Transfer Pricing Services in DIFC

Transfer pricing is essential in the Dubai International Financial Centre (DIFC) to ensure fair pricing for transactions between affiliated entities. Proper compliance fosters transparency and trust, supporting a strong business environment. MS Transfer Pricing Services helps you uphold financial integrity, prevent tax evasion, and meet international standards.
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Mohammad Shafeek

Founder & Group CEO, MS

Let MS empower your business in ADGM

UAE TP: Simplified and Future-Ready

Compliance with transfer pricing regulations offers several benefits for businesses. It helps set fair prices for intercompany transactions, reducing the risk of over- or under-pricing. Proper compliance also lowers the chance of tax audits and disputes by providing clear analysis and documentation of pricing policies. It ensures transparency and consistency with clear policies. Compliance applies to related parties (entities or people with ownership, control, or kinship connections) and connected persons (those with ownership, directorial roles, or close family ties), ensuring a thorough approach to following the rules.

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Who falls under the scope?
  • Related Party: This refers to an individual or entity with an existing connection to a business, established through ownership, control, or kinship in the case of natural person.
  • Connected Person: Refers to an individual with an ownership interest in the company or serving as a director/officer, along with relatives up to the fourth degree of kinship or affiliation, thereby being considered Connected to the company's business.
How does complaince with Transfer Pricing regulations provide benifits?
  • Streamlining pricing decisions to minimise the risk of over or under-pricing in intercompany transactions.
  • Reducing the risk of tax audits and disputes with tax authorities through detailed analysis and documentation of Transfer Pricing policies.
  • Establishing clear Transfer Pricing policies and procedures for enhanced transparency and consistency for taxpayers.
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Key points regarding Transfer Pricing regulations in the UAE
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Transfer pricing rules apply to companies that fall within the scope of UAE corporate tax.
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The rules govern transactions between related parties to ensure they are conducted at arm's length.
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The arm's length principle requires that transactions between related parties be conducted as if they were between independent entities.
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Businesses must demonstrate that their related party transactions are comparable to those conducted between unrelated parties under similar circumstances.
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Detailed documentation of related party transactions, global business operations, transfer pricing policies, and allocation of income and activities.
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Companies must submit a form disclosing their related party transactions along with their corporate tax return.
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Information on related party transactions must be included in the annual corporate tax return.
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Traditional Transaction Methods: Comparable Uncontrolled Price (CUP) method, Resale Price Method (RPM), and Cost-Plus Method.
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Transactional Profit Methods: Transactional Net Margin Method (TNMM) and Profit Split Method.
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Penalties can be imposed for failing to comply with transfer pricing documentation and reporting requirements.
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Why MS
Transfer Pricing Services for DIFC entities

MS can assist businesses in complying with UAE transfer pricing regulations by offering expert consultation on regulatory requirements and helping with the preparation of Local and Master Files. MS can guide clients through completing and submitting Transfer Pricing Disclosure Forms, advise on appropriate transfer pricing methods, and support them during audits. Additionally, we can aid in negotiating Advance Pricing Agreements (APAs), help avoid penalties by ensuring accurate and timely compliance, and provide sector-specific advice. By keeping clients updated on regulatory changes and offering training, MS ensures their ongoing compliance and efficient management of transfer pricing issues.

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Frequently Asked Questions (FAQ)
what is the potential risk for DIFC entity if they violate Transfer pricing regulation ?
Violating Transfer Pricing (TP) rules in the DIFC can lead to extra taxes and penalties for tax underpayment. Tax authorities may adjust transaction prices, resulting in substantial additional tax liabilities. TP audits and discussions with tax authorities are complex and time-consuming, heightening the consequences of non-compliance.
What are the methods established to align with OECD transfer pricing guidelines ?
Accepted transfer pricing methods include Transactional Net Margin, Transactional Profit Split, Cost-Plus, Comparable Uncontrolled Price, and Resale Price. These methods ensure fair assessments aligned with international standards.
What transfer pricing documentation should the DIFC companies maintain and what are the contents of the TP documentation ?
DIFC companies are required to maintain transfer pricing documentation as per UAE law. This includes a master file with comprehensive information on the multinational enterprise group and a local file focusing on specific transactions of the local taxpayer. The local file contains details of the local entity, controlled transactions, and financial information for comparison. This documentation ensures compliance and transparency in transfer pricing practices.
What is transfer pricing ?
Transfer pricing (TP) regulations globally are designed to ensure fair tax assessments by preventing the manipulation of transaction prices, especially by related parties attempting to evade taxes by transferring profits to jurisdictions with lower tax rates. These regulations establish standards based on the arm’s length principle, ensuring that transactions mirror those conducted between unrelated parties in similar situations. This principle safeguards against tax evasion tactics and promotes equity in tax contributions across jurisdictions.
Disclaimer: MS is a trading name of MS Corporate Services (DIFC) Limited, M S Global Solutions DMCC and M S Chartered Accountants LTD (ADGM). MS Corporate Services (DIFC) Limited is registered with the Dubai Financial Services Authority (Reg No: 9054) as DNFBP and is commercially licensed by the Dubai International Financial Centre Authority as a Corporate Services Provider. M S Global Solutions DMCC is licensed by Dubai Multi Commodities Centre Authority (Reg no: 873767) as a Corporate Services Provider and Management Consultant. M S Chartered Accountants LTD is licensed by ADGM Authority (Reg No: 000007218) for Management Consultancy, Tax Consultancy, Compliance Consultancy and Accounting Services.