UAE Law and Practice Contributed by: Marios Palesis, Theodora Charalambous and Giorgos Kinanis, Kinanis Tax Consultancy Middle East Limited
3.4 Ranges and Statistical Measures The Corporate Tax Law acknowledges and accepts that the application of transfer pricing methods may result in an arm’s length range of financial results or indicators for establishing the arm’s length result of a controlled transaction. In the case of an arm’s length range, the FTA Trans - fer Pricing Guide considers appropriate the use of the interquartile range, as it provides a more robust measure of central tendency and variability compared to other statistical measures like the arithmetic mean or median. The interquartile range represents all data between the lower quartile and the upper quartile. Any point within the arm’s length range is acceptable in establishing the arm’s length price, though the FTA has the right to challenge the correctness of the arm’s length range. A point closer to the lower quartile may be appropriate for a company performing very limited functions, holds no assets and assumes no risks. A point closer to the upper quartile may indicate high- value functions, and the ability to assume risk and employ assets. 3.5 Comparability Adjustments As per the FTA Transfer Pricing Guide, comparability adjustments may be made for accuracy and reliability purposes (ie, if they are expected to increase the reli - ability of the results). Adequate justification for any comparability adjustment is required. The UAE does not have any notable rules specifically relating to the transfer pricing of intangibles. It largely follows the guidance in Chapter VI of the OECD Trans - fer Pricing Guidelines. The FTA Transfer Pricing Guide, however, does men - tion that in the case of intangibles, methods other than the OECD’s accepted methods can be used in cases where there is a unique intangible or one-off transac - tion of an intangible (eg, market appraisal valuation). 4. Intangibles 4.1 Notable Rules
4.2 Hard-to-Value Intangibles The UAE does not have any special rules regarding hard-to-value intangibles. 4.3 Cost Sharing/Cost Contribution Arrangements The UAE does not have any special rules regarding cost contribution arrangements. It largely follows the guidance in Chapter VIII of the OECD Transfer Pricing Guidelines. 5. Adjustments 5.1 Upward Transfer Pricing Adjustments Upward transfer pricing adjustments are made on a self-assessment basis by the taxpayers as part of the disclosure form that is completed during the prepara - tion of their tax return. The burden is on the taxpayers to ensure that controlled transactions are aligned with the arm’s length principle. Taxpayers may make upward transfer pricing adjust - ments after filing tax returns, but before the deadline for submission of the tax return in accordance with the Corporate Tax Law, without any penalties. Administra - tive penalties may apply if a taxpayer makes upward pricing adjustments after the expiry of the deadline for submission of the tax return. Downward transfer pricing adjustments can be made only after obtaining approval from the FTA. 5.2 Secondary Transfer Pricing Adjustments The UAE does not have any specific rules on second - ary adjustments. 6. Cross-Border Information Sharing 6.1 Sharing Taxpayer Information The UAE has concluded over 140 bilateral double tax - ation agreements, as well as a number of exchange of information agreements and mutual administrative assistance agreements. Additionally, it has been a member of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes since 2010, and is a signatory to the Multilateral Convention
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