Checklist: Transfer Pricing & IAS 24 Compliance

 

This checklist ensures that you comply with UAE Transfer Pricing (CTGTP1) and IAS 24 – Related Party Disclosures. Clients should prepare the following documents before the external audit.

 

1- Related Party Disclosures (IAS 24)

• List of Related Parties

  • Identify all related entities and individuals (subsidiaries, parent companies, joint ventures, key management personnel).

  • Ensure disclosures match the Transfer Pricing documentation.

• Description of Related-Party Transactions

  • Nature of each transaction (e.g., sales, purchases, management fees, loans, royalties).

  • Financial impact and terms of transactions.

• Disclosure of Outstanding Balances

  • Amounts payable/receivable with related parties at year-end.

  • Terms & conditions (e.g., interest rates, payment terms).

  • Whether transactions are secured or unsecured.

• Disclosure of Pricing Policies

  • How prices were determined (cost-plus, resale price, profit split, etc.).

  • Explanation if not at arm’s length.

• Consistency Between Financial Statements & TP Documentation

  • Ensure that amounts in the financial statements match the TP reports.

  • Verify disclosure of compensating adjustments (if any)

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2- Transfer Pricing Documentation (CTGTP1)

• Transfer Pricing Policy Document

  • Written policy explaining how related-party transactions are priced.

  • Rationale for choosing a pricing method.

• Master File

  • Organizational structure (ownership relationships).

  • Business operations of the group.

  • Intangible assets (who owns/trades them).

  • Financing arrangements within the group.

• Local File

  • Details of intra-group transactions (amounts, counterparties, terms).

  • Economic analysis (benchmarking of pricing method).

  • Profitability analysis (to support arm’s length pricing).

• Transfer Pricing Disclosure Form (Filed with the UAE tax return)

  • High-level details of all related-party transactions.

  • Submitted to the Federal Tax Authority (FTA) with the tax return.

• Benchmarking Study

  • Proof that prices charged match independent market rates.

  • Selection of comparable companies and transactions.

• Intercompany Agreements

  • Contracts covering each related-party transaction.

  • Ensure the agreements reflect actual business substance.

  • Review key terms (pricing, payment conditions, termination clauses).

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3- Specific Transactions – Additional Documentation

• Intercompany Services (Management fees, IT support, consulting, etc.)

  • Justification of benefit received (prove service was needed).

  • Cost allocation method (who pays what and why).

  •  Support for pricing (benchmarking or cost-plus method).

• Intercompany Loans & Financing

  • Loan agreements with terms & conditions.

  • Interest rate benchmarking (prove it’s at market rate)

  • Debt capacity analysis (prove borrower can repay).

  • Purpose of the loan (how funds were used).

• Intellectual Property (IP) Transactions (Royalties, trademarks, patents)

  • Ownership documentation (who owns the IP?).

  • Royalty agreement with pricing methodology.

  • Benchmarking of royalty rates (prove rates are fair).

  • Substance of IP owner (prove it’s not just a tax structure).

• Inventory Transactions (Cross-border purchase/sales between related parties)

  • Pricing method used (e.g., resale price, cost-plus).

  • Comparison with third-party sales prices.

  • Proof of delivery & payment terms.

 

4. Tax & Compliance Risk Mitigation

• Ensure Economic Substance Compliance (For Free Zone Entities)

  • Proof of actual business activities in the UAE (office, employees, decision-making).

  • Avoid classification as a shell company.

• Consistency Between Financials & Tax Filings

  • Ensure Transfer Pricing figures match the tax return and VAT filings.

• Internal Control Process for TP Compliance

  • Appoint a TP compliance officer “accounting department”.

  • Annual review of pricing policies to stay compliant with FTA rules.

• Documentation Readiness for FTA Audit

  • FTA can audit Transfer Pricing within 5 years.

  • Ensure all documentation is available before an audit notice.