CORPORATE COMPLIANCE SERVICES

TRANSFER PRICING

Introduction

Under the framework of UAE Corporate Tax Laws, our firm specializes in ensuring businesses comply with transfer pricing regulations, especially concerning transactions with connected persons.

This legal framework mandates adherence to the Arm’s Length Principle for transactions between related parties, as delineated in the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022) and further elaborated in the Executive Regulations. This legislation requires that transactions, especially those concerning remuneration to individuals in key managerial positions who significantly influence a company’s operations, be conducted as if between unrelated parties at market value. The objective is to prevent profit erosion through potentially inflated compensations to connected persons.

These laws stipulate that payments to individuals in key managerial positions, who have a significant influence on a company’s operations, should conform to Arm’s Length principles. This principle mandates that compensation to such connected persons must be comparable to what would be paid under similar circumstances between unrelated parties, aiming to prevent profit erosion through overcompensation.

Compliance Approach

Our service adopts a thorough approach to achieve this compliance:

Management Consultation: Our engagement begins with in-depth discussions with your company’s management to understand the scope of influence and roles of individuals deemed as connected persons due to their ownership stakes or significant impact on the company’s affairs.

Arm’s Length Price Determination: Following a detailed analysis of the roles, responsibilities, and qualifications of these connected persons, we embark on determining the arm’s length price or range. This step is vital to ensure the remuneration is consistent with industry standards and meets the legal requirements.

Industry Standards Benchmarking: Utilizing a range of professional employment databases, we gather pertinent compensation and benefits data across industries. This aids in benchmarking against market standards, ensuring an accurate comparison for compliance.

Comparative Analysis with External Data: Leveraging sophisticated tools such as TP Catalyst, we conduct an external search to analyze comparables and their margins. This comparison helps in assessing if your company’s margins align with the arm’s length range, ensuring compliance with transfer pricing regulations.

Dual Benefit of Service

Our service is crafted to not only assist your company in adhering to the regulatory requirements but also to provide strategic insights into structuring compensation in alignment with market norms. This dual benefit ensures regulatory compliance while fostering the establishment of equitable and competitive compensation practices within your organization, safeguarding against the risk of legal repercussions and contributing to the overall financial health and operational integrity of your business.

The information provided does not constitute a direct or implied recommendation or endorsement of any strategy, decision, or action. Clients are encouraged to consult with the tax, legal, or professional advisors to determine the applicability of the information to their specific circumstances. Europe Emirates Group expressly disclaims any liability for errors or omissions in this information or for any loss or damage suffered by any person as a result of reliance on the information provided. Use of and reliance on the information is at the user’s own risk.