The introduction of Corporate Tax in the UAE, with a 9% standard rate, marked a clear evolution of the country’s tax environment. The framework has become more structured, more transparent and increasingly aligned with international standards.
Yet the UAE remains one of the most competitive jurisdictions globally, with businesses still able to access a 0% effective Corporate Tax rate, provided that specific conditions are properly structured and actively managed. The difference today lies in execution.
Access to the 0% regime is no longer automatic. It depends on a carefully engineered fiscal and corporate architecture, capable of demonstrating real economic substance, operational coherence and proper value allocation within cross-border group structures.
For companies that are correctly structured and professionally advised, significant tax optimisation opportunities remain fully available.
Qualifying free zone persons: accessing the 0%
Through the Qualifying Free Zone Person (QFZP) regime, companies may apply a 0% tax rate on qualifying income, while non-qualifying income remains subject to 9%. This is one of the most powerful structuring tools available in the UAE — but it is conditional.
To preserve QFZP status, a company must:
- Conduct Qualifying Activities as defined under the applicable UAE regulations;
- maintain adequate economic substance in the Free Zone (e.g., physical office premises, qualified personnel, core income-generating activities and proportionate operating expenses);
- comply with the arm’s length principle in all related-party transactions, supported by appropriate documentation.
It is this last element that becomes decisive.
Transfer Pricing is not a formal compliance exercise. It is the mechanism through which authorities verify that intra-group transactions genuinely reflect the value created. If margins applied between related entities are not aligned with functions performed, risks assumed and assets employed, Qualifying Income may be reassessed, potentially affecting access to the 0% regime and exposing the company to financial and regulatory consequences.
Transfer pricing in the UAE: tax, law and international coordination
UAE Transfer Pricing rules follow OECD principles, requiring related-party transactions to be priced as if conducted between independent parties under market conditions.
But Transfer Pricing is more than a technical tax rule. It is a structural component of corporate governance that connects operational reality with tax positioning.
An effective Transfer Pricing framework requires:
- demonstrating genuine economic benefit in intra-group services;
- selecting and supporting the appropriate pricing methodology;
- preparing robust benchmark analyses;
- maintaining defensible documentation;
- aligning intercompany agreements with actual conduct;
- implementing margin monitoring and year-end adjustments;
- ensuring consistency between policy, accounting and operational behaviour.
Drafting a policy, however, is only the starting point. Transfer Pricing is inherently cross-border. It operates at the intersection of tax law, corporate governance and multi-jurisdictional regulatory coordination.
Consider a UAE Free Zone holding company at the head of a multi-jurisdictional group. In such a structure, the policy must be formally adopted locally, reflected in intercompany agreements, supported by corporate resolutions and consistently implemented across jurisdictions. It must function operationally throughout the year — not merely exist on paper.
When properly structured, Transfer Pricing protects and stabilises the 0% regime. When poorly implemented, it becomes a structural risk. This is not about defining a mark-up. It is about engineering a sustainable tax and legal architecture.
Fidinam: your cross-border partner
With offices worldwide, FIDINAM supports international groups and investors in structuring and implementing cross-border tax and corporate frameworks in the UAE.
Through a fully integrated and multidisciplinary approach, we assist clients in securing and preserving the 0% Corporate Tax regime, coordinating Transfer Pricing, governance and multi-jurisdictional compliance to build structures that are robust, defensible and sustainable over time.
This article is edited by Iacopo Carraro - Italian Desk, Fidinam Dubai. If you require clarification or wish to request a tax consultancy, please use the form below.
