Crowe Highlights UAE Transfer Pricing Focus and Federal Tax Authority Scrutiny

As businesses in the UAE progress through their corporate tax compliance and transfer pricing documentation cycles, the Federal Tax Authority (FTA) is expected to focus increasingly on related-party transactions, according to an advisory by Crowe. The firm notes that the authority will assess whether transactions are appropriately priced, adequately supported, and consistent with underlying business substance.

Crowe states that while the UAE transfer pricing framework broadly aligns with OECD principles, taxpayers must address the practical realities of their local operations. The FTA's developing risk-based audit approach is anticipated to target the quality of documentation, economic substance, and value creation based on functions performed, assets employed, and risks assumed.

High-value cross-border transactions involving goods, services, intellectual property licensing, and intra-group financing are expected to face closer inspection, particularly where they materially impact taxable income. Crowe also warns that discrepancies among transfer pricing documentation, official tax disclosures, and audited financial statements represent potential compliance risks.

To manage these risks, Crowe advises businesses to perform periodic transfer pricing reviews to ensure benchmarking studies remain up to date and contractual arrangements match operational conduct.