Intercompany Agreement Transfer Pricing Template for the United Arab Emirates

An Intercompany Agreement Transfer Pricing is a crucial legal document that establishes the framework for determining arm's length prices in transactions between related entities in the UAE. Following the introduction of corporate tax legislation in 2023, you need this agreement to ensure compliance with UAE transfer pricing regulations and demonstrate that your intercompany transactions meet the required legal standards.

When do you need this document?

You require an Intercompany Agreement Transfer Pricing when conducting any commercial transactions between related parties, including parent companies and subsidiaries, branches and head offices, or any entities under common control. This becomes essential when transferring goods, services, intellectual property, or providing financing arrangements between related entities. If your group operates across multiple jurisdictions with UAE entities, you need this agreement to establish consistent pricing methodologies and ensure compliance with local transfer pricing requirements. The document is particularly critical for multinational enterprises with regional headquarters in the UAE that coordinate transactions across the Middle East and North Africa region.

Key legal considerations

Your agreement must incorporate the arm's length principle as the fundamental basis for all intercompany pricing, ensuring transactions are conducted at prices that would be agreed upon by independent parties under similar circumstances. You need to include detailed provisions for selecting and applying appropriate transfer pricing methods, such as comparable uncontrolled price, resale price, cost plus, profit split, or transactional net margin methods. The agreement should establish clear documentation requirements, including annual preparation of transfer pricing documentation and master files as required by UAE regulations. Risk allocation provisions must clearly define which party bears specific business risks and how these allocations affect pricing arrangements. You should also include dispute resolution mechanisms and procedures for handling transfer pricing adjustments or challenges from tax authorities.

Legal requirements in United Arab Emirates

Under UAE Federal Decree-Law No. 47 of 2022, you must ensure all related party transactions comply with the arm's length principle and maintain comprehensive documentation supporting your transfer pricing positions. Cabinet Decision No. 101 of 2023 requires you to prepare detailed transfer pricing documentation, including local files and master files, within specified deadlines. Your agreement must align with OECD Transfer Pricing Guidelines 2022, which the UAE has adopted as the framework for transfer pricing compliance. You need to consider UAE Federal Decree-Law No. 32 of 2021 for commercial contract requirements and ensure your agreement meets general contracting standards. VAT implications under UAE Federal Decree-Law No. 8 of 2017 must be addressed where applicable to intercompany transactions. The agreement should include provisions for annual review and updates to ensure ongoing compliance with evolving transfer pricing regulations and maintain consistency with your global transfer pricing policies.