Transfer Pricing – Country-by-Country Reporting in UAE

A Country-by-Country (CbC) Report is a critical element in the nation of transfer pricing, offering insights into the global operations of a multinational corporation. In the UAE, compliance with the Federal Tax Authority (FTA) mandates that companies submit a CbC report if specific criteria are met. This typically entails a consolidated group revenue of AED 3.15 billion or higher in the preceding tax year.

The CbC report is a comprehensive document that encompasses various essential details. It sheds light on consolidated revenue, profit or loss before income tax, income tax paid, stated capital, accumulated earnings, the workforce’s size, tangible assets (excluding cash and cash equivalents), and a breakdown of business activities for each constituent entity within the multinational corporation.

These insights are carefully categorized by jurisdiction, ensuring transparency and adherence to regulatory standards. We guide you through the intricacies of CbC reporting and its significance in the UAE’s tax landscape.

Compliance with OECD Guidelines signifies a commitment to internationally recognized standards of financial transparency and fairness in taxation. These guidelines, crafted by the Organization for Economic Co-operation and Development (OECD), are instrumental in shaping the global landscape of tax regulations and practices. They encompass various aspect of taxation, ensuring that countries and businesses worldwide operate on a level playing field and abide by principles such as:

• Transfer Pricing Rules:
• Double Taxation Treaties:
• Exchange of Information:
• Base Erosion and Profit Shifting (BEPS):
• Country-by-Country Reporting:
• Improving Tax Dispute Resolution:

Compliance with these OECD Guidelines is not only a legal requirement but also a testament to a commitment to responsible business practices, ethical taxation, and global fiscal integrity. It paves the way for businesses to thrive in a transparent and stable tax environment while contributing to international efforts to combat tax evasion and ensure equitable taxation for all.

Determining the arm’s length price for a transaction is a meticulous process that involves selecting and applying the most appropriate transfer pricing method. These methods are internationally recognized for their effectiveness in ensuring fair and equitable pricing in cross-border dealings:

• Resale Price Method (RPM): This method calculates the arm’s length price based on the resale price of goods or services, considering a reasonable profit margin.
• Cost Plus Method (CPM): CPM considers the costs incurred in producing goods or services, adding an appropriate profit markup to determine the arm’s length price.
• Comparable Uncontrolled Price Method (CUPM): CUPM assesses the arm’s length price by comparing it to the prices charged in similar transactions between unrelated parties.
• Transactional Net Margin Method (TNMM): TNMM analyzes the net profit margin of a taxpayer in a controlled transaction, comparing it to the margins of unrelated party transactions.
• Transactional Profit Split Method (TPSM): TPSM is employed when multiple parties contribute to the creation of value in a transaction. It allocates profits based on each party’s contribution.

Selecting the appropriate transfer pricing method hinges on several factors, including the availability of data, the strengths and limitations of each method, and the nature of the transactions. Once a suitable method is identified and a reliable comparable is found, businesses can calculate an arm’s length range, ensuring that their cross-border dealings adhere to international transfer pricing standards.

MASAR Chartered Accountants is your trusted partner for navigating the complex landscape of transfer pricing and country-by-country reporting. Our expert team leverages their extensive knowledge and experience to provide tailored solutions that meet your specific needs.

Here’s how MASAR can assist you in this intricate domain:

• Comprehensive Transfer Pricing Services.
• Country-by-Country Reporting Expertise.
• Transfer Pricing Method Selection.
• Risk Assessment and Mitigation.
• Documentation and Compliance.
• Ongoing Support.
• Audit Defense.

By choosing MASAR Chartered Accountants for your transfer pricing and country-by-country reporting needs, you’re opting for a partner with a proven track record of excellence, a deep understanding of international regulations, and a commitment to helping your business thrive in a global marketplace.