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At Kreston, we are dedicated to providing exceptional accounting and auditing services to businesses throughout Dubai and the UAE. Our team of highly skilled professionals brings years of experience and expertise to deliver personalized financial solutions that cater to the unique needs of each client. Whether you require comprehensive bookkeeping, thorough audits, or expert tax consulting, Kreston is your trusted partner in navigating the complexities of the financial landscape in the UAE.
We pride ourselves on building long-term relationships with our clients, founded on trust, transparency, and a commitment to excellence. Kreston serves a diverse range of industries, including real estate, hospitality, retail, manufacturing, healthcare, and technology. Our goal is to help your business stay compliant with the latest regulations while providing strategic insights to secure your financial future. Reach out to Kreston today and discover how we can help you achieve your business objectives with confidence and clarity.
About Kreston
Placing clients at the centre of all that we do and adhering to the highest standards of professionalism, transparency, ethics and conduct, Kreston Menon has steadily grown over the years to be reckoned as one of the leading auditing and advisory firms in the United Arab Emirates.
The roster of our clientele – from large multinational corporations to leading banks to budding startups – points to the diversity and flexibility of our offerings and services. In these 32 years since our inception, thanks to the invaluable business relationships we have nourished and maintained, and the innumerable clients who have been with us from our early days, we now operate in the UAE, GCC and India with over 500 employees across 12 verticals from our 16 offices.
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Kreston Global
Kreston Menon is a member firm of Kreston Global, one of the largest accounting networks in the world with over 150+ member firms employing over 27,500+ professionals in 800+ offices from 110 countries.
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Delivering Transfer Pricing Certainty: The UAE APA Programme
Background and legislative framework
Transfer pricing provisions were introduced in the United Arab Emirates (“UAE”) with the enactment of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the “Corporate Tax Law”).
Pursuant to Article 34 of the Corporate Tax Law, all transactions and arrangements between Related Parties and Connected Persons must comply with the Arm’s Length Principle. Further, Article 59 of the Corporate Tax Law permits taxpayers to apply for an Advance Pricing Agreement (“APA”), which enables to set the criteria to determine the Arm’s Length Price in relation to Controlled Transactions entered or to be entered by that Person with its Related Party/Parties, over a fixed period of time.
On 31 December 2025, the UAE Federal Tax Authority issued the Advance Pricing Agreements Corporate Tax Guide (hereinafter referred to as “APA Guide”). This guidance sets out the procedural framework for APAs in the UAE, including the scope of the APA programme, eligibility conditions, application process, monitoring and compliance requirements, and the legal effect of an APA once granted.
Overview of the APA Programme
The Advance Pricing Agreement (APA) programme provides a voluntary mechanism for a Person, whether a natural person or a juridical person, to enter into an agreement with the Federal Tax Authority (FTA) to determine the Arm’s Length Price (may include application of one or combination of the TP methods) of Controlled Transactions over a specified period. By establishing agreed Transfer Pricing arrangements in advance, APAs help mitigate the risk of Transfer Pricing disputes and litigation.
The FTA is implementing the APA programme in a phased manner. Initially, the programme focuses on Domestic Unilateral APAs (UAPAs), with applications accepted from December 2025. Cross-border UAPAs will be introduced subsequently, with the commencement date to be announced in 2026 and details of Bilateral and Multilateral APAs will be introduced at a later stage.
Eligibility and Materiality Threshold
A Natural Person or Juridical Person may apply for an Advance Pricing Agreement (APA) if the total or expected value of the domestic and/or cross-border Controlled Transactions is equal to or exceeds AED 100 million in a specific tax period. Controlled Transactions that fall under safe-harbour provisions, including low value-adding intra-group services, are not eligible for coverage under an APA and will be excluded from the threshold calculation.
A non-refundable fee of AED 30,000 per application of a Unilateral APA, and AED 15,000 for amendment or renewal of an existing Unilateral APA applies. The APA may be applied for a minimum of three prospective Tax Periods and a maximum of five prospective Tax Periods.
