Transfer Pricing benchmarking is the analytical backbone of every TP documentation. It determines whether intercompany transactions between related parties meet the Arm’s Length Principle—that is, whether prices, margins, or interest rates would have been agreed between independent parties in comparable circumstances.

In the UAE context, Article 34 of Federal Decree-Law No. 47 of 2022 and Ministerial Decision No. 97 of 2023 mandate that all related party and connected person transactions must comply with the Arm’s Length Principle and be substantiated through reliable comparability analysis.

Young Global’s benchmarking services are designed to provide data-driven, defensible justifications for your intercompany pricing—aligned with the OECD Guidelines, FTA expectations, and international best practices.

Body Structure (Use Subheads) -

Importance of Benchmarking under UAE Transfer Pricing Law

Benchmarking forms the foundation of compliance under the UAE’s Transfer Pricing regime. Article 34 of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses mandates that all related parties and connected person transactions must be consistent with the Arm’s Length Principle.

This means that the terms and pricing of intercompany dealings should mirror what independent parties would agree to under comparable circumstances. Further, Article 55(2) of the same law, along with Ministerial Decision No. 97 of 2023, prescribes the documentation standards to substantiate such compliance.

The UAE’s Transfer Pricing framework draws heavily from the OECD Transfer Pricing Guidelines, and therefore, benchmarking is not a mere analytical exercise but a statutory requirement that provides the evidentiary backbone for every intercompany transaction. The Federal Tax Authority (FTA), which oversees Corporate Tax implementation, expects taxpayers to present reliable, data-backed benchmarking analyses demonstrating that their prices, margins, and interest rates are within an acceptable arm’s length range.

Why Benchmarking is Necessary

Benchmarking is essential to ensure that intercompany transactions are priced in a commercially reasonable and defensible manner. It serves as the quantitative validation of the Arm’s Length Principle, bridging the gap between internal pricing policies and external market evidence. Without benchmarking, a business exposes itself to significant risks both financial and reputational.

Benchmarking allows taxpayers to justify the reasonableness of their arrangements, minimize the risk of tax adjustments, and prevent penalties for non-compliance. It also serves as a preventive mechanism during audits, offering documented proof that all related party transactions are in line with market norms. From a governance perspective, benchmarking ensures consistency in pricing policies across group entities and provides management with confidence that related party dealings are transparent, fair, and aligned with economic reality.

Scope of Benchmarking Across Transaction Types

The scope of benchmarking under the UAE Transfer Pricing regime is wide-ranging and encompasses nearly every category of controlled transaction. It covers the sale or purchase of goods, provision of services, management and technical support fees, cost recharging, and cost-sharing arrangements.

Benchmarking is equally critical for financial transactions such as loans, guarantees, and treasury operations, where arm’s length interest rates and guarantee fees must be justified. Intangible property transactions, including royalty payments, licensing of trademarks, software, and franchise arrangements, also fall within the ambit of benchmarking.

Furthermore, benchmarking extends to connected person transactions, particularly remuneration of owners, directors, and family members where compensation must be commensurate with market value.

Whether the business operates in manufacturing, trading, retail, technology, or services, benchmarking remains a central requirement for compliance and audit defense.

Global Databases and Benchmarking Tools Used by Young Global

At Young Global, benchmarking is conducted using a robust mix of global databases and analytical tools. We leverage TP Catalyst, a specialized transfer pricing platform by Bureau van Dijk, which provides access to financial data of millions of companies globally and allows for sophisticated screening by functions, risks, and industries. The Orbis and Osiris databases are used for global comparable searches, providing extensive financial, ownership, and industry-level information.

For intangible property benchmarking, we rely on databases such as RoyaltyStat and RoyaltyRange, which compile empirical royalty rates from licensing and IP transactions across various jurisdictions.

Financing transactions are supported through access to LoanConnector, DealScan, Refinitiv, and Bloomberg, enabling precise analysis of intercompany loan interest rates, guarantee fees, and credit spreads.

For connected person remuneration benchmarking, we use reliable HR and salary data sources, including Cooper Fitch, Michael Page and Humatix salary guides. These resources allow our team to produce high-quality benchmarking analyses that are defensible and aligned with both OECD and FTA expectations.

Benchmarking Methodologies Applied

Our approach to benchmarking is grounded in globally recognized methodologies consistent with the OECD Transfer Pricing Guidelines. Depending on the nature of the transaction, we employ methods such as the Comparable Uncontrolled Price (CUP) method for direct price comparisons, the Resale Price Method for distribution and trading entities, and the Cost-Plus Method for manufacturing and service arrangements.

For broader operational analyses, the Transactional Net Margin Method (TNMM) is widely used to benchmark net profit margins of the tested party against comparable independent companies. In cases involving complex or integrated operations where both parties contribute unique intangibles, we apply the Profit Split Method to allocate profits in proportion to value creation.

Where necessary, hybrid or multi-method approaches are used to address industry-specific nuances or data limitations. Each benchmarking study is customized to the client’s business model, ensuring technical soundness and commercial relevance.

Expert Team and Technical Competence

The benchmarking practice at Young Global is led by a team of seasoned Transfer Pricing professionals with over a decade of experience across Big 4 firms and international advisory networks. Our experts have managed benchmarking projects across more than sixty jurisdictions, enabling a deep understanding of regional market differences and global comparability principles.

