Transfer Pricing Policy Drafting and Review

What does a well-crafted transfer pricing policy look like?

A well-designed transfer pricing policy will have the following critical components:

Documentation: Multinational Enterprises (MNEs) must maintain documentation supporting their transfer pricing policies and methods to demonstrate the prices are at arm’s length. Transfer pricing documentation in the UAE includes local files, master files, country-by-country reports (CbCr) and disclosure forms.

Methodology: The policy should state the transfer pricing methodology used such as the comparable uncontrolled price (CUP) method, resale price method, cost-plus method,  profit split method, and transactional net margin method.

Regulatory Compliance: The transfer pricing policy should comply with the UAE transfer pricing regulations and guidelines.

Risk Assessment: The policy must address the potential risks such as tax audits, disputes and penalties. Key factors you must consider include the risk tolerance of the company, level of documentation and supporting evidence for defending the transfer pricing arrangements.

Steps in Creating a Robust Transfer Pricing Policy

To create a well-designed transfer pricing policy, you must:

• Study transfer pricing regulations
• Analyse the group structure
• Identify and analyse controlled transactions
• Carry out functional & economic analysis
• Choose a transfer pricing method
• Document transfer pricing policies
• Update the policy and review it regularly

Our Transfer Pricing Policy Services in Dubai

Being one of the best transfer pricing consultants in Dubai, we are committed to helping you navigate all your transfer pricing challenges. Our transfer pricing policy services in Dubai include:

• Strategic analysis of your transfer pricing arrangements
• Drafting and review of your transfer pricing policies
• Support for policy implementation
• Benchmark studies
• Documentation and compliance support
• Transfer pricing advice and ongoing support

Why Choose Tax Gian’s Transfer Pricing Policy Services in Dubai?

Tax Gian is a flagship brand of Jitendra Tax Consultants (JTC) and its associate Jitendra Chartered Accountants (JCA). Some of the world’s top corporate groups trust our services for our:

• Over two decades of experience in the UAE market
• Impeccable knowledge and expertise
• Client-centric approach
• Personalized support
• Cost-effective services
• Customer-centric approach

Frequently Asked Questions (FAQs)

1. What is the arm’s length principle in Transfer Pricing?

This is a standard in transfer pricing that requires the prices of controlled transactions to be similar to what independent parties would agree upon in the open market.

2. What is transfer pricing?

Transfer pricing involves setting the price at which the goods, services of intellectual property (IP) are transferred between the related parties (subsidiaries) of a MNC that are located in different tax jurisdictions. The prices, however, should be at arm’s length.

3. What happens if my transfer pricing is incorrect?

Incorrect transfer pricing may lead to tax disputes and the FTA can correct it. However, such corrections may create the risk of double taxation. Transfer pricing consultants in the UAE such as Tax Gian can help you in such cases.