On this page
- How we can help
- Connect intercompany pricing to commercial reality
- What the engagement can cover
- Prepare for the assessment
- Test the transaction against how the business operates
- Make cost pools and allocation keys understandable
- Choose economic support that answers the pricing question
- Implement the policy and reconcile the year-end result
- A practical way forward
- Frequently asked questions
- Related guides and services
- Official sources & further reading
How we can help
- Review domestic and cross-border related-party transactions.
- Separate the arm’s-length obligation from file and return-disclosure thresholds.
- Choose a method from the transaction facts, functions, assets and risks.
Connect intercompany pricing to commercial reality
Transfer pricing concerns the terms of transactions between related parties and connected persons. The starting point is a reliable understanding of the transaction, the functions performed, assets used and risks assumed by each participant.
Saif Chartered Accountants can support transaction mapping, policy design, method selection, economic analysis and documentation. Domestic dealings and cross-border arrangements both need consideration under the UAE framework.
What the engagement can cover
A related-party transaction inventory; review of agreements and pricing policies; functional interviews; selection of an appropriate method; benchmarking where suitable; and assistance with relevant disclosure and documentation schedules.
Documentation requirements are not identical for every business. Master File, Local File and return disclosures have their own conditions. A business below a documentation threshold should still retain evidence supporting its pricing.
Prepare for the assessment
Bring the legal group structure, ownership details, intercompany agreements, transaction-level schedules, segmented financial information and any previous transfer pricing study. Identify new arrangements, financing, royalties, management services and business restructurings.
Agree the entities, transactions, periods, methodology, deliverables and implementation responsibilities. A policy should be reflected in actual invoicing, year-end adjustments and accounting records.
Test the transaction against how the business operates
A transfer pricing project should connect the written agreement to the work actually performed. Functional discussions can establish who makes decisions, manages people, uses assets and bears commercial risks. Differences between a group policy and local practice should be identified early rather than hidden by copying a standard description into the report.
The proposed output is a transaction profile that the operational team can recognise and confirm. For a management service, that means understanding what assistance was delivered and to which recipient. For a financing or distribution arrangement, a different set of commercial questions is needed. Each profile should state the facts still awaiting evidence.
Make cost pools and allocation keys understandable
Shared-service charges often become difficult to explain when one group total is divided without a clear connection to the recipients. The engagement can review what enters the cost pool, which entities benefit and why the proposed allocation key fits the service. Separate services where a single key would conceal materially different drivers.
A useful workpaper lets finance reproduce the calculation from the underlying accounts. It identifies exclusions, adjustments, recipient data and approvals, rather than presenting only the final invoice. An allocation schedule does not by itself establish that the charge is appropriate; the underlying service and pricing basis also need support from the actual arrangement.
Choose economic support that answers the pricing question
Method selection should follow the transaction and available evidence. The review can consider whether reliable internal information exists, what external comparison may be suitable and which differences affect comparability. A database result or a markup copied from another company is not a substitute for explaining why the analysis fits this arrangement.
Agree the analytical deliverable before the work begins: a method assessment, a benchmarking study where appropriate, or support for a particular transaction calculation. The report should connect its assumptions and financial data to the selected approach. Limitations should be visible, including missing segmentation or facts that management needs to confirm before the conclusion is finalised.
Implement the policy and reconcile the year-end result
A policy needs an operating process for invoicing, monitoring and any proposed year-end adjustment. Identify who calculates the charge, supplies recipient information and approves changes. The documentation should explain actual transactions during the period, not only the outcome the group originally intended to achieve.
At completion, the handover can link the policy, supporting study, calculation and disclosure workpapers. Reconcile transaction totals to the accounts and identify continuing actions for the next period. Master File, Local File and return-disclosure requirements should be assessed separately for the taxpayer; a common group report should not be assumed to meet every local requirement without that review.
YOUR NEXT STEPS
A practical way forward
- 01
Step 1
Map the group, transactions and commercial arrangements.
- 02
Step 2
Analyse functions, risks, comparability and pricing support.
- 03
Step 3
Document the position and align the policy with records and disclosures.
CLEAR ANSWERS
Frequently asked questions
Do only multinational groups need transfer pricing support?
No. Domestic related-party arrangements can also require an arm’s-length analysis.
Can a generic markup prove compliance?
A markup needs an appropriate factual and economic basis for the arrangement.
What if our intercompany agreement does not match the charges in the accounts?
Identify the differences in services, counterparties, timing and calculation, and establish what actually occurred. The engagement can assess whether the policy, agreement, calculation or accounting needs attention. A new document should not be used to obscure the historical facts; the final analysis should explain the arrangement and any proposed corrective steps.
Does an overseas group transfer pricing study remove the need for a UAE review?
No. It may provide useful background, but the UAE entity’s transactions, functions, financial information and applicable documentation or disclosure conditions still need consideration. Agree which parts can be reused, what needs updating and whether the study’s method and comparables fit the local arrangement and period being reviewed.
VERIFY THE DETAIL
Official sources & further reading
- FTA — Transfer Pricing Guide CTGTP1
- MoF — Transfer pricing documentation requirements
- FTA — Transfer pricing methods
Source checks support this general guide. Your treatment depends on the facts, tax period and applicable legislation.
