived from exploiting the intangible.

The analysis focuses on which entities perform functions, employ assets and assume risks associated with the development, enhancement, maintenance, protection and exploitation of the intangible. Legal ownership is relevant, but it is not determinative on its own. A legal owner may receive proceeds from exploitation of an intangible, but other group members that contribute to the value of the intangible through DEMPE-related functions, assets or risks must be appropriately compensated on an arm’s length basis.

The FTA Guide also requires an assessment of consistency between contractual arrangements and actual conduct. Where the contract and conduct are inconsistent, the actual conduct of the parties should be used to determine the relevant controlled transaction and its nature.

The entitlement to intangible-related returns is determined by reference to legal ownership, contractual arrangements, actual conduct and the DEMPE-related contributions of each relevant party. The key criteria are the functions performed, assets employed and risks assumed in relation to the intangible, including the control of important functions and economically significant risks.

The FTA Guide indicates that the level of risk assumed affects the reward to which a group member is entitled. A group member asserting entitlement to returns from assuming risk must bear responsibility for the actions required, and the costs that may arise, if the relevant risk materialises. For intangibles, relevant risks may include development risk, infringement risk, product liability risk and exploitation risk.

The Guide sets out a sequence of analysis: identify the relevant intangibles and legal ownership, examine contractual arrangements, analyse functions, assets and risks, confirm whether the parties assuming economically significant risks also control those risks, characterise the actual controlled transactions in light of legal ownership, contracts and conduct, and then determine the arm’s length price for the use or transfer of the intangible.

Accordingly, the entity entitled to residual intangible-related returns is not necessarily the legal owner alone. It is the entity, or entities, that make the relevant economically significant contributions and control and bear the relevant DEMPE-related risks, with other contributing parties receiving arm’s length compensation for their functions.

The FTA Guide recognises that some intangibles may be “unique and valuable” and classified as hard-to-value. It describes such intangibles as those that are not comparable to intangibles used by or available to parties in potentially comparable transactions and whose use in business operations is expected to produce greater future economic benefits than would be expected in the absence of the intangible.

The UAE regulations do not set out a separate detailed domestic hard-to-value intangibles regime, nor do they expressly state that ex post outcomes may be used as presumptive evidence for testing ex ante assumptions. The FTA Guide instead directs the analysis back to the general arm’s length framework: identify the relevant intangible, accurately delineate the transaction, consider the unique features and profit potential of the intangible, assess the options realistically available to the parties, and select the most appropriate TP method.

Where the five recognised methods cannot be reliably applied, the CT Law allows another method to be used if the taxable person can demonstrate that the listed methods cannot reasonably be applied and that the alternative method satisfies the arm’s length standard. The FTA Guide notes that market appraisal or valuation techniques may be relevant, particularly for unique intangibles or one-off intangible transfers.

The FTA TP Guide recognises cost contribution arrangements (“CCAs”) as contractual arrangements between RPs or CPs within an MNE Group with an objective to share the contributions and risks of joint projects involving the development, production or acquisition of tangible or intangible assets, or the performance of services, with the expected benefits allocated equitably among the participants. The FTA TP Guide’s treatment of CCAs follows Chapter VIII of the OECD TP Guidelines, with modifications made to suit the domestic requirements and views of the FTA.

Per the FTA TP Guide, the arm’s length principle requires that each CCA participant’s contributions match what independent enterprises would have agreed to contribute given their proportionate share of the total anticipated benefits. To be a participant, an entity must have a reasonable expectation of benefiting from the CCA activity, must exercise control over the specific risks it undertakes, and must have the financial capacity to assume those risks. The value of each participant’s contribution must be consistent with what independent businesses in comparable circumstances would have assigned, and all contributions, whether made at inception or on an ongoing basis, must be recognised. Where a participant’s contributions are not proportional to their anticipated benefits, balancing payments are required. If a balancing payment is not made, the FTA has the right to adjust the taxable person’s profit to reflect the arm’s length outcome. The CCA must be in writing and must specify the activities to be carried out, the contributions to be made by each participant, and the method for determining each participant’s share of the benefits. The Guide also addresses entry, withdrawal and termination of CCAs, including buy-in payments for new entrants acquiring interests in prior CCA results and buy-out payments for departing participants transferring their interests.

