Transfer Pricing Services in Dubai, UAE
Transfer pricing is one of the most challenging tax issues that multinational across the world face today. International regulations now require a stricter compliance and a detailed information about pricing intercompany transactions. Transfer pricing regulations across the globe demand that. Every transaction between the related parties is at Arm’s length price.
The Arm’s length principle of transfer pricing states that the amount charged by one related party to another for a given product must be the same as if the parties were not related.
Applicability of Transfer Pricing
Transfer pricing provisions comes in to play under the following circumstances.
I . When business divided in more departments or divisions in the same country
a) Management requires to identify activities of the business that generate value
b) A division of the group provide services or transfer goods to another division of the same company and profitability of each division required to be determined.
II. In case of cross border transaction when transaction whether relating to tangible goods, services, finance, or intangible property takes place between the entities under common ownership and control.
Need of Transfer pricing in UAE
The United Arab Emirates have joined the OECD inclusive framework on Base Erosion and Profit shifting (BEPS) on 16th May 2018 . By joining the inclusive framework, the UAE has committed to BEPS minimum plan. One of which is Transfer pricing documentation and Country-by-Country reporting( CbCR)
Since the Corporate law is introduced in UAE , transfer pricing rules will automatically apply to UAE also. UAE will apply internationally recognized Arm’s length principles to transactions and arrangements between related parties and with connected persons.
Transfer Pricing Risk Assessment
Risk assessment and management is an area in which GSPU can offer extensive expertise. As such, our transfer pricing risk assessment services will consider the following measures:
• An assessment of your Group’s risks during the early stages of international business.
• Selecting significant subsidiaries with the highest risk in a transfer pricing tax context.
• Evaluating the risk for the rest of the subsidiaries after the documentation is prepared.
• Reviewing how reasonable the prepared documents are i.e., providing a second opinion.
Transfer Pricing Documentation
• TP reporting requirements were applicable for TP Disclosure Forms, Master file and Local file.
• The Authority may request the entity to provide all information and documents in its possession and required for auditing its transfer pricing practices with respect to its transactions with related entities, including:
- Information and documents related to the entity’s operations and functions.
- Information and documents related to the operations, functions, and financial results of the related entities with which such entity transacted.
- Information related to potential benchmarking, including internal benchmarking of related entities.
- Documents related to the unrelated comparable entities’ operations and financial results and transactions between them.
- Information and other documents available to the entity or the entities related thereto
• Resident entities and permanent establishments in UAE are required to submit Master file to the GTA on request.
• The contents of the Master file are in line with the Organization for Economic Co-operation and Development (OECD) recommendations.
• As per the OECD recommendations, the following information needs to be included in the Master file:
- A high-level overview of a company’s business operations, description of the groups 5 largest supply chain products or services, as well as service agreements between group entities
- Main geographical markets and functional analysis describing the principal contributions to value creation by individual entities within the group
- Significant transactions related to business restructuring, acquisitions and divestment operation
- TP policies and information about intangibles owned by group entities, intercompany financial activities, and financial and tax positions.
• Resident entities and permanent establishments in UAE are required to submit Local file to the GTA on request.
• The contents of the Local file are in line with the OECD recommendations.
• As per the OECD recommendations, the following information needs to be included in the Local file:
- A description of the management structure of the local entity, a local organization chart, business strategy, whether the resident entity participated in business restructuring operations or transfers of intangible assets and information about the main competitors
- Description of the material controlled transactions (eg procurement of manufacturing services, purchase of goods, provision of services, loans, financial and performance guarantees, licenses of intangibles, etc.)
- A functional analysis, copy of intercompany agreements, and TP methods;
- Information about bilateral advanced pricing agreements (APAs) and tax rulings
o A financial statement of the local entity, a schedule of the relevant financial data for comparable used in TP analysis and the sources from which that data was obtained.
Make us your trusted transfer pricing consulting partner
Our professional transfer pricing services are intended to have two main outcomes. The first is to make sure your organization is fully compliant without taking your focus off your objectives. The second is to educate you about the implications of doing business at home and abroad.
At GSPU, we combine the benefits of our knowledge and experience with the support of a global network. It puts us in a position where we can deliver essential transfer pricing solutions to maximize your business potential. Would you like to learn more? Please contact us today.