When UAE Corporate Tax law came into force, many smaller businesses assumed transfer pricing rules were something for large multinationals to worry about. In 2026, that assumption is proving costly — the FTA has moved into active, risk-based enforcement, and transfer pricing sits near the top of its audit priority list.

Who is actually in scope

Transfer pricing rules apply to any UAE taxable person transacting with related parties or "Connected Persons" — regardless of business size. You're in scope if your company:

  • Transacts with a related party anywhere in the world
  • Pays management fees, service fees, royalties, or interest to a connected entity
  • Receives goods or services from a parent company, subsidiary, or group affiliate
  • Pays a shareholder-director a salary or benefit (see our related post on remuneration benchmarking)

There's no minimum transaction size below which the arm's length requirement is waived — even businesses claiming Small Business Relief still need to price related-party transactions fairly.

The core rule: the arm's length principle

Related-party and connected-person transactions must be priced as if the parties were unrelated, independent businesses negotiating at market rates. If they're not, the FTA can adjust your taxable income upward to reflect what an arm's length price would have been — directly increasing your Corporate Tax liability, with limited scope to offset the adjustment through reduced penalties.

What documentation you need to have ready

At a minimum, most businesses with related-party transactions should maintain a contemporaneous transfer pricing policy, updated periodically, along with a benchmarking study that demonstrates arm's length pricing using a recognised method. Larger groups — generally those exceeding specific revenue thresholds — face additional Local File and Master File requirements. Documentation doesn't need to be filed proactively with your return in most cases, but the FTA can request it, and businesses typically have only a short window (around 30 days) to produce it once asked.

Why "we'll sort it out later" doesn't work

Thirty days is not enough time to build credible transfer pricing documentation from scratch — a proper benchmarking study takes research and time to prepare correctly. Businesses that wait for an FTA request before starting are, in practice, unable to respond in time.

Our recommendation

If your business has any related-party dealings — including paying yourself or a family member from the company — a transfer pricing health check now is far cheaper than a Corporate Tax adjustment later.