01Taxation
Transfer pricing a tax auditor can follow
Documentation, benchmarking, advance pricing agreements and disputes for groups in the UAE and India.
Written by Ajit Jain, founder of Averise. Last reviewed .
Transfer pricing sets the price of transactions between related parties so each entity reports a fair share of profit where it operates.
Averise prepares Master Files and Local Files, builds benchmarking studies, and supports advance pricing agreements and audits. Every position is tied to the facts of the group and to a cited rule.
Functions, assets, risks
What each entity does, owns and bears
Transaction
What is really exchanged between related parties
Method
The approach that fits the transaction
Benchmark
A range drawn from independent comparables
Documentation
Master File, Local File and agreements
01
Documentation
The UAE applies the arm's length principle through Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. Ministerial Decision No. 97 of 2023 sets when a Master File and a Local File must be kept, including a revenue test of AED 200 million.
We write the functional analysis from interviews and contracts, not from a template. The file then states which entity performs which functions, uses which assets and controls which risks.
- Master File and Local File preparation and review
- Related-party disclosures and their reconciliation to the accounts
- Intercompany agreements that match how the group actually operates
- Record keeping under Article 56 (Record Keeping) of Federal Decree-Law No. 47 of 2022
02
Benchmarking
A benchmark is only as strong as the method choice behind it. We select the method from the delineated transaction, then search for comparables and document every accept and reject decision.
Searches are refreshed on a stated cycle so the range in the file matches the year being tested.
03
Advance pricing agreements and disputes
Where the stakes justify certainty, we assess whether an advance pricing agreement or a clarification request is the better route. In the UAE, Article 59 (Clarifications) of Federal Decree-Law No. 47 of 2022 provides the clarification channel.
In an audit, we rebuild the authority's reasoning, test it against the file and the facts, and prepare a written response. Where two countries tax the same profit, we map the treaty route to relief.
Questions clients ask
- Does every UAE company need a transfer pricing Local File?
- No. Ministerial Decision No. 97 of 2023 sets the thresholds, including a revenue test of AED 200 million. A company below them must still price related-party transactions at arm's length and keep records that support the price.
- What does a benchmarking study involve?
- It identifies the transaction, selects the most appropriate method, searches databases for independent comparables, screens them against stated criteria and sets an arm's length range. Each rejection is recorded so a reviewer can retrace the search.
- Can Averise review a file another adviser prepared?
- Yes. A review tests whether the functional analysis matches the facts, whether the method fits the transaction and whether the comparables survive scrutiny. It ends with a list of gaps ranked by audit risk.
- When is an advance pricing agreement worth pursuing?
- When a transaction is large, recurring and open to more than one reasonable method. The cost and time of negotiation are weighed against the cost of repeated disputes over the same question.
Sources
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The UAE corporate tax law; Articles 56 and 59 are named by title in Article 14.1 of Cabinet Decision No. 142 of 2024.
- Ministerial Decision No. 97 of 2023. Master File and Local File thresholds.
General information, not advice on your facts.
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