The UAE’s implementation of a transfer pricing scheme can be seen as a crucial step in enhancing its standing as a desirable investment location and regional centre.
Due to the fast expansion of international markets, transfer pricing is becoming more and more relevant and crucial for businesses all over the world. Our wide variety of transfer price services, which we offer as subject matter experts, also includes advisory services, compliances, and transfer pricing planning.
Framing Transfer Pricing Policy and Advisory
Accroun is made up of economists, tax experts, and MBAs with practical experience in international transfer pricing in UAE. By facilitating uniform reporting and removing internal discrepancies that may result from using multiple service providers, this unified worldwide approach makes the process more effective, efficient, and simple to explain to the appropriate authorities.
Transfer pricing, policy and advisory structuring
The concept of internal agreed-upon arm’s length and transfer pricing have gained popularity in the Middle East. When interacting with the federal tax authorities, the UAE’s corporate tax as well as the right transfer pricing plan and documentation will be crucial.
- Allowing companies to modify existing policies in accordance with local legislation, corporate functions, and assessing how new tax rules might effect their overall tax condition.
- Assisting companies in the analysis, reporting, and development of tools and procedures for tracking the results of transfer pricing.
- Assist companies in creating and putting into place cost- and economically successful TP policies.
In the future, it will be essential for the company to have the tools and experts at their disposal. ATP policy that is structured and clearly stated will act as a comprehensive strategy for daily activities.
Transfer Pricing Documentation
Transfer pricing issues will arise as a result of a corporate entity’s expanding volume and complexity of domestic and international transactions, raising regulatory costs for taxpayers.
Transfer pricing issues will arise as a result of a corporate entity’s expanding volume and complexity of domestic and international transaction, raising regulatory costs for taxpayers.
A business will also need to maintain a master and local file if the arm’s length value of their related party transactions exceeds a certain threshold during the appropriate tax period (with format and content corresponding to the standards established under OECD BEPS Action 13).
Transfer Pricing Documentaion under OECD Guideliness
Authorities use a three-tiered approach for transfer pricing paperwork that is in accordance with
OECD transfer pricing rules. This approach entails:
Local file: A document that specifically refers to significant transactions involving local taxpayers.
County by country report : Information on the earnings and taxes the MNE group has paid, as well as details on the locations of its economic activities.
Goals of Transfer Pricing documentation in UAE
Let’s quickly go over the main objectives of transfer price documentation.
- To give the information needed for tax authorities to conduct a precise assessment of the risk involved with transfer pricing.
- To provide tax authorities with useful information they can use to conduct a full analysis of the firms’ transfer pricing practises.
In what ways does Accruon Consultants support UAE transfer pricing documentation?
- Aids in the creation of transfer pricing documentation that meet TP standards
- Assessing your present records to make sure they adhere to TP guidelines
- Helping by providing guidance and advice on TP papers.
County by county reporting in UAE
According to the Country by Country Reporting (CbCR) rules put into place in the UAE with effect in 2019, large multinational enterprises (MNE) operating in the UAE are expected to submit a report to the appropriate authorities at the end of each financial year. At Accroun Consultants, we have a team of tax advisors who can help customers understand the cbcr UAE requirements, conduct the necessary research to see if their business operations are subject to the limitations, and provide assistance with any necessary adherence.
CbCR: an Overview
Action 13 of the Base Erosion and Profit Shifting (BEPS) programme of the Organization for Economic Cooperation and Development (OECD) includes CbC Reporting UAE. The UAE has committed to implementing the BEPS basic standards for transfer pricing documentation and country-by-country reporting.
BEPS Action 13 mandates that large multinational groups of entities (MNEs) provide a CbC Report that includes a review of the MNE’s global revenue, profit before tax, income tax accrued, and numerous other economic activity indicators for each country in which it does business.
Organizations with tax residency in the United Arab Emirates and membership in MNEs with combined revenues equal to or above AED 3.15 billion (EUR 764 million / USD 858 million) in the fiscal year before the “financial reporting year” in question are subject to the CbCR criteria.
CbC Reporting Goals
CbC Reporting aims to address any informational gaps that may exist between tax administrations and taxpayers regarding the location of business value creation within MNE Groups and whether or not this corresponds to the locations where earnings are distributed and taxes are paid globally.
