Federal Tax Authority Releases UAE APA Guide | What It Means for UAE Businesses

The Federal Tax Authority has officially released the UAE Advance Pricing Agreement guide, giving multinational and domestic groups a long-awaited path to transfer pricing certainty. This new framework changes how controlled transactions are priced, reviewed and protected from disputes.

1. Introduction

Look closely at how the Federal Tax Authority has chosen to introduce the UAE’s first formal Advance Pricing Agreement framework. The move signals a clear message: serious transfer pricing planning is no longer optional. Businesses dealing with related parties now have a defined path to certainty, but it demands preparation, discipline, and clarity of facts.

The APA guide issued by the Federal Tax Authority on 31 December 2025 is not a casual technical note. It lays out how taxpayers can lock in transfer pricing positions for years in advance, avoid disputes, and reduce the risk of audit adjustments. For companies with complex or high-value group transactions, this marks one of the most important developments under the UAE Corporate Tax regime so far.

2. What is UAE APA Programme?

An Advance Pricing Agreement, or APA, is a formal agreement between a taxpayer and the Federal Tax Authority that defines how the Arm’s Length Price for controlled transactions will be determined over a fixed period. Instead of arguing about transfer pricing years later during an audit, pricing methods are agreed in advance.

Once signed, an APA is binding on both the taxpayer and the Federal Tax Authority. For domestic transactions, the related party is also expected to follow the agreed terms, even though legal enforceability remains with the signatories.

3. Which Transactions Can Be Covered

The Federal Tax Authority allows APAs for two broad categories:

• Cross-border controlled transactions
• Domestic controlled transactions where different tax rates apply or tax incentives are available
  

Safe harbour transactions are excluded. This means low-value intra-group services or other simplified arrangements cannot be placed under an APA.

The Federal Tax Authority also focuses on complexity. APAs are meant for transactions where pricing cannot be reliably determined without significant judgment. Simple or routine arrangements are unlikely to be accepted.

4. Materiality Threshold and Flexibility

To apply, controlled transactions proposed to be covered must normally exceed AED 100 million per tax period. Only transactions included in the APA are counted.

That said, the Federal Tax Authority has left the door open. Applications below the threshold may still be accepted if strong justification is provided. This shows that economic substance and complexity matter more than just size.

Meeting the threshold does not guarantee acceptance. Failing to meet it does not mean automatic rejection.

5. How the Rollout Works?

The APA programme is being introduced in phases.

At the moment, only unilateral APAs are available. These involve an agreement between the taxpayer and the Federal Tax Authority. Bilateral and multilateral APAs, which involve foreign tax authorities through mutual agreement procedures, will be introduced later.

Domestic unilateral APAs can already be submitted. Cross-border unilateral APAs will be announced in a later phase.

6. Term, Fees and Timing

An APA runs for a prospective period of three to five years. Rollback to prior years has not yet been provided for.

The Federal Tax Authority has fixed the fees clearly:

• ~AED 30,000 for a new APA, including amendments
  
• ~AED 15,000 for renewals

After pre-filing approval, the APA application must be submitted within the earlier of two months or twelve months before the first covered tax period begins. One part of the guide also refers to 40 days, which means timelines should be treated as tight and closely monitored.

7. The Four Stages of an APA

The Federal Tax Authority has structured the process into four formal stages.

Stage 1: Pre-Filing Consultation

A prescribed form must be submitted. One or more meetings follow, where the Federal Tax Authority assesses whether the case is suitable for an APA. The outcome is notified within 60 days after the consultation ends.

Stage 2: APA Application

Once approved, the full application is filed. A project plan is agreed. The Federal Tax Authority may request more data, conduct interviews, or even visit business sites.

Stage 3: Evaluation and Negotiation

The Federal Tax Authority prepares its own transfer pricing analysis. This is discussed with the taxpayer. If agreement cannot be reached, the application can be dropped.

Stage 4: Conclusion

If both sides agree, the APA is signed. Information shared during the process cannot be used for audit purposes if the APA does not proceed.

8. Monitoring and Annual Declarations

Once an APA is signed, compliance does not stop. An APA Annual Declaration must be filed for each covered tax period. This confirms that the agreed pricing and assumptions have been followed.

The declaration is due within 90 business days of signing the APA or by the tax return filing date, whichever is later.

9. When the Federal Tax Authority Can Cancel or Revoke

The Federal Tax Authority may revise an APA if there are changes in law, business, or economic conditions. The taxpayer must report such changes within 20 business days.

Revocation can occur in cases of misrepresentation, failure to follow terms, or breach of critical assumptions. Revocation applies retroactively. Cancellation is prospective.

10. Why This Matters for Transfer Pricing Strategy?

The APA guide makes it clear that contract and conduct must match. Forecasts must be realistic. Benchmarking must be defensible. Weak or artificial structures will not survive pre-filing.

For serious groups, this offers something valuable: stability. For the Federal Tax Authority, it means fewer disputes and stronger compliance.

11. Arnifi Perspective

Arnifi supports companies navigating complex regulatory and tax frameworks across the UAE. With the Federal Tax Authority introducing a structured APA regime, careful preparation is no longer optional.

Arnifi works with tax advisors, corporate teams, and finance leaders to align business models, contracts, and transfer pricing policies before engaging with authorities. Strong documentation, clear assumptions, and defensible pricing structures make the difference between approval and rejection.

When handled correctly, an APA becomes a strategic shield rather than an administrative burden.

12. FAQs

What is an APA under UAE Corporate Tax?
An agreement with the Federal Tax Authority that fixes transfer pricing methods in advance.

Who can apply for an APA?
A UAE taxable person or tax group parent through a registered agent or legal representative.

What is the minimum threshold?
Controlled transactions of AED 100 million per tax period, subject to discretion.

Are cross-border APAs available?
Not yet, only domestic unilateral APAs are currently open.

How long does an APA last?
Between three and five years.

13. Conclusion

The release of the UAE APA guide marks a serious shift in how transfer pricing is handled under the Corporate Tax regime. The Federal Tax Authority has laid out a system built on transparency, discipline, and economic reality. For businesses with large or complex related-party transactions, this is an opportunity to move away from disputes and into predictability.

The Federal Tax Authority is clearly signalling that structured compliance will be rewarded. Those who prepare early, document properly, and understand their transaction economics will find the APA framework a powerful tool.

Arnifi remains positioned to guide companies through this new landscape, helping transform regulatory complexity into business certainty.