Related-party transactions, priced and documented correctly
Transfer Pricing Services
UAE corporate tax law requires related-party transactions to be priced at arm's length, with documentation to support it — a requirement that's easy to overlook until a free zone entity's Qualifying Free Zone Person claim depends directly on getting it right.
A required condition for maintaining QFZP status, not an optional compliance extra
Key facts
| Applies to | Groups and entities with related-party transactions above relevant thresholds |
| Documentation requirement | Master file and local file thresholds apply based on revenue and related-party transaction value |
| QFZP relevance | Transfer pricing compliance is one of the specific conditions for maintaining Qualifying Free Zone Person status |
What this actually involves
Intercompany management fees, royalty payments, and financing arrangements between related UAE entities — or between a UAE entity and an overseas parent or sister company — all fall under transfer pricing rules requiring arm's-length pricing. The principle is simple to state and genuinely difficult to apply correctly without a documented benchmarking analysis behind the numbers.
The most commonly under-documented transactions we encounter are informal intercompany loans with no stated interest rate, management fees set at a round number with no supporting rationale, and IP licensing arrangements priced without reference to comparable market royalty rates. Each of these is exactly the kind of finding an FTA transfer pricing review is designed to surface.
For free zone entities specifically, transfer pricing compliance isn't a peripheral concern — it's one of the specific, named conditions for maintaining Qualifying Free Zone Person status and its associated 0% tax rate on qualifying income. A free zone entity with non-arm's-length related-party transactions risks its QFZP status directly, not just a separate transfer pricing penalty.
Is this actually relevant to you?
- Your UAE entity has intercompany transactions — management fees, royalties, financing — with a related UAE or overseas entity
- You're a free zone entity claiming or planning to claim Qualifying Free Zone Person status and want your transfer pricing position reviewed as part of that
- You have informal intercompany balances or arrangements that have never been formally documented or benchmarked
- Your group is above the relevant thresholds requiring master file or local file documentation
Our process, step by step
Related-party transaction review
Identifying and cataloguing all intercompany arrangements across your group structure.
Arm's-length pricing analysis
Benchmarking your intercompany pricing against comparable market transactions.
Documentation preparation
Master file and local file documentation built to withstand FTA scrutiny, not just a compliance formality.
QFZP-specific review
Where a free zone entity is involved, confirming transfer pricing compliance supports rather than jeopardises qualifying income status.
Scope of work
Transfer pricing documentation supports the related-party disclosures in your corporate tax return, and is especially relevant to tax groups, holding companies and free zone businesses claiming qualifying status.
What an FTA review typically tests first
- Informal intercompany loans with no documented interest rate or repayment terms, functioning in practice as permanent equity but never formally converted.
- Management fees or royalties set at a round, unbenchmarked figure rather than supported by comparable market analysis.
- Free zone entities with related-party transactions that haven't been assessed for their impact on QFZP qualifying income status.
Related corporate tax services in the UAE
Every corporate tax service is delivered by the same team that keeps your books, so registrations, returns and elections stay consistent year to year.
Related guides from our team
Practical explanations of the rules behind this service, written by our chartered accountants.
Common questions
Does transfer pricing apply to small groups too?+
Documentation thresholds scale with size, but the underlying arm's-length principle applies regardless of group size — a proportionate review is worthwhile even below formal documentation thresholds.
How does this affect our free zone 0% tax rate?+
Qualifying Free Zone Person status requires related-party transactions to be conducted at arm's length — non-compliant transfer pricing can jeopardise the 0% qualifying income treatment specifically.
What's the difference between a master file and a local file?+
A master file provides an overview of the group's global transfer pricing policies; a local file documents the specific UAE entity's related-party transactions in detail — different thresholds trigger each requirement.
Do we need transfer pricing documentation if all our related parties are also in the UAE?+
Yes — the arm's-length requirement applies to domestic related-party transactions too, not only cross-border ones.
How often should transfer pricing documentation be updated?+
Generally reviewed annually or whenever a material change occurs in the nature or scale of related-party transactions.
Have intercompany transactions that have never been formally priced or documented?
We'll review your related-party arrangements and flag what needs documentation before it becomes an FTA finding — or a QFZP status problem.