The United Arab Emirates (UAE) is quickly emerging as a key jurisdiction in the global transfer pricing (TP) landscape. As the UAE gears up for its first-ever Transfer Pricing Country Profile under the OECD framework, multinational enterprises (MNEs), tax advisors, and regulators alike are watching closely. This anticipated move represents not just the formal alignment of the UAE with OECD-compliant practices but also a pivotal step in the country’s growing reputation as a modern, transparent, and globally integrated tax jurisdiction.
Let’s explore what stakeholders can expect from the UAE’s forthcoming OECD TP profile, and how it fits into the broader global tax framework.
Brief Background: UAE’s Transfer Pricing Journey
Although the UAE historically functioned as a low-tax or no-tax jurisdiction, its Corporate Tax Law (effective from 1 June 2023) has significantly transformed its tax landscape. This includes:
Introduction of transfer pricing rules aligned with the OECD Transfer Pricing Guidelines.
Requirement for arm’s length principle in related-party transactions.
Master File, Local File, and Country-by-Country Reporting (CbCR) thresholds in line with BEPS Action 13.
Publication of Ministerial Decision No. 97 of 2023, providing guidance on TP documentation and disclosure requirements.
Now, with the OECD preparing to publish the UAE’s Transfer Pricing Country Profile, the Emirates is taking another step toward transparency and international credibility.
Key Components Expected in the OECD Profile
Based on the standard OECD format and the UAE’s domestic regulations, here’s what we expect to see in its debut profile:
Transfer Pricing Methods
The UAE endorses the full range of OECD-recommended methods: Comparable Uncontrolled Price (CUP), Resale Price, Cost Plus, TNMM, and Profit Split.
The most appropriate method rule is applicable.
Application of the Arm’s Length Principle
The UAE follows the OECD’s arm’s length principle, consistent with Article 9 of the OECD Model Tax Convention.
Related party transactions are benchmarked against third-party comparable transactions.
Documentation Requirements
Master File & Local File required for entities crossing global and local thresholds:
AED 3.15 billion in consolidated global revenue (Master File).
AED 200 million in local revenue or expenses (Local File).
CbCR reporting mandatory for UAE-headquartered MNEs exceeding AED 3.15 billion in consolidated group revenue.
Benchmarking and Comparability
Expect the profile to confirm that local or regional benchmarking studies are not mandatory, but OECD-aligned economic analyses are required.
The interquartile range is likely to be the default range for comparability adjustments.
Inclusion of HTVI and Amount B
The OECD is actively adding Hard-to-Value Intangibles (HTVI) and Amount B (simplified pricing for baseline distributors) to member and non-member profiles.
Given the UAE’s commitment to BEPS and recent alignment efforts, its profile is likely to:
Acknowledge HTVI guidance as applicable.
Evaluate or adopt Amount B for routine marketing/distribution transactions.
Dispute Resolution: Is the UAE Ready for MAP and APAs?
The UAE has taken early steps to build tax treaty-based dispute resolution mechanisms, including:
Inclusion of Mutual Agreement Procedure (MAP) clauses in recent double tax treaties.
Potential rollout of Advance Pricing Arrangements (APAs) through future administrative circulars or guidance.
While the OECD Country Profile may initially state “Not Applicable” or “Under Development” for APAs, the UAE is expected to provide MAP access via treaty partners, particularly where it aligns with Article 25 of the OECD Model Convention.
