As the UAE’s corporate tax framework continues to evolve, transfer pricing (TP) has become one of the most important compliance areas for businesses operating locally and internationally. With the 2025 tax year bringing enhanced reporting, documentation requirements, and stricter audits, companies must understand how transfer pricing rules influence their tax obligations—and how non-compliance can trigger penalties, scrutiny, or tax reassessments.

For businesses aiming to stay compliant and tax-efficient, this guide explains the latest UAE transfer pricing requirements, their real impact on corporate tax filing, and how firms like Swenta assist companies in meeting these obligations seamlessly.

What Are Transfer Pricing Rules?

Transfer pricing rules ensure that transactions between related parties—such as parent companies, subsidiaries, and group entities—are conducted at arm’s length, meaning the pricing must match what independent parties would charge under similar market conditions.

These rules apply to:

• Goods and service transactions

• Financing arrangements

• Royalty or IP transfers

• Cost-sharing agreements

• Intragroup management fees

The UAE follows OECD Transfer Pricing Guidelines, making compliance essential for multinational and multi-entity businesses.

Why Transfer Pricing Matters for 2025 Corporate Tax Filing

1. Increased Corporate Tax Oversight

The Ministry of Finance is strengthening its review mechanisms for cross-border and domestic related-party transactions. Tax returns filed in 2025 undergo more detailed validation, making accurate transfer pricing documentation more important than ever.

2. Mandatory Disclosure Forms

Most businesses must now submit:

• Local File

• Master File

• Related Party Disclosure Form (submitted with the corporate tax return)

Failure to maintain these documents in time can lead to non-compliance penalties.

3. Reduced Risk of Tax Adjustments

Incorrect pricing between related parties may cause the Federal Tax Authority (FTA) to:

• Adjust taxable income

• Impose fines

• Initiate an audit

Accurate TP documentation protects the company from unexpected tax liabilities.

Why Transfer Pricing Is Under Greater Global and Local Scrutiny

Just like the real estate sector attracts criminals due to high-value transactions and weak oversight, related-party transactions are globally monitored because they can easily be misused to shift profits, hide taxable income, or reduce tax liabilities.

Authorities worldwide—including the UAE—focus heavily on transfer pricing because:

• Multinationals often operate across multiple tax jurisdictions

• Money can be moved through internal pricing

• Manipulated prices can hide taxable profit

Transfer pricing rules aim to keep tax systems fair and transparent.

Understanding the UAE’s Risk-Based Approach (RBA) to Transfer Pricing

The UAE applies a risk-based regulatory approach, meaning tax authorities focus more attention on transactions or industries with heightened risk.

High-risk factors include:

• Complex ownership structures

• Large cross-border transactions

• Significant intellectual property use

• Heavy reliance on intercompany financing

• Intragroup service charges without clear economic substance

Low-risk transactions still require documentation but attract less scrutiny.

Businesses that adopt an internal RBA—with the help of UAE tax and transfer pricing consultants—are better positioned to defend their pricing during audits.

Key TP Compliance Steps for Businesses Filing 2025 Corporate Tax

1. Conduct a Proper Functional Analysis

Identify:

• Who performs key functions

• Who assumes risks

• Who uses assets

This forms the foundation of TP justification.

2. Prepare Comparable Market Studies

Businesses must benchmark their prices against market comparables using OECD-compliant databases.

3. Maintain Yearly Documentation

All documentation must be:

• Accurate

• Up-to-date

• Available upon request

The FTA expects companies to maintain records for a minimum number of years.

4. File the Transfer Pricing Disclosure With Your Tax Return

This form must be submitted together with the 2025 corporate tax return.

5. Prepare Local File & Master File (If Applicable)

Required if revenue or consolidated group thresholds are met.

6. Review Intragroup Policies Regularly

Pricing policies must remain:

• Consistent

• Well-documented

• Reflective of economic reality

Consultants like Swenta help businesses develop compliant TP policies.

How Supervisors and Regulators Enforce TP Compliance

Just as real estate regulators oversee AML compliance for high-risk transactions, the UAE tax authority enforces TP for fair taxation.

Authorities focus on:

• Detecting aggressive tax planning

• Auditing high-risk sectors

• Ensuring documentation exists at the time of filing

• Providing guidance for better tax transparency

Industries with historically low documentation or complex structures receive extra attention.

Extra Care Required in Emerging or High-Risk Industries

Some sectors—much like underdeveloped real estate markets—are more vulnerable to misuse.

These include:

• Technology startups

• Trading companies with thin margins

• Family-owned groups

• Free zone companies involved in cross-border transactions

Companies in these sectors must maintain stronger TP documentation.

Practical Steps to Strengthen TP Compliance in 2025

To remain compliant and minimize audit risk, companies should:

✔ Establish Internal Transfer Pricing Policies

Clear guidelines reduce inconsistent pricing.

✔ Use Technology for Benchmarking & Data Tracking

Automated tools help log transactions accurately.

✔ Train Finance Teams Regularly

Employees must understand new corporate tax and TP rules.

✔ Assess High-Risk Transactions Annually

Finance, service fees, and IP royalties need special review.

✔ Engage UAE Transfer Pricing Experts

Tax specialists (including Swenta) help businesses:

• Prepare documentation

• Conduct benchmarking

• Develop TP policies

• Avoid penalties

• Navigate FTA audits

Transfer pricing is no longer optional or secondary—it is a central component of UAE corporate tax compliance. With 2025 introducing stricter reporting and documentation standards, businesses must understand how TP affects taxable income and ensure all related-party transactions meet the arm’s length standard.

A proactive approach—supported by expert guidance from firms like Swenta—helps businesses avoid penalties, reduce audit risk, and confidently file their 2025 corporate tax returns.