Page 146 - Confluence - Souvenir 2023 - Flip Book

Overview of the UAE

Transfer Pricing Landscape

A. Key Regulations C. Coverage of TP Regulations

Arm's Length Principle enforced for transactions with Foreign related party transactions
Related Parties. Domestic related party transactions including those
Related Parties defined with a 50% ownership. Kinship, within free zones and Tax Group.
Control, Significant influence criteria included. Dealings with Connected Persons, domestic/foreign PEs,
Payments to 'Connected Persons' must align with Head offices and branches.
market value.
Internationally recognized TP methods adopted. D. C ategories of Transactions
Authority to adjust Taxable Income if results deviate
from ALP range. Goods, Services, Tangible Property, Capital Transactions,
Intangible Property, Financing Arrangements, Intra-
group Services, and Business Restructurings.
Payments to Connected Persons, such as remuneration,
rent, dividends, and interest.
TP Structuring & TP Policy
Benchmarking Setting
E. Key Clarifications in TP Guide
TP rules encompass domestic transactions.
The Domestic UAE Groups without foreign entities exempt
Transfer from Master File.
TP Audits & Pricing TP Small business relief election to exempt businesses
Dispute Life Cycle Implementation from TP documentation only.
Resolution & Monitering FTA has no preference for commercial databases, as
long as they assist in comparability analysis.
Multi-jurisdictional comparables search allowed by
following a specific order (local, regional, then other
TP TP regions).
Documentation & Adjustments for Policy Multiple years (minimum 2 years) data required for
Compliances & ALP adherence comparables.
Arm’s length range determined using Inter-quartile
range.
Simplified approach advised for inter-co agreements.
Transaction-specific benchmarking preferred over
B. ALP Compliance and TP Documentation Mandates entity-wide analysis (TNMM aggregation).
International agreements prevail over conflicting UAE
‘Supporting TP Documentation’ for related party TP regulations.
transactions by all businesses including QFZPs. Additional guidance on Financial Transactions, Intra-
‘Disclosure Form’ to be filed for businesses to be group services, Intangibles, Cost Contribution
notified. Arrangements, profit attribution to PE, and Business
‘Master File’ and ‘Local File’ Documentation must for Restructurings provided.
Entities with revenue AED 200 Mn or more. Also, applies
to UAE entities of MNE Groups subject to CbCR F. Key Action Points
compliance.
‘CbCR’ mandatory for UAE-headquartered MNE Groups TP structuring, benchmarking, policy setting, and
with AED 3.15 Bn Consolidated Group Revenue. documentation.
FTA can call for any of the above documents to be Transitional TP adjustments for related party closing
submitted within 30 days. balances before the first tax period.
‘TP documentation’ - Part of the standard audit TP policy implementation and supporting
procedure for entities subject to mandatory audit. documentation collation for compliances readiness.
‘TP Benchmarking Analysis’ crucial for determining
taxable income. “TP planning is crucial to support all tax positions,
www.icaidubai.org
146 ALP compliance and TP documentation are critical for computation, and compliances.”
Qualifying Free Zone Persons.
Small businesses are exempt from TP documentation
rules but must comply with ALP and TP supporting - CA Mithilesh Reddy, CA Balaram Vuchidi, CA Naveenkumar Kabraa,
documentation requirements. CA Praneeth Narahari, CA Rishabh Agarwal, CA Rajesh Vaishnav