BETA
Transfer Pricing
Transfer pricing refers to the rules and methods for pricing transactions of Physical goods or Providing services or Intangibles within and between enterprises under common ownership or control.
What is ALP?
The arm’s length price (ALP) of a transaction between two associated enterprises is the price that would be paid if the transactions had taken place between two comparable independent and unrelated parties, where the consideration is only commercial.
TRANSFER PRICING
TAXATION & COMPLIANCES
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Impact of Transfer Pricing on Corporate Tax in UAE:
To ensure that transactions between related parties reflect fair and independent pricing, taxpayers are advised to apply the “arm’s length principle.” This principle suggests that related parties should conduct their transactions as if they were unrelated entities operating in the open market.
In practical terms, this means that the pricing and terms of transactions between related parties should not be influenced by their relationship but should be in line with prevailing market prices or conditions for the specific commodity or service in question. By adhering to the arm’s length principle, taxpayers aim to prevent situations where related parties engage in transactions at artificially inflated or deflated prices, which could result in tax avoidance or evasion.
TP Documentation
Why?
Documentation is a crucial part of TP Regulations. This is essential to furnish tax authorities with the essential data required for conducting a well-informed evaluation of transfer pricing risks.
Further, this ensures that taxpayers have taken into account the transfer pricing requirements when determining the prices and other conditions for their transactions and while reporting the income from these transactions in their tax returns.
This in turn will assist the taxpayers to show that their transactions satisfy the arm’s length principle and hence eliminate transfer pricing disputes. Where any business entity has increased volume and complexity of international as well as domestic transactions, it will lead to transfer pricing issues which ev
Country by Country Report (CbCR)
The CbCR legislation only applies to the parent companies of multinationals whose consolidated turnover exceeded USD 857 million (more than or equal to AED 3.15 billion) in the previous financial year.
Therefore the parent company of an international group must submit the report to the prescribed authority in its country of residence. Hence the report is based on a consolidated financial statement of the MNE group.
In other words, it is the global allocation of the MNE groups’ income and tax paid, which are the indicators of the location of economic activity within the MNE group.
Why Us?
With our Subject matter expert professionals, we can assist you in developing tax-efficient arrangements that maximize compliance with laws and regulations while meeting all of your transfer pricing requirements and ensuring that you are compliant with all the regulations of TP in the UAE.
We perform a thorough walk-through and collate the information through an Inquiry and questionnaire as a part of fieldwork after the engagement & approval of the audit plan.
