Transfer Pricing - Prema Consulting

What is Transfer Pricing?

Transfer pricing is the method used to set prices for transactions between related entities within the same multinational group or connected parties, such as goods, services, intellectual property, or financial arrangements.

NOTE: Businesses with revenue over AED 200M or related party transactions above AED 40M must maintain three-tier documentation: Master File, Local File, and Disclosure Form, plus benchmarking studies. This ensures fair tax allocation and compliance with UAE Federal Tax Authority (FTA) rules.

Our Transfer Pricing Approach

Understand your Business Model

Map legal entities, functions, assets, and risks.
Identify key intercompany flows that drive revenue, cost, or funding.

Design Practical Pricing Policies

Select appropriate methods (e.g. cost‑plus, resale‑minus, margin‑based) that match your data and sector.
Set clear rules for mark‑ups, licensing fees, and shared services allocations.

Benchmark and Validate

Use external comparables and financial analysis to support selected margins or rates.
Stress‑test the policies against different scenarios and tax authority expectations.

Document and Implement

Prepare concise, business‑friendly documentation explaining the rationale, calculations, and supporting data.
Translate policies into accounting entries, charge‑out templates, and intercompany agreements.

Monitor and Update

Review annually (or on major business changes) so pricing keeps pace with new markets, products, or regulations.
Support your team during queries, audits, or negotiations with authorities.

Why is Transfer Pricing Important?

Transfer pricing is important because it directly affects how profits, taxes, and risks are allocated across related companies, and how tax authorities view your group’s transactions.

Regulatory Compliance

Ensure your intercompany prices meet arm’s length rules and satisfy UAE and global tax regulations with confidence and clarity.

Tax Efficiency

Allocate profits correctly across entities so you legally optimise the overall tax burden without aggressive schemes.

Penalty Protection

Reduce the risk of audits, adjustments, penalties, and double taxation through proper policies and documentation.

Clear Profit Allocation

Show tax authorities how profits are fairly distributed between group companies in different jurisdictions.

Better Governance

Strengthen transparency, internal controls, and financial reporting around all related-party transactions.

Investor Confidence

Demonstrate robust, compliant pricing structures that build trust with investors, lenders, and other stakeholders.

Why Choose Prema Consulting for Transfer Pricing Compliance?

Expert Knowledge
In-depth understanding of UAE and international transfer pricing regulations.
Tailored Solutions
Customized strategies that align with your industry and business model.
Proactive Compliance
Stay ahead of regulatory updates with our real-time advisory.
End-to-End Support
From policy creation to audit defense, we manage it all.
Global Expertise
Leverage our experience with multinational corporations and diverse industries.

FAQs

When should a business start thinking about transfer pricing?

As soon as you have cross‑border related‑party transactions or plan to expand into new jurisdictions, transfer pricing should be on your radar. Early planning avoids messy retrofits, disputes, and costly adjustments later.

Can you help if we already have a structure but no documentation?

Yes. The team can review your existing charges, benchmark them, and prepare documentation to support current arrangements, while suggesting improvements where risk is high.

Do you only work with large multinationals?

No. Many clients are regional groups or founder‑led businesses with just a few entities that want to “get it right” before scaling further.

How data‑heavy is a typical project?

You will need financials by entity, details of intercompany transactions, and basic functional information. Prema Consulting helps organise this data so it becomes a reusable foundation for future years.

Can you coordinate with our external auditors and local tax advisors?

Yes. Prema Consulting frequently collaborates with audit firms and in‑country advisors to ensure transfer pricing positions are aligned, defendable, and consistent across filings.

What documentation is required for transfer pricing compliance?

For transfer pricing compliance, documentation typically needs to cover three areas:

A clear description of your group structure and business model.
Details of related‑party transactions (type of service/goods, value, parties involved). Required documentation may include a Local File, Master File, and a Disclosure Form.
The chosen pricing method, benchmarking or comparables used, and calculations supporting the margins/charges.

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