Benefits of the APA programme
The UAE Advance Pricing Agreement Guide identifies five core benefits that justify programme participation for qualifying taxpayers.
• Enhanced predictability provides multi-year certainty on transfer pricing methodologies, enabling accurate tax forecasting and eliminating retrospective assessment risk across the 3–5 year APA term.
• Facilitated collaboration between the Federal Tax Authority and taxpayers replaces adversarial audit dynamics with cooperative methodology development through structured pre-filing consultation and negotiation processes.
• Prevention of transfer pricing disputes addresses primary multinational concerns: advance FTA acceptance of methodologies reduces audit adjustment risk compared to traditional documentation approaches, simultaneously eliminating controversy management costs.
• Prevention of double taxation becomes achievable through bilateral APAs (yet to be announced), wherein coordinated competent authority agreements ensure consistent treatment across jurisdictions.
• Streamlined compliance delivers quantifiable efficiency: ongoing obligations reduce to critical assumption monitoring rather than annual benchmarking studies, decreasing compliance costs over typical five-year terms while maintaining comprehensive tax certainty and reducing management time devoted to transfer pricing matters.
Way Forward
Considering the presence of Multi National Enterprises in UAE, and the expected beneficiaries of the programme seeking tax certainty, the programme would be expected to undergo a few updates in the due course of time, following other global jurisdictions.
• Rollback Provisions: The UAE initially offers no rollback to cover prior years. Considering the utilisation rate of rollback provisions introduced in other jurisdictions like India and the USA, the said provision represents clear taxpayer demand for historical coverage. This creates a “gap period” where 2024-2025 positions could potentially remain unprotected during the processing period.
• Dispute resolution mechanism: The procedures laid down emphasises on qualitative filtering of applications ensuring effective use of time and resources by way of pre-filing consultation. This envisages situations wherein an application can be rejected at the pre-filing stage or at the application stage. The programme does not lay down procedure for any recourse available to the applicant in the case of any dispute that arises pertaining to such rejection faced.
• Bilateral Capability: The phased rollout means bilateral APAs, essential for complete double taxation protection, would not be available initially. This could lead to potential transitional double taxation losses for Multi National Enterprises, who would be keen to minimise the gap at the earliest.
Conclusion
Through these comprehensive guidelines, the UAE establishes itself as a sophisticated Transfer Pricing jurisdiction. The UAE’s combination of inaugural APA capability, 0% free zone regimes, and 140+ double taxation treaties creates compelling positioning for regional headquarters operations. The programme delivers quantifiable benefits: enhanced predictability for complex Transfer Pricing positions, collaborative authority engagement replacing traditional audit approach, and proactive dispute prevention. For multinationals managing UAE-specific complexities—mainland-free zone structures, regional service arrangements, IP migrations—APAs provide essential certainty transforming compliance obligations into strategic advantages. As the programme matures with bilateral capability development and enhanced transparency, the UAE’s position will strengthen further, cementing its role as the region’s premier destination for Transfer Pricing-supported investment.
Overhaul of the UAE Commercial Companies Law: Key Implications for Businesses
Federal Decree-Law No. 20 of 2025 introduces significant amendments to the UAE’s Commercial Companies Law (Federal Decree-Law No. 32 of 2021), marking a major step in modernizing the nation’s corporate legal framework. These reforms align domestic regulations more closely with international—particularly common law—standards, enhancing flexibility, governance, and cross-border operational clarity.
Below is a structured overview of the core changes and their practical impact for companies operating in or entering the UAE market.
1. Clarified Jurisdictional Scope and Free Zone Integration
The amendments provide long-awaited clarity on the application of federal law to free zone entities conducting activities in the mainland. While free zone companies remain governed by their respective zone regulations within their geographic boundaries, any branch or representative office operating outside the free zone must comply with the Commercial Companies Law and other applicable federal legislation.
