In the UAE and other international markets, key transfer pricing methods a price for goods or services sold between parts of the same company—for example, between a company’s branch in Dubai and its head office in another country. When done correctly, transfer pricing helps companies comply with tax laws, especially with the UAE introducing corporate tax rules, and supports better financial planning for international operations.

At JAKS, we offer reliable transfer pricing services across the UAE. We help you understand the true value of your business, so you can make smart and confident decisions for growth.

Transfer Pricing Methods 

1. Comparable Uncontrolled Price (CUP) Method

The CUP method checks if the price charged between two related company parts is fair. It compares this to the price of the same product or service sold between two unrelated companies.

Businesses need strong data from other deals between independent parties to apply this method. A big difference may show that the internal price was not at arm’s length (fair market value). In that case, the fair price from the outside deal can be used instead.

2. Resale Price Method

This method starts with the price at which a product is resold to an outside customer after being bought from a related party. You subtract the amount needed to cover operating costs (like salaries, rent, and marketing) from the resale price and reasonable profit. The amount left helps determine the fair price for the original sale between the related businesses. This is often used in the UAE for companies that import and resell goods without major changes.

3. Cost Plus Method

This method starts by examining the cost to a company to produce a product or service. Then, a markup is added to cover profit.

So, Cost + Profit = Fair Price between the related businesses.

This method is often used when one part of a company provides raw materials, semi-finished goods, or long-term services to another group. It’s common in the UAE’s trading and manufacturing sectors.

4. Transactional Net Margin Method (TNMM)

The TNMM sets transfer prices by comparing the net profit from a deal to factors like sales or assets. To use this method properly, the company should use the same profit margin that would be used in similar deals between unrelated companies. Businesses often use data from other companies in the market to find this.

It’s also important to check the functions and risks handled by each party in the deal to ensure a fair comparison. Many service-based businesses in the UAE, including those in consulting, logistics, or distribution, apply this method.

5. Transactional Profit Split Method

This method is useful when two related companies are involved in creating value and when profits (or losses) need to be shared fairly. It looks at how independent companies would divide profits in a similar situation. This avoids any bias or special deals between related parties.

First, the total profit from the transaction is calculated. Then it’s split based on the value each company adds—this can depend on assets used, risks taken, and work performed. This method works well for joint ventures or shared projects, which are often seen in real estate, technology, or R&D partnerships in the UAE.

With the UAE’s current corporate tax rules, following transfer pricing guidelines is more important than ever. These methods help ensure that cross-border and internal transactions are priced fairly and compliant with international tax standards, including the OECD’s.

JAKS is a trusted consulting firm based in Dubai. We offer expert transfer pricing services to help you understand your business’s real value. We also take care of bookkeeping, VAT filing, payroll, and monthly financial reports so you can manage your finances without stress. At JAKS, we make everything simple, reliable, and easy to handle. Need support? Call us at +971 503372712 or email [email protected]—we’re always ready to help!