UAE CbCR regulations are applicable to MNE organization’s having headquarters in the UAE and financial reporting years starting on or after January 1, 2019.
What standards apply to filing?
The CbC report shall be submitted within 12 months following the end of the reporting period. For instance, the CBC report will be delivered no later than December 31, 2020, if the financial reporting year starts on January 1st, 2019.
Reasons for Submitting CbC Report
The major recommendations for submitting the CbCR report are as follows:
- To evaluate the risks of transfer pricing. to assess any additional hazards associated with BEPS.
- To check whether the companies making up the MNE Group are abiding by the relevant transfer pricing laws.
- To look up the company’s financials to see how much economic value was generated
CbC reporting in UAE : Asst Accruon Consultants
The UAE’s adoption of the CbCR recommendations is a crucial step that demonstrates to the international tax community the UAE’s commitment to passing new BEPS-related legislation. For the vast majority of MNE companies operating in the UAE, the new restrictions offer independence.
The new rules will mainly affect eligible MNE groups with headquarters in the UAE because they must develop and submit a CbC report. All qualified MNE organisations should review their status and ensure compliance because of the significant penalties for non-compliance.
A new federal corporation tax system will be implemented in the UAE starting on or after June 1, 2023, according to a historic announcement made by the UAE Ministry of Finance. The UAE will impose a normal corporation tax rate of 9%; the tax structure is designed to take into account global best practises and lessen the burden of company regulations.
The analysis of related party/connected person transactions to determine if they are priced in line with the arm’s length principle, or the price that a third party would pay for roughly the same deal under same conditions, is known as transfer pricing. Once the corporate tax is put in place, the Transfer Pricing Rules would be applicable in the UAE. All parties would be subject to the transfer pricing rules and other pertinent restrictions.
Transfer pricing advisory in UAE
Let’s quickly review the services we provide.
Transfer Pricing Policy Structure
Transfer pricing and the concept of internal agreed-upon arm’s length are becoming more popular in the Middle East. The corporation tax, along with the appropriate transfer pricing strategy and documentation, will be essential when communicating with the federal tax authorities. Therefore,
having the appropriate tools and professionals at their side will become more and more important for businesses in the future. A TP policy that is organised and clearly stated will act as a road map for daily activities. It will also guarantee:
Compliance with UAE Corporate Tax Laws, Appropriate Decision-Making Guidance, and Simplified Internal Procedures
Transfer Pricing Documentation
Businesses must adhere to the transfer pricing guidelines and supporting paperwork set forth by the OECD. Transfer pricing issues can be avoided by taxpayers by establishing that their transactions adhere to the arm’s length principle with the help of appropriate documentation. Accruon Consultants focuses on international business transactions and transfer pricing laws.
Accruon Consultants, a seasoned tax expert in the Dubai , UAE, can offer advice on upholding prope and efficient:
- Local file
- Master file
Assistance with Transfer Pricing Disclosure
The effective management of Transfer Pricing (TP) adherence and paperwork is now more important than ever for businesses. With the aid of knowledgeable tax experts, such as Accruon Consultants, the TP disclosure form would be provided, along with the fact that it is included in and submitted as part of the CIT return.
Country by Country reporting
Large multinational enterprises (MNEs) in the UAE are required to file a report with the relevant parties at the end of each financial year, detailing the amount of revenue, profit or loss before tax, income tax accrued, income tax paid, tax residence of the constituent company, and so on.
Transfer Pricing due diligence
The focus of tax authorities’ efforts is transfer pricing. As a well-known tax consultant in Dubai ,UAE, Accroun Consultants offers services in performing due diligence investigations to identify potential hazards and guarantee that transfer pricing guidelines and paperwork are followed.
Businesses in the UAE will have to abide by transfer pricing regulations and procedural requirements in accordance with the OECD Transfer Pricing Guidelines. The arm’s length rule should be used by tax payers to confirm that related-party transactions are valued separately. It is commendable and essential that the UAE made the switch to a tax economy in response to growing competition since it encourages economic diversity and responsibility. The importance of following an authority’s rules and regulations has increased, therefore businesses that wish to avoid future problems should work with the best tax consultant in Dubai ,UAE, like Accruon Consultants , to provide transfer pricing services.