On October 23, 2023, The FTA has recently issued the much-awaited Transfer Pricing Guide which provides a general guidance on the TP regulations in the UAE & also provides an overview of Transfer Pricing rules and procedures, determination of the related party transactions, different methodologies for pricing related party transaction and key compliance requirements . Some of the key highlights are given below-
- TP Guidelines have also included various scenarios which determine the ability of a Person to exercise ‘significant influence’ over another Person.
- Frequency of updating the external comparable search: searches for comparable should be fully updated every three years with an annual financial update of the comparable in the interim years as a minimum requirement.
- Exceptions on maintenance of a Master File:-Any Taxable Person that is part of a UAE headquartered group that is not an MNE Group (i.e. a group that does not have business establishments outside the UAE) is not required to maintain a Master File. However, they should maintain a Local File as per the prescribe threshold.
- FTA doesn’t have a preference for any particular commercial database. However, following order should be adopted for applying the comparables :
- Regional (middle east)
- Other regions.
- Threshold and format to be prescribed in due course for filing TP disclosure form
- No safe harbour has been prescribed for payment to Connected persons (Managerial Remuneration)