Cross-border TP information may be exchanged by the UAE through a number of international tax cooperation mechanisms, subject to the relevant legal framework and confidentiality safeguards.

The primary legal basis for information exchange is the UAE’s extensive network of DTAs, which generally contain exchange of information provisions and MAP articles. Through the MAP process, the competent authorities of treaty partners may exchange relevant TP information to resolve disputes for eliminating double taxation arising from TP adjustments.

In addition, the UAE is a signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which provides a broad framework for the exchange of tax information with participating jurisdictions. The UAE has also implemented the CbC reporting exchange framework through the Multilateral Competent Authority Agreement on the Exchange of CbC Reports, enabling the automatic exchange of CbC reports containing information on revenues (including related-party revenues), profits, taxes, capital, accumulated earnings, assets, and employees. This information serves as an important risk assessment tool for tax authorities in identifying TP and other international tax risks for potential review or audit.

To further strengthen the UAE’s international tax transparency framework, Cabinet Decision No. 209 of 2025 on Exchange of Information upon Request for Tax Purposes reinforces the UAE’s commitment to the internationally agreed Exchange of Information on Request (“EOIR”) standard. This framework facilitates the exchange of taxpayer information with foreign tax authorities and supports the administration and enforcement of TP and other tax rules.

Lastly, the UAE’s APA programme contemplates unilateral, bilateral, and multilateral APAs. While bilateral and multilateral APAs are yet to be implemented, these arrangements generally involve the exchange of relevant TP information, methodologies, and pricing positions between the competent authorities of the participating jurisdictions to reach agreement on the arm’s length treatment of controlled transactions.

Given the relative infancy of the UAE TP regime, there is currently limited public guidance or case law on the extent to which exchanged information may be relied upon in TP assessments or litigation.

Notwithstanding this, information obtained through tax treaties, CbC reporting frameworks, and other exchange of information mechanisms may be used by the FTA to identify TP risks, assess potential inconsistencies, and support audit and enforcement activities. This is consistent with the FTA’s broader powers under Federal Decree-Law No. 28 of 2022 on Tax Procedures (as amended), which governs the FTA’s conduct of tax audits and its use of information obtained in that context. However, the use of such information remains subject to the applicable legal framework, including confidentiality and permitted-use restrictions under the relevant treaty or exchange mechanism.

The statutory basis for TP documentation in the UAE is Article 55 of the CT Law. This provision requires taxable persons to maintain information and documents regarding their transactions and arrangements with RPs and CPs as prescribed. Article 55 also requires disclosure in the tax return of information regarding those transactions and arrangements.

MD 97 implements the documentation requirements. It requires qualifying taxable persons to maintain a Master File and a Local File. The Master File must provide an overview of the multinational enterprise group’s global business operations and TP policies. The Local File must contain detailed information regarding the taxable person’s material controlled transactions, including a functional analysis, the selected TP method, the comparable analysis and financial data showing the arm’s length nature of the transactions.

CbC reporting is governed separately by Cabinet Resolution No. 44 of 2020.

Under MD 97, a taxable person must maintain a Master File and a Local File where it is, at any time during the relevant tax period, a constituent entity of a multinational enterprise group with total consolidated group revenue of at least AED 3.15 billion, or where the taxable person’s own revenue in the relevant tax period is at least AED 200 million. Below these thresholds, the taxable person is not required to maintain a Master File and Local File, although it must still maintain adequate records and information to demonstrate compliance with the arm’s length principle.

In addition, while the above thresholds are prescribed, it is important to note that a Qualifying Free Zone Person (“QFZP”) is required to declare in its tax return that it has complied with Article 55, including the maintenance of the Master File and Local File. Accordingly, even where the applicable TP documentation thresholds are not met, a QFZP should maintain and retain these documents to support its compliance obligations and substantiate its position, if required by the FTA.

For CbC reporting, the obligation falls on the Ultimate Parent Entity (“UPE”) of a multinational enterprise group headquartered in the UAE with consolidated group revenue of at least AED 3.15 billion. The UPE is also required to file a CbC notification with the FTA.

TP documentation should be maintained contemporaneously. The Master File and Local File should be prepared or updated for each tax period by the time the taxable person files its Corporate Tax Return (CTR). The CTR must be filed within nine months from the end of the relevant tax period.

