The Global Policy Still Has to Survive the UAE

In most groups the transfer pricing policy arrives rather than being written. It comes from head office, it covers the transaction types the group runs everywhere, and the local file is the group study with the local entity named in it. The FTA transfer pricing guide addresses that arrangement directly, and it neither rejects it nor accepts it as filed.

Two parameters

The guide observes that a group may have commercial dealings with Related Parties and Connected Persons in multiple countries, and may operate a group-wide transfer pricing policy for common transactions. Such a policy, it says, should be evaluated from the UAE context on two parameters.

1. Whether the taxable person is carrying out similar transactions and arrangements with Related Parties and Connected Persons.
2. Whether the group-wide policy takes the arm's length standard into account.

The first is a matching question and it is easy to skip. A group policy covering distribution, manufacturing services and IP licensing is not evidence about a UAE entity that only provides support services. The parts of the policy that do not describe what the local entity actually does are not doing any work in its file.

The comparables point, and what it asks you to do

The guide's sharpest instruction in this section concerns comparables. If local and/or regional comparables are available but not considered, the group-wide transfer pricing policy should be re-evaluated to consider such comparables.

That sits directly on top of the comparability guidance elsewhere in the guide, which expects domestic comparables to be used as far as possible because they are more comparable in market and economic circumstances, and permits regional or global data where insufficient data is available domestically.

When the data genuinely is not there, keep the audit trail

The guide accepts that divergence can arise for practical reasons, and gives one: the non-availability, or delay in availability, of necessary financial information in the public domain. In such a case, it says, it is expected that the taxable person shall maintain an audit trail to demonstrate this.

That is a workable position and a specific obligation. The absence of data is a defensible reason; the absence of evidence that you looked is not. In practice the audit trail is the search itself — the databases queried, the screens applied, the date it was run and what came back — which is material that only exists if it is captured at the time.

It also aligns with what the guide says about outsourced studies elsewhere: the FTA may request access to a private database used to support transfer prices, so the search behind a conclusion needs to be retrievable rather than summarised.

Where this meets the documentation rules

A group-wide policy is not a substitute for the UAE documentation obligations, and the Local File in particular is designed to ask local questions — the local entity's business and strategy, its material controlled transactions, and whether it has been involved in restructurings or intangibles transfers.

The burden of proof also sits locally. The guide places it on the taxable person to maintain sufficient supporting documentation and make timely submissions supporting the position taken in its own return, for each tax period in scope. A policy owned by a parent in another jurisdiction does not move that burden.

For a free zone entity, the arm's length principle is a condition of Qualifying Free Zone Person status rather than only a computational rule — so a group policy that does not hold up locally reaches the rate.

What to check

1. Map the group policy against what the UAE entity actually does, and set aside the parts that describe other entities.
2. Ask whether the policy takes the arm's length standard into account for the UAE, not just in general.
3. Run a domestic and regional comparables search before adopting a group set, even if you expect it to fail.
4. Where local or regional comparables exist, re-evaluate the policy to consider them rather than noting them and moving on.
5. Where the data genuinely is not available or is delayed, keep an audit trail demonstrating that.
6. Capture the search at the time — databases, screens, date, results — because it cannot be reconstructed later.
7. Keep the search retrievable, since the FTA may ask for access to a private database used to support prices.
8. Remember the burden of proof is on the UAE taxable person, whoever owns the policy.

The FTA Transfer Pricing Guide (CTGTP1) is guidance rather than legislation; the underlying obligations are in Articles 34 and 55 of the Corporate Tax Law. Confirm the position for your own facts before relying on it.