Federal Tax Authority released a new corporate income tax guide on advance pricing agreements (APAs) at the end of December 2025. The guide explains who can apply for an APA, how the process works, and the steps involved, from initial discussions to negotiation. For now, the focus is on unilateral APAs, with bilateral and multilateral agreements planned for later stages. To apply, transactions must meet a minimum value of AED 100 million. Applications for unilateral APAs covering domestic related-party transactions are open from December 30, 2025, while cross-border APAs will follow in 2026.
To access the Guidance, click here.
The United Arab Emirates (UAE) is preparing for its first transfer pricing audits this year, bringing new challenges for businesses that started following the country’s transfer pricing regime in 2024. The Federal Tax Authority (FTA) has strengthened its expertise for these audits, and companies have been advised to ensure careful planning and documentation. For this purpose, in November 2024, UAE released a corporate tax guide on transfer pricing aspects.
Unlike many other countries, the UAE requires businesses to comply not only for transactions with foreign entities but also for transactions with related entities inside the country’s free zones. This increases the complexity of calculations and documentation. As the UAE’s transfer pricing rules largely align with OECD standards, there are specific nuances, such as the extended definition of related parties, especially in free zones, to prevent tax avoidance.
The introduction of this regime is a big shift for UAE businesses, which previously had more flexibility in internal transactions. Now, companies must ensure that all transactions, including those within free zones, follow arm’s-length pricing rules.
On February 8, 2025, the Emirati Ministry of Finance published UAE Cabinet Resolution No. 142, which introduces a top-up tax on multinational enterprise (MNE) groups in line with the OECD Pillar Two initiative. The resolution applies to MNE groups with annual consolidated revenue of 750 million euros (US$780.8 million) or more in at least two of the last four fiscal years. It outlines the calculation of net income or loss for constituent entities, including adjustments, temporary differences, and deferred tax considerations. The resolution also details how to calculate the effective tax rate (ETR) and top-up tax, covering substance-based income exclusions and de minimis exemptions. It clarifies the rules for filing top-up tax returns, and introduces transitional safe harbor provisions, including simplified calculations for MNEs meeting certain tests. The decision applies to fiscal years starting on or after January 1.
To access the Resolution, click here.