The TP documentation must be made available to the FTA within 30 days of a request. This requirement underscores the expectation that documentation is maintained on a contemporaneous basis and is not prepared only after an FTA inquiry is received. The CbC report must be filed within 12 months of the last day of the reporting fiscal year of the multinational enterprise group.

The penalty framework for corporate tax, including TP-related penalties, is set out in the Federal Decree-Law No. 28 of 2022 on Tax Procedures (as amended) and Cabinet Decision No. 75 of 2023 on Administrative Penalties for Violations of the CT Law. Penalties may be imposed for various violations, including failure to maintain TP documentation as required, failure to submit documentation within the prescribed timeframe, and failure to include required disclosures in the CTR.

In addition, where a TP adjustment results in additional taxable income, the taxable person may be liable for the additional tax, plus any applicable late payment penalties. The FTA may also impose penalties for inaccurate tax return filings where the understatement of taxable income is attributable to non-arm’s length pricing of controlled transactions. The penalty amounts are specified in the schedule to Cabinet Decision No. 75 of 2023.

Yes. Article 55 of the UAE CT Law requires taxable persons to disclose information regarding transactions and arrangements with RPs and CPs as part of their CTR. To meet this requirement, the FTA has incorporated a TP Disclosure Form (DF) within the CTR. The form must be submitted alongside the tax return and generally requires disclosure where the prescribed materiality thresholds are exceeded. Specifically, the RP Transactions Schedule is required where the aggregate value of transactions with RPs exceeds AED 40 million, with disclosure of individual transaction categories where the aggregate value of a category exceeds AED 4 million. The CPs Schedule is required where the aggregate value of transactions with a CP exceeds AED 500,000.

The TP DF requires taxpayers to provide details of reportable RP and CP transactions, including the identity and tax residence of the counterparty, the nature and category of the transaction (e.g., goods, services, financing, intellectual property, assets, liabilities and other), the gross value of the transaction (as per books of accounts), the TP method applied, the arm’s length value, and any TP adjustments made.

Yes. APAs are available in the UAE. The legal basis for the APA regime is provided by Article 59 of the CT Law, which permits taxpayers to apply to the FTA for an APA in relation to transactions with RPs and CPs. The FTA further expanded on the operation of the APA regime through its Corporate Tax Guide on Advance Pricing Agreements (CTGAPA1), issued in December 2025, which sets out the objectives, scope, eligibility criteria, application procedures and administrative requirements applicable to APAs. An APA is an agreement between the taxpayer and the FTA that establishes, in advance, the TP methodology and criteria for determining the arm’s length price of specified controlled transactions over a defined period, thereby providing greater certainty and reducing the likelihood of future TP disputes.

The UAE APA framework contemplates unilateral, bilateral and multilateral APAs; however, the regime is being introduced on a phased basis. The FTA began accepting applications for unilateral APAs in respect of domestic controlled transactions from December 2025, with the commencement of applications for cross-border controlled transactions to be announced in 2026.

The FTA intends to progressively expand the APA programme to include bilateral and multilateral APAs, with the relevant implementation timelines to be announced in due course. The availability of bilateral and multilateral APAs will generally depend on the existence of an applicable tax treaty, cooperation between the competent authorities of the relevant jurisdictions, and the willingness of those authorities to participate in the APA process.

The UAE TP regime does not currently provide any formal statutory safe harbour rules for specific categories of taxpayers or transactions, with the limited exception of low-value-adding intra-group services. The only reference to a safe harbour concept in the FTA TP Guide relates to such services and is broadly aligned with the OECD TP Guidelines. Under the FTA TP Guide, certain support services (such as accounting, bookkeeping, human resources, IT and other administrative services) may qualify as low-value-adding intra-group services and be priced using a simplified cost-plus 5% mark-up. However, the FTA TP Guide is administrative guidance and is not legally binding. Accordingly, this guidance does not establish a formal UAE safe harbour regime and is not applicable to other categories of controlled transactions. The arm’s length principle under Article 34 of the CT Law continues to apply to all controlled transactions, irrespective of their nature, value, or the size of the taxpayer.

The principal simplification measures available are the TP documentation thresholds prescribed under MD 97, which may relieve certain taxpayers from maintaining a Master File and Local File. However, such taxpayers still remain subject to the arm’s length principle and any applicable TP disclosure requirements.