Additionally, free zone companies are now formally recognized as holding UAE nationality. This reduces legal ambiguity for multi-jurisdictional structures and simplifies operational planning for businesses operating across both mainland and free zone environments.
2. Introduction of a Non-Profit Company Structure
For the first time, UAE company law formally provides for the establishment of non-profit companies. These entities must reinvest all net profits toward their stated objectives, with distributions to owners expressly prohibited. Detailed implementing regulations are expected from the Cabinet. This creates a dedicated legal vehicle for philanthropic, social, and cultural organizations, formalizing their operational framework within the UAE.
3. Adoption of Common-Law Corporate Mechanisms
The reforms integrate familiar common-law tools directly into the statutory framework for Limited Liability Companies (LLCs) and Private Joint Stock Companies (PJSCs):
• Drag-Along & Tag-Along Rights: These may now be embedded directly in a company’s Memorandum of Association, enhancing enforceability in M&A and exit scenarios.
• Shareholder Succession Planning: Companies can pre-define mechanisms for handling a deceased shareholder’s stake, including purchase priority for remaining shareholders at an agreed or court-determined valuation.
These changes reduce reliance on complex side agreements, lower transactional friction, and provide clearer pathways for ownership transition.
4. Enhanced Capital Structure Flexibility for LLCs
Mainland LLCs are now permitted to issue multiple classes of shares (e.g., common, preferred) with differentiated rights concerning voting, dividends, liquidation preferences, and redemption. This is a transformative development for venture capital, private equity, and family businesses, enabling sophisticated capital and governance structures within the UAE’s most common corporate vehicle.
5. Formalized Re-Domiciliation (Corporate Migration) Framework
A landmark introduction is the statutory process for re-domiciliation. Companies can now transfer their legal seat into, within, or between UAE jurisdictions (including from overseas, between free zones, and between mainland and free zones) while maintaining their legal identity, corporate history, and contracts.
This “regulatory portability” is a strategic enabler, allowing businesses to optimize their structure for licensing, taxation, or commercial reasons without the need for liquidation and re-incorporation.
6. Streamlined Fundraising and Governance
• Private Placements: Private Joint Stock Companies may now offer securities via private placement in UAE financial markets, subject to Securities and Commodities Authority (SCA) rules, creating a new domestic fundraising avenue.
• Governance Continuity: Clearer rules govern managerial resignations, board succession, and interim management, reducing operational deadlocks. For instance, boards can continue to function for up to six months post-term expiry, after which authorities may appoint an interim board to ensure continuity.
• In-Kind Contributions: The amendments reinforce the validity of in-kind capital contributions, provided they are assessed by accredited valuers to ensure transparency and fairness.
Practical Takeaways for Businesses and Investors
The 2025 amendments collectively signal the UAE’s commitment to a dynamic, predictable, and internationally competitive corporate ecosystem. Key benefits include:
• Reduced Transactional Complexity: Standard M&A and succession tools are now codified, aligning UAE practice with global markets.
• Sophisticated Capital Structuring: The ability to create share classes within LLCs meets the needs of modern institutional investors and growth companies.
• Operational Agility: The re-domiciliation regime and clarified free zone interface offer unprecedented flexibility for corporate restructuring and regional expansion.
• Enhanced Governance and Certainty: New continuity provisions and formalized mechanisms strengthen investor protections and reduce legal uncertainty.
• Raising capital with more flexible instruments.
• Optimizing companies’ legal relocation via re-domiciliation.
These reforms position the UAE to better accommodate cross-border investment, complex corporate life cycles, and innovative business models, solidifying its status as a leading global business hub. They are further designed to attract and retain regional and international investment by offering a more predictable, agile, and business-friendly legal environment.
Companies operating in the UAE should review their existing governance documents and corporate structures to leverage these new provisions.
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