UAE Law and Practice Contributed by: Marios Palesis, Theodora Charalambous and Giorgos Kinanis, Kinanis Tax Consultancy Middle East Limited
9. Alignment With OECD Guidelines 9.1 Alignment and Differences The UAE’s transfer pricing regime aligns closely with the OECD Transfer Pricing Guidelines. 9.2 Arm’s Length Principle UAE transfer pricing rules do not depart from the arm’s length principle. 9.3 Impact of the Base Erosion and Profit Shifting (BEPS) Project The OECD’s BEPS project has had a significant influ - ence on the evolution of the UAE’s domestic transfer pricing landscape, primarily through the adoption of internationally recognised standards in both legisla - tion and administration. Following its accession to the OECD Inclusive Frame - work in 2018, the UAE implemented country-by-coun - try reporting requirements in line with BEPS Action 13 and subsequently incorporated comprehensive trans - fer pricing documentation requirements. More recently, global tax developments under BEPS 2.0, particularly Pillar Two (the global minimum tax), have also influenced the UAE’s broader corporate tax policy direction, contributing to the introduction of a federal corporate tax regime and the consideration of domestic minimum tax mechanisms for large multi - national groups. In addition, the issuance of APA guidance reflects alignment with BEPS Action 14 on dispute resolution, signalling the UAE’s intention to provide mechanisms to address cross-border tax controversies. 9.4 Impact of BEPS 2.0 The UAE has adopted a co-operative stance towards the OECD’s BEPS 2.0 initiatives, particularly in rela - tion to Pillar Two. By contrast, Pillar One has had lim - ited practical impact to date, as it has not yet been adopted. 9.5 Pillar One Amount B The UAE has not implemented Pillar One Amount B.
neither party has control over or provides detailed instruction to the other party); or • a permanent establishment (PE) of a non-resident person in the UAE whose income is subject to the same corporate tax rate as the income of the taxpayer. A disclosure form must be submitted as part of a tax - payer’s tax return, disclosing controlled transactions, in the following cases. • In the case of related party transactions, when: (a) the aggregate value of all transactions with related parties exceeds AED40 million (primary threshold); and (b) the aggregate value of transactions per cat - egory with related parties exceeds AED4 million (secondary threshold). Individual trans - actions per category exceeding the secondary threshold must be disclosed once the primary threshold is met. • In the case of transactions with connected per - sons, when: (a) the aggregate payment or benefit exceeds AED500,000 per connected person (together with its related parties). A country-by-country report must be submitted by the ultimate parent entity for groups with revenue that is equal to or more than AED3.15 billion during the rel - evant tax period. The report must be submitted no later than 12 months after the last day of the reporting fiscal year of the group. Additionally, it is important to note that the UAE pro - vides relief for small businesses in the form of excep - tions from maintaining transfer pricing documenta - tion and from filing the disclosure form. The relief is available to taxpayers whose revenue for the relevant tax period up to 31 December 2026 and previous tax periods (starting from 1 June 2023) did not exceed AED3 million.
281 CHAMBERS.COM
Powered by FlippingBook