Key Takeaways
- Related-party transactions must follow the arm's length principle
- Documentation may be required to evidence pricing
- Family groups and multi-entity structures face particular scrutiny
Many Abu Dhabi businesses operate as groups — holding companies, family conglomerates, and multi-entity structures. UAE corporate tax brings transfer pricing rules that these groups must follow to avoid adjustments and penalties.
The arm's length principle
Transactions between related parties and connected persons must be priced as if between independent parties. This affects intercompany sales, management fees, loans, and royalties within an Abu Dhabi group — all of which must reflect market terms.
Documentation requirements
Depending on size and whether they are part of a multinational group, Abu Dhabi entities may need to prepare transfer pricing documentation, including a master file and local file, and to disclose related-party transactions. Even smaller groups should keep evidence supporting their intercompany pricing.
Managing group compliance
A tax consultant can benchmark intercompany charges, prepare the required documentation, and structure transactions so the group's corporate tax position is robust. This is especially important for family businesses where informal intercompany dealings are common.
