Transfer Pricing & Salary Benchmarking
Comprehensive documentation and policy creation to ensure full compliance with UAE Corporate Tax and OECD transfer pricing regulations.
Overview
UAE Corporate Tax rules require related-party transactions — between group companies, connected persons, and shareholders — to be priced on an arm's length basis and properly documented. Royal Grace helps you build a transfer pricing framework that satisfies the Federal Tax Authority while reflecting how your business actually operates.
We prepare Master File and Local File documentation aligned with OECD guidelines, benchmark related-party salaries and management fees against market data, and design a Transfer Pricing Policy your finance team can apply consistently across future transactions — reducing audit risk and giving you a defensible position if the FTA asks questions.
Scope & Applicability
Transfer pricing rules apply to transactions between related parties and connected persons, including intra-group sales, management fees, financing arrangements, cost-sharing agreements, and salaries paid to shareholders or connected individuals. If your business has cross-border or intra-group dealings within the UAE, these transactions must be tested against the arm's length standard, regardless of your revenue size.
Compliance Requirements
Businesses meeting the relevant thresholds must maintain a Master File and Local File, disclose related-party transactions via the Disclosure Form filed with the Corporate Tax return, and retain supporting documentation for at least seven years. Documentation must be prepared contemporaneously — before the return is filed — not reconstructed afterward.
Benefits of Getting It Right
Well-documented transfer pricing gives you a defensible position in the event of an FTA audit, removes ambiguity around intra-group pricing for your finance team, and prevents double taxation disputes between jurisdictions. It also brings clarity to related-party salary and fee structures that are often set informally in growing family or group businesses.
Penalties & Risks
Failure to maintain adequate transfer pricing documentation can result in administrative penalties, and related-party transactions found not to be at arm's length may be adjusted by the FTA — potentially triggering additional Corporate Tax liability, interest, and penalties on the adjusted amount.
What's Included
- Transfer Pricing Policy
- Master & Local File Creation
- Arm's Length Price Documentation
- Salary Benchmarking
Who This Is For
Group structures with related-party transactions, UAE entities paying management fees or salaries to connected persons, and businesses preparing for their first Corporate Tax filing.
Frequently asked questions
Common questions about transfer pricing and salary benchmarking in the UAE.
If your business has transactions with related parties or connected persons — including intra-group sales, management fees, financing, or salaries to shareholders — you're within scope regardless of company size, though the depth of documentation required scales with your revenue and transaction value.
The Master File gives an overview of the group's global business, structure, and transfer pricing policies. The Local File documents the specific related-party transactions of the UAE entity in detail, including the pricing method used and supporting benchmarking analysis.
The FTA can impose administrative penalties for non-compliance and may adjust related-party transactions it deems not to be at arm's length, which can trigger additional Corporate Tax liability, interest, and further penalties on the adjustment.
We recommend an annual review, or sooner if your group restructures, enters new related-party arrangements, or if market conditions shift enough to affect the arm's length pricing of existing transactions.
Ready to talk about your transfer pricing position?
Get a clear, documented policy the FTA will accept.