Why Businesses in Dubai Choose Affinitas for Transfer Pricing Audit
Does This Apply to You?
Almost Every UAE Business With Related Parties
Has a Transfer Pricing Obligation
The most dangerous assumption in UAE tax compliance in 2026 is that transfer pricing is someone else’s problem. Here is who it applies to.
Most Common Risk - Free Zone ↔ Mainland Transactions
Many businesses assume that transactions between their Free Zone and Mainland UAE entities are domestic and therefore outside scope. They are not. The Arm's Length Principle applies to all controlled transactions within the UAE. This is the most common — and most expensive — misunderstanding Affinitas encounters.
High Risk - Holding Company → Operating Subsidiary
Management fees, service agreements, and cost allocations between a UAE holding company and its operating subsidiaries — whether the subsidiary is in the UAE or abroad — must all be priced at arm's length with documented justification.
Commonly Missed - Shareholder & Intercompany Loans
Zero-interest loans and below-market loans between group entities are not arm's length. The FTA will impute a market interest rate on the lender, creating taxable income that was never reported. This affects almost every multi-entity group structure in the UAE.
International Exposure - UAE Entity ↔ Foreign Parent or Subsidiary
Cross-border related-party transactions — paying a foreign parent for services, royalties, or technical expertise — are a primary FTA focus area. The UAE's Country-by-Country Reporting obligations also apply to large MNE groups from AED 3.15B in consolidated group revenue.
Often Overlooked - Connected Persons — Directors & Shareholders
Payments to directors, shareholders, and their family members — including salaries above market rate, consulting fees, or property rents — are connected-person transactions subject to TP rules. The disclosure threshold is AED 500,000, significantly lower than the AED 40M related-party threshold.
Learn more about UAE Corporate Tax: Corporate Tax Overview
Transfer Pricing FAQ — Answered
Yes, without exception. The Arm’s Length Principle under Article 34 of the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022) applies to all UAE taxable persons — including Free Zone entities. This covers transactions between a Free Zone company and any related mainland entity, foreign parent, subsidiary, or connected person. Free Zone status does not provide any exemption from the transfer pricing obligation. Critically, maintaining Qualifying Free Zone Person (QFZP) status for the 0% CT rate requires transfer pricing compliance — the FTA uses TP data to assess whether income genuinely qualifies or has been artificially structured into the Free Zone.
The tax return is typically due 12 months after the end of the tax period.
Non-compliance can result in significant penalties, including fines and potential legal action.
While it’s possible to register independently, engaging a professional can save time and ensure accuracy.
Yes—through legal and strategic structuring, such as moving to qualifying Free Zones. Contact Affinitas for a personalized assessment.