Trading, import & export
Transfer pricing basics for UAE trading groups
If you buy from your own group or sell to your own family's companies, prices need a basis.
Who it affects
Under UAE Corporate Tax, transactions between related parties and with connected persons must be carried out at arm's length, meaning on terms that independent parties would agree. Trading groups are often affected: a UAE company buying from an overseas sister company, selling to a family-owned retailer, or paying management fees to a parent.
Common related-party transactions in trading
- Purchases of goods from a group supplier abroad
- Sales to a related distributor or retailer
- Interest-free loans between group companies
- Management, marketing or warehousing fees charged within the group
- Payments to owners or their relatives
Why it matters for free-zone companies
Compliance with transfer pricing rules is one of the conditions for a Qualifying Free Zone Person to keep the 0% rate. A free-zone trading company with related-party transactions that are not at arm's length risks more than an adjustment.
What to keep
- A list of related parties and connected persons
- Agreements for each related-party transaction
- The basis for each price: comparable third-party prices, cost plus a margin, or another method
- Disclosure in the Corporate Tax return where the thresholds require it
Start simple
For most small and mid-sized trading groups, the first step is not a thick report but a clear record: who you deal with inside the group, on what terms, and why those terms are commercial. Larger groups may need formal master and local files, depending on size.
Recent result
AED 36,000
of AED 40,000 in penalties waived for an IFZA free-zone company. We prepared the waiver request; the investor paid AED 4,000.
Not sure where you stand?
Send us your last VAT return or your trade licence. A chartered accountant will tell you what is in order and what needs attention. No obligation.