When the Ministry of Finance (MOF) announced the
implementation of corporate tax it announced that it would be
following the Organization for Economic Co-Operation and
Development (OECD) model. By doing so, it would also introduce a
well-established principle of corporate taxation, namely the
principle of transfer pricing. Transfer pricing will see a greater
scrutiny placed on transactions and financial support between
related companies (even if they are in Freezones).
This article will briefly and simply consider the concept of
transfer pricing.
What is transfer pricing and who does it affect?
The concept of transfer pricing focuses specifically on business
transactions between related companies, common within the region,
particularly between multinational companies and in some cases
large family-owned businesses within the UAE that are able to
control a certain market.
