Transfer pricing (TP) services in the UAE have become increasingly significant following the country’s adoption of the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan, particularly Action 13 which relates to transfer pricing documentation and reporting. Here’s an overview of what TP services typically include and the regulatory context within the UAE:
Regulatory Context
1. BEPS Compliance: The UAE is a member of the OECD Inclusive Framework on BEPS, which means it is committed to implementing measures to combat tax avoidance, including transfer pricing regulations.
2. Country by Country Reporting (CbCR): Large multinational enterprises (MNEs) with consolidated group revenues exceeding AED 3.15 billion (approx. USD 860 million) must file CbCR. This requirement is part of the UAE’s commitment to the BEPS Action Plan.
Transfer Pricing Services
Transfer pricing services typically encompass a range of activities aimed at ensuring compliance with TP regulations and optimizing tax efficiency. These services include:
1. Transfer Pricing Policy Development:
Formulating transfer pricing policies that align with global best practices and local regulatory requirements.
Ensuring policies are robust enough to withstand scrutiny from tax authorities.
2. Documentation and Compliance:
Preparing transfer pricing documentation, including Local Files, Master Files, and Country by Country Reports.
Ensuring documentation meets the requirements of the UAE Ministry of Finance and other relevant authorities.
3. Benchmarking Studies:
Conducting benchmarking studies to determine arm’s length pricing for intercompany transactions.
Using databases and other resources to find comparable transactions and pricing.
4. Risk Assessment and Planning:
Assessing transfer pricing risks and potential areas of noncompliance.
Providing strategic planning to minimize transfer pricing risks and optimize tax positions.
5. Dispute Resolution:
Assisting in dispute resolution and negotiations with tax authorities.
Providing support during tax audits and responding to queries from tax authorities.
6. Training and Support:
Offering training programs for internal teams on transfer pricing compliance and best practices.
Providing ongoing support and updates on regulatory changes and their implications.
Conclusion
With the UAE’s growing emphasis on transfer pricing compliance in line with international standards, companies operating in the region must ensure they have robust transfer pricing policies and documentation in place. Engaging with professional service providers can help businesses navigate the complexities of transfer pricing regulations and maintain compliance while optimizing their tax positions.