GCC Transfer Pricing Brief

For any company with a 31 December 2025 financial year end, the first corporate tax return is due by 30 September 2026, and the transfer pricing work that goes with it falls due at the same time. The months between now and then are when the documentation either gets done properly or gets rushed at the last minute.

A few things make this season different from the registration rush of the last two years.

The transfer pricing disclosure form goes in with the return itself. It is a summary of your related party and connected person positions, and it is filed alongside the corporate tax return. The files behind it are a separate matter, which brings me to the next point.

You do not upload the master file and local file with your return. You hand them over only when the Federal Tax Authority asks for them, and once it asks you have 30 days to produce them. Thirty days is not enough time to write a local file from scratch. It is only enough time to hand over one you already have. That is the reason that the taxable persons now shall start preparing for the compliance readiness wherever the thresholds are met.

The arm's length principle, though, applies to everyone. There is no minimum value below which a related party transaction escapes it. As it is mentioned always that the tax does not follow materiality just like the IFRS. Therefore, even small amounts of controlled transactions requires justification to be at ALP.

On the free zone side, the point to be careful about is qualifying status. A qualifying free zone person that fails to meet any of its qualifying conditions during a tax period loses that status from the start of that period and for the next four tax periods, so five periods in total. This comes from Ministerial Decision No. 265 of 2023. Arm's length pricing on related party dealings is one of those conditions, so weak transfer pricing can contribute to a loss of status, but in practice the more common trigger is breaching the de minimis limit on income that does not qualify, or earning income from excluded activities. It is worth being precise here, because a single mispriced transaction usually leads to a pricing adjustment rather than an automatic loss of the zero rate.

Two tools are worth knowing for groups that want certainty rather than just compliance. The advance pricing agreement programme is open for domestic unilateral agreements, where the controlled transactions you want covered are worth AED 100 million or more, over a term of three to five years. It is built for complex or high value structures, and it is well suited to pricing between free zone and mainland entities. The cross border phase was signalled to start during 2026, so check the current status before you tell a client to wait for it. Separately, the authority has formalised a route to written clarifications and directives, in effect since 1 March 2026, which gives you a structured way to get a position in writing when a treatment is uncertain.

Other GCC Countries

Step back from the UAE and the pattern across the Gulf is hard to miss. Five of the six states now have a 15 percent minimum tax mechanism that is either live or moving toward it, and transfer pricing is the thread running through all of them. Pricing your intercompany transactions for one country no longer keeps you safe in the others, because each authority is now testing those same transactions to protect its own share of the tax.

In the UAE the headline rate is 9 percent above AED 375,000, with zero percent still available on the qualifying income of a qualifying free zone person. The domestic minimum top up tax applies to large groups for financial years starting on or after 1 January 2025, and the transfer pricing rules in Articles 34 to 36 sit underneath all of it.

• Saudi Arabia has the most developed regime in the region. Its corporate income tax runs at 20 percent on the foreign owned share of profits, with zakat on the Saudi and GCC owned share, and its transfer pricing bylaws now reach zakat payers as well as taxpayers. An advance pricing route exists. Saudi Arabia has not enacted a domestic minimum top up tax to date, so that is one to keep watching.
• Qatar runs a general rate of 10 percent and has gone further than most on the global minimum tax, with both a domestic minimum top up tax and an income inclusion rule in effect from 1 January 2025, including for entities in the Qatar Financial Centre.
• Bahrain was the first in the Gulf to move. Its domestic minimum top up tax has applied since 1 January 2025 under Decree Law No. 11 of 2024. Bahrain still has no broad corporate income tax, although a draft corporate income tax law has been reported as advancing toward a planned introduction in 2027. Treat that 2027 tax as expected rather than enacted.
• Kuwait brought in a domestic minimum top up tax of 15 percent under Decree Law No. 157 of 2024, with executive regulations following in 2025, and it applies to in scope multinational groups for financial years starting on or after 1 January 2025. The law requires related party transactions to be at arm's length and lets the tax authority adjust income where they are not. This is a real step forward for Kuwait, which had only limited transfer pricing documentation rules before, although the arm's length requirement here sits within the scope of the top up tax rather than as a full economy wide documentation regime.
• Oman is the one to be careful about, because the reputable sources do not fully agree. Oman issued Royal Decree No. 70 of 2024 on 31 December 2024, effective from 1 January 2025, introducing a supplementary tax aligned with the global minimum tax. Some advisers describe it as a domestic minimum top up tax and an income inclusion rule together. Others, reading it more cautiously, describe it mainly as an income inclusion rule that taxes Omani parents on their foreign subsidiaries that are taxed below the minimum, with the profits of Omani entities themselves left outside its scope, and with the detailed regulations still to come. Because of that disagreement, I would not state flatly that Oman now has a domestic top up tax on locally earned profits, and I would not claim it forces groups to fully line up their transfer pricing with local Omani filings. Oman does not run a full OECD style transfer pricing documentation regime in the way Saudi Arabia or the UAE do. The safe line is that Oman has enacted Pillar Two legislation, principally an income inclusion rule, with regulations pending.
  
   

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