Transfer Pricing & International Tax

Transfer Pricing

The UAE also proposes to introduce formal Transfer Pricing (TP) rules and TP Documentation requirements in line with the TP Guidelines issued by the Organisation for Economic Cooperation and Development (OECD TP Guidelines).

TP Documentation

The consultation paper suggests that TP Rules and TP Documentation requirements would be in line with the OECD TP Guidelines. Incidentally, OECD TP guidelines recommend three-tier TP Documentation to be maintained by taxpayers:

Country-by-Country Reporting (CbCR)

The UAE has already introduced CbCR requirements in the past, applicable from FY 2019. UAE tax resident entities that are members of multinational groups with annual consolidated revenues of AED 3.15 billion (approximately USD 860 million) or more in the preceding year are required to comply with the CbCR filing requirements.

Group Master File

It is a document that can be best described as a blueprint of the global business operations and TP policies of the MNE group. It includes details of intangible assets owned by the group, key financial arrangements of the group, key intra-group service arrangements, etc.

Local File

Local File or TP Study Report typically has transaction-level details of a specific entity within the jurisdiction. The local file encompasses a complete analysis of the arm’s length nature of covered related party transactions.

The final law with respect to the UAE CT regime is likely to provide further details on the extent to which TP would apply to different kinds of licensees. For example, licensees in the free zone have been provided exemption from the UAE CT regime (subject to certain conditions), however, whether such entities would also be exempted from the TP regime would be known only when the final regulations are released by the Ministry of Finance (MoF).

How Nexdigm can help?

Nexdigm’s Global TP practice has been consistently ranked as one of the leading TP firms by various institutions. The team has a perfect blend of highly experienced team of professionals and access to the most prominent databases, which are critical for performing TP analysis. Nexdigm is well positioned to support mid-size and large corporates with its presence in the UAE through its three offices and also has a support team in India.

Transfer Pricing

Advisory

• TP Impact Assessment
• Formulating TP compliant operating structures
• Implementation of Global TP Policy

Compliance and Litigation Services

• TP documentation
• TP Litigation Support and representation

International Tax

In 2018, UAE became the 116th country to join the Inclusive Framework on BEPS (Base Erosion and Profit Shifting). This has led to various tax reforms within UAE to align the tax policies with BEPS and to shed its image as a tax haven. Now as the authorities plan to introduce Corporate Income Tax in the UAE, companies need to adopt suitable tax positions and maintain correct documentation.

Additionally, UAE is also a part of the following international reporting standards:

• FATCA (Foreign Account Tax Compliance Act) introduced by USA
• CRS (Common Reporting Standard) introduced by OECD (Organisation for Economic Co-operation and Development)

Therefore, it becomes essential that multinational entities which undertake cross-border activities in the UAE to determine the tax outflow and compliance requirements of UAE as well as foreign jurisdictions.

Nexdigm provides a range of international tax services wherein we cater to all your tax matters and depending on your business needs, even provide an in-house tax team. Our services include independent business advisory, business structuring, as well as assistance in tax and regulatory compliances. We ensure you stay compliant with all regulatory and tax matters in the UAE with greater accountability that comes from our decades of experience.

Our International Tax Services in UAE include:

Corporate Advisory and Consultancy

We consult businesses from a global tax and regulatory perspective, specifically keeping in mind the BEPS standards. With our unwavering focus on the client’s business objective, we don’t just come up with solutions, we help implement them.

Investment Structuring

We help in setting up tax-efficient structures and analyzing alternative investment jurisdictions. We assist international clients at various stages of investment achieve their macro objectives.

Impact of Digital Taxation in various jurisdiction

OECD is in the advance stages of implementing Pillar I and Pillar II inclusive framework for challenges arising out of digital transaction across the globe. The impact of the same could be significant to companies having business in various jurisdiction without any presence. We assist in evaluating the impact of the same to optimize structures.

Permanent Establishment (PE) Exposures

We identify the potential PE exposures to avoid unnecessary tax outflow within any jurisdiction. Our portfolio includes working closely with clients to build business models that are PE proof. We provide holistic compliance services, which include maintaining books of accounts and undertaking required compliances.