6 July 2026 · Arm's length
The Arm's Length Principle in UAE Transfer Pricing
Under UAE corporate tax, transactions between related parties and connected persons must be priced at arm's length — the price independent parties would have agreed in a comparable deal. If your intra-group pricing does not meet this standard, the FTA can adjust your taxable income upward. You demonstrate compliance using one of the five OECD-recognised methods, backed by a benchmarking study.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
What arm's length actually means
The test is simple to state and harder to prove: your intra-group price must match what unrelated parties would agree.
- Applies to transactions with related parties and connected persons.
- Covers goods, services, financing, IP and management charges.
- The FTA can adjust income where pricing is not arm's length.
- The burden is on you to show the price is defensible.
Choosing a transfer pricing method
The UAE follows the OECD methods. The right one depends on the transaction and available comparables.
- Comparable Uncontrolled Price (CUP).
- Resale Price and Cost Plus methods.
- Transactional Net Margin Method (TNMM).
- Profit Split — for integrated or IP-heavy operations.
Related guides
Frequently Asked Questions
For UAE groups pricing intra-group transactions.
What is the arm's length principle?
It requires related-party transactions to be priced as if the parties were independent, so profit is not artificially shifted between group entities.
Which transfer pricing methods are allowed in the UAE?
The five OECD methods: CUP, Resale Price, Cost Plus, TNMM and Profit Split. You choose the most appropriate for the transaction.
What if my pricing is not arm's length?
The FTA can make a transfer pricing adjustment that increases your taxable income, with corporate tax and potential penalties on the difference.
Can Exiloz set arm's length prices for us?
Yes. We review your related-party dealings, select the right method and run a benchmarking study to support the pricing.
Get your intra-group pricing right
Exiloz benchmarks your related-party transactions so they stand up to FTA review.