The UAE Corporate Tax regime, including its transfer pricing rules, remains in the early stages of implementation, with the first tax periods commencing on or after 1 June 2023 and the initial tax returns being filed during 2024 and 2025. Given the TP documentation requirements, mandatory TP DF, and access to CbC reports, the FTA is likely to enhance its TP risk assessment capabilities and focus on higher-risk taxpayers and transactions. As a result, increased TP scrutiny and enforcement activity may be expected as the regime continues to mature in the near future.

There is currently no published domestic TP case law in the UAE. Given the nascent stage of the corporate tax regime, including the TP rules, neither the Tax Disputes Resolution Committees nor the courts have yet issued publicly reported decisions on TP matters. As a result, TP practice is presently guided by the Corporate Tax Law, its implementing decisions, FTA guidance, and public clarifications.

Given the recent introduction of the UAE corporate tax regime, there is currently limited public guidance on TP audits or disputes. Nevertheless, arrangements involving QFZP may receive particular attention given the differential tax rates available under the regime. The FTA may focus on ensuring that such arrangements are supported by appropriate economic substance and arm’s length pricing. Business restructurings and changes to operating models with the intention to benefit from being QFZP may also be reviewed to understand their commercial rationale and tax implications thereof.

Several developments are likely to reshape TP practice in the UAE over the next five years. The most significant is the continued evolution of the FTA’s TP compliance and audit capabilities. As the FTA gains experience from the initial rounds of Corporate Tax Returns, TP Disclosure Forms and CbC reports, it will be better positioned to conduct targeted and data-driven TP audits, which will in turn drive greater discipline in taxpayer compliance.

The implementation of the OECD/G20 Inclusive Framework’s Pillar Two rules will also be a key development. The introduction of a UAE Domestic Minimum Top-up Tax (DMTT), together with the interaction between Pillar Two, the corporate tax regime, and free zone incentives, is likely to add complexity to TP analyses for multinational groups operating in the UAE. In particular, where QFZPs currently benefit from 0% Corporate Tax on qualifying income, the application of a 15% effective minimum tax rate under Pillar Two may fundamentally alter the economics of principal/IP-holding structures located in UAE Free Zones – with direct implications for how intercompany transactions are priced and documented.

In addition, the growing prominence of digital business models and the increasing role of intangibles, data, and technology-driven value creation will continue to influence TP considerations, particularly given the UAE’s position as a regional hub for technology, e-commerce, financial services, and international trade. The challenge for practitioners will be to apply the arm’s length principle to business models where value is created through algorithms, platforms, user data, and network effects rather than traditional tangible assets and physical presence.

The gradual emergence of TP-related jurisprudence through the ruling of the tax authorities and the courts is also expected to provide greater clarity and shape future practice.

Looking ahead, increasing fiscal expectations and the expanding role of corporate taxation within the UAE’s public finance framework may place greater emphasis on ensuring that TP outcomes appropriately reflect value creation within the jurisdiction. Coupled with enhanced international exchange of information (including CbCR data and the Common Reporting Standard) and the UAE’s ongoing alignment with OECD standards, TP is expected to remain an area of growing focus and importance for both taxpayers and the tax authorities.

To sum up, the most transformative developments will be the intersection of three forces:

1. FTA audit maturity: Moving from compliance collection to substantive challenge of TP positions (expected 2026–2027).
2. Pillar Two/DMTT: Potentially undermining the tax efficiency of Free Zone principal structures and forcing groups to reassess where value-creating functions, assets, and risks are located.
3. Digital and intangible-driven models: Requiring the UAE to develop domestic positions on DEMPE attribution, hard-to-value intangibles, and the allocation of returns from data and algorithms.

The UAE’s TP regime will mature rapidly – and the groups that build robust, defensible frameworks now will be significantly better positioned than those that treat TP as a pure compliance exercise.

Looking ahead, the Groups should invest now in: (i) a TP policy framework that is flexible enough to accommodate Pillar Two restructuring if required; (ii) accounting systems and ERP configurations that capture intercompany transactions with sufficient granularity for TP Disclosure Form reporting; (iii) governance processes (board-level awareness, tax risk registers) that evidence contemporaneous decision-making; and (iv) a monitoring mechanism to track FTA guidance, TDRC decisions, and legislative amendments as the regime evolves.