The team combines analytical rigor with business pragmatism—integrating economic analysis, functional risk evaluation, and industry insights into each benchmarking assignment. Every study undergoes a multi-layer review process to ensure precision, consistency, and alignment with UAE Transfer Pricing standards. This internal quality framework ensures that every benchmarking report issued by Young Global is audit-ready, transparent, and defendable before tax authorities.

Connected Person Benchmarking (Remuneration Testing)

One of the most unique features of the UAE Transfer Pricing regime is the inclusion of Connected Person provisions under Article 36 of the Corporate Tax Law. These provisions require that remuneration paid to shareholders, directors, and related family members must reflect the value of their contribution to the business. At Young Global, we conduct connected person benchmarking using a combination of quantitative data and qualitative assessment.

We reference market salary guides such as those published by Cooper Fitch, Michael Page, and Humatix, along with role-specific salary surveys issued by reputable HR advisory firms.

Each benchmarking study evaluates job responsibilities, seniority, industry, and company size to determine the appropriate market remuneration range. Where additional validation is required, we coordinate with independent HR consulting firms to obtain formal salary benchmarking certificates. This ensures that our clients’ compensation structures are defensible, transparent, and compliant with Article 36.

Legal and Regulatory Foundation of Benchmarking

Benchmarking derives its legal enforceability from multiple pillars of the UAE’s Corporate Tax framework. Article 34 establishes the Arm’s Length Principle as a statutory requirement, while Article 55(2) mandates the maintenance of documentation evidencing compliance. Ministerial Decision No. 97 of 2023 explicitly outlines the components of Transfer Pricing documentation, including the obligation to conduct benchmarking analyses.

Furthermore, the UAE has adopted the OECD Transfer Pricing Guidelines as a reference framework for determining comparability, selecting appropriate methods, and preparing documentation.

The FTA’s published FAQs and clarifications reinforce the expectation that all transfer pricing positions must be supported by empirical, data-driven benchmarking. As a result, benchmarking is not just a technical best practice, it is a legal necessity for every UAE taxpayer engaging in related party or connected person transactions.

Benchmarking Process Followed by Young Global

Our benchmarking process begins with a detailed understanding of the client’s business model, industry, and transaction structure. We first perform a functional analysis (FAR) to identify the functions performed, assets employed, and risks assumed by each party involved.

Based on this, we determine the most appropriate transfer pricing method and the tested party. Once the approach is defined, our team performs comprehensive searches in international databases, applying both quantitative and qualitative filters to identify independent comparables.

We analyze their financials, eliminate outliers, and determine the arm’s length range through statistical measures such as the median and interquartile range. The results are carefully reviewed to ensure consistency with the client’s operational realities, after which we document the entire analysis in an audit ready-benchmarking report.

Finally, we translate these outcomes into actionable guidance, helping clients implement compliant pricing, update agreements, and align internal systems.

Industry-Specific Benchmarking Expertise

Young Global has deep expertise across industries, allowing us to adapt benchmarking methodologies to the specific characteristics of each sector.

In manufacturing, we benchmark cost-plus margins for both full-fledged and limited-risk producers. In retail and trading, we evaluate the profitability of distributors. For technology companies, we conduct royalty benchmarking for intellectual property, software licensing, and franchise fees. In the financial services sector, we test interest spreads and guarantee fees under the CUP method.

For real estate, construction, and hospitality clients, we apply cost-plus and TNMM approaches to management and support service charges. In healthcare and pharmaceuticals, we benchmark R&D service providers and contract manufacturers. For family-owned groups, we assess director remuneration, shareholder salaries, and related-party cost allocations. Each industry demands a tailored analytical lens, and our benchmarking models are refined to capture these sectoral distinctions with precision.

Advantages of Benchmarking with Young Global

Partnering with Young Global for benchmarking brings multiple advantages. We have access to multiple global databases, ensuring that no analysis relies on a single limited data source. Our integrated approach merges technical accuracy with commercial viability, producing results that are both compliant and practical for day-to-day business implementation.

We maintain updated economic data and range revisions, ensuring our clients remain aligned with market conditions. The benchmarking output is seamlessly integrated with other transfer pricing documentation, including Local Files, Master Files, and intercompany agreements.

We also collaborate with finance, legal, and HR teams to ensure a holistic compliance approach. This combination of accessibility, expertise, and end-to-end support positions Young Global as one of the most trusted benchmarking specialists in the UAE.

Deliverables and Reporting

Every benchmarking engagement culminates in a comprehensive report designed to meet both regulatory and business requirements. Each report contains a detailed explanation of the method selection, tested party rationale, database searches, and screening criteria.

The report presents clear summary tables showing the selected comparables, their financial metrics, and computed arm’s length ranges. Appendices include detailed company profiles, search strategy documentation, and adjustment rationales.

For client convenience, an executive summary highlights key conclusions and recommendations for immediate implementation. Additionally, we provide supplementary memoranda integrating benchmarking outcomes into intercompany agreements and pricing policies, ensuring that compliance is fully embedded within the organization’s operational framework.