UAE Offers Multinationals a Route to Tax Certainty with APAs

The United Arab Emirates has taken a decisive step toward strengthening tax certainty under its corporate tax regime with the release of long-awaited guidance on advance pricing agreements.

The Federal Tax Authority has published its corporate tax guide on advance pricing agreements, formally putting into operation the APA framework introduced under the UAE’s corporate tax law.

The guidance provides multinational enterprises with a structured pathway to agree transfer pricing outcomes in advance, marking a significant development in the country’s evolving transfer pricing landscape.

The launch of the APA program underscores the UAE’s intention to align with OECD standards and international best practices. For groups with complex or high-value related-party transactions involving the UAE, the new framework offers an opportunity to manage risk proactively and reduce the likelihood of costly tax audits or disputes.

As the program matures, the introduction of bilateral and multilateral APAs is expected to further enhance its attractiveness, particularly for multinational groups seeking coordinated outcomes across jurisdictions.

Advance Certainty

An APA is a binding agreement between a taxpayer and the tax authority that sets out the arm’s-length pricing methodology for specified controlled transactions over a defined period. Once concluded, the Federal Tax Authority won’t challenge the agreed pricing or methodology for the covered transactions and years, provided the taxpayer complies with the APA’s terms and underlying assumptions.

Under the UAE regime, APAs are designed to address situations where determining an arm’s-length outcome involves material uncertainty, typically where transactions are complex, involve unique features, or historically have been subject to audit scrutiny.

The Federal Tax Authority has adopted a phased rollout of the APA program:

• Unilateral APAs are available for domestic controlled transactions from December 2025. Cross-border unilateral APAs will follow, with the start date to be announced during 2026.
• Bilateral and multilateral APAs, grounded in the mutual agreement procedure provisions of the UAE’s double tax treaties, aren’t yet available but are expected to be introduced at a later stage.

This sequencing reflects a cautious but deliberate approach, allowing the UAE to build internal capability before engaging in more complex multi-jurisdictional negotiations.

Not all transactions qualify. Transactions falling within safe harbor regimes, such as low value-adding intragroup services, are excluded. Domestic transactions may be eligible only where the parties are subject to different tax outcomes, such as dealings between a mainland entity and a qualifying free zone person.

How to Apply

Only transactions meeting a materiality threshold of 100 million UAE dirham ($27.2 million) per tax period are automatically eligible, although the Federal Tax Authority can accept smaller cases where an APA would materially enhance compliance or certainty.

Even where the threshold is met, acceptance isn’t guaranteed. The Federal Tax Authority will assess applications based on factors such as transaction complexity, transfer pricing risk, and the overall value of an APA to the tax system.

An APA may cover between three and five tax periods at the outset, with the possibility of renewal where there are no material changes to the business or critical assumptions.

Multi-Stage Process

The UAE APA process follows a four-stage structure, broadly consistent with Organization for Economic Cooperation and Development guidance.

The process begins with a pre-filing consultation, during which the taxpayer presents the proposed scope, transactions, methodology, and assumptions. This stage is non-binding and allows both parties to assess whether the case is suitable for an APA. The Federal Tax Authority expects this phase to take between six and nine months.

If the government agrees to proceed, the taxpayer may submit a formal APA application, which must be filed within two months of approval or at least 12 months before the first covered tax period. The application must include detailed functional, economic, and industry analyses, along with a clearly articulated transfer pricing methodology.

During the evaluation and negotiation phase, the Federal Tax Authority may conduct interviews, site visits, and technical reviews before developing its own transfer pricing analysis. The process should be interactive, with opportunities for discussion and refinement. If agreement can’t be reached, the application will be closed without conclusion, and fees incurred won’t be refunded.

Where agreement is achieved, the APA is formally concluded and implemented, becoming legally binding for the covered transactions and years.

Fees, Monitoring, Enforcement

A non-refundable fee of 30,000 UAE dirham applies to APA applications, with a reduced fee of 15,000 UAE dirham for renewals.

Once an APA is in force, taxpayers must submit an annual APA declaration confirming compliance with the agreed terms and assumptions. The Federal Tax Authority may review these declarations and request further information to ensure continued adherence.

APAs may be revised by mutual agreement if there are changes in law, business operations, or economic conditions. Material misrepresentations or breaches of critical assumptions can result in revocation, potentially with significant transfer pricing adjustments and penalties.

Considerations for Multinationals

The UAE’s APA program is likely to be most attractive to multinational groups with complex operating models, significant intangibles, or material cross-border flows involving the UAE. For these businesses, an APA can provide a level of certainty that standard documentation alone may not deliver.

That said, APAs aren’t a quick fix. The process is resource-intensive and demands a high degree of transparency, technical rigor, and internal alignment. Businesses must also be comfortable that their operating model and pricing outcomes are stable enough to withstand scrutiny over several years.

The current limitation to unilateral APAs also means that double taxation risk may persist for cross-border transactions until bilateral or multilateral options become available.

Looking Ahead

Publication of the APA guide represents a meaningful milestone in the UAE’s transfer pricing journey. It signals a willingness by the Federal Tax Authority to engage constructively with taxpayers and to provide advance certainty in an increasingly sophisticated tax environment.

In the meantime, businesses should view the UAE’s APA program as one element of a broader transfer pricing strategy, one that rewards early planning, robust analysis, and a long-term approach to tax risk management.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Randall Fox is international head, transfer pricing, with DLA Piper.

Ton van Doremalen is partner and head of tax Middle East with DLA Piper, based in the Dubai office.

Juan Pablo Osman Moreno is principal/knowledge lead, transfer pricing with DLA Piper, based in the London office.

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