Transfer Pricing Valuation Services
Under Articles 34–36 of Federal Decree Law No. 47 of 2022, every taxable person must ensure that any transfer of goods, services, financing, intangibles, or business interests between related parties or connected persons reflects an arm’s length value. Valuation is therefore not optional.
Transfer Pricing valuation covers a broad spectrum: pricing of intercompany supplies, valuation of intangibles, determination of interest rates on group financing, exit charge calculations in restructurings, and fair value support for share based payments. Each valuation must integrate tax, accounting, and commercial perspectives to ensure that the price charged or the compensation received accurately reflects market conditions.
Regulatory Framework
The UAE Corporate Tax Law, reinforced by Ministerial Decision No. 97 of 2023, mandates that all related party dealings comply with the Arm’s Length Principle. Where such transactions involve transfers of assets, risks, or intangibles, the valuation must demonstrate that consideration equals what independent parties would agree upon under comparable circumstances.
Additionally, valuations often underpin compliance with Article 36 on payments to connected persons, IFRS 13 Fair Value Measurement, and Economic Substance Regulations for certain asset holding entities.
Scope of Transfer Pricing Valuation Services
At Young Global, our valuation practice covers seven primary domains:
- Intercompany Transaction Valuation – determining arm’s length pricing for sale or purchase of tangible goods, intercompany services, financing arrangements, and royalty/licensing fees.
- Business Valuation – valuing business units, subsidiaries, or equity interests for restructurings, mergers, acquisitions, or new entity setup.
- Intangible Asset Valuation – assessing the fair value of intellectual property, brands, technology, or customer intangibles transferred or licensed within the group.
- Financial Instrument Valuation – valuing loans, guarantees, bonds, hybrids, or cash pooling arrangements using market based yield curves and credit risk models.
- Intragroup Restructuring and Exit Valuation – quantifying compensation when functions, risks, or assets migrate between entities (business restructuring or exit charge analysis).
- Equity and Share Based Compensation Valuation – determining fair value of shares, stock options, and phantom unit plans granted to employees or management across group entities.
- Valuation for Tax and Regulatory Compliance – supporting TP documentation, IFRS reporting, ESR filings, and justification of capital contributions, write offs, or impairments involving related parties.
Methodologies Applied
Our professionals apply globally accepted valuation techniques consistent with OECD Guidelines and IFRS standards:
- Market Approach: Comparable Uncontrolled Price (CUP), guideline public company, and precedent transaction multiples.
- Income Approach: Discounted Cash Flow (DCF), relief from royalty, excess earnings, and multi period excess earnings models for intangibles.
- Cost Approach: Reproduction and replacement cost models, typically for early stage or specialized IP.
- Option Pricing Models: Black Scholes or binomial methods for share based compensation and hybrid instruments.
Key Challenges for the UAE Businesses
- Lack of Defendable Valuations: Many taxable persons rely on internal estimates or accounting book values that do not satisfy the arm’s length test. Such unsubstantiated values may be challenged by the FTA during audit reviews.
- Overlap Between Tax and Accounting Valuation Standards: Discrepancies between fair value accounting under IFRS and arm’s length valuation for tax can lead to reporting inconsistencies, misstatements, or double adjustments.
- Absence of Documentation Linking Valuation to TP Method: Valuations are often performed in isolation, without linking to the TP method applied (CUP, TNMM, etc.), which weakens the overall documentation trail.
- Challenges in Intangible and Financing Valuations: Intangibles and intercompany loans require complex modelling credit risk, useful life, obsolescence, or royalty benchmarking often beyond the in house team’s capacity.
How we can help you with
Young Global integrates valuation specialists with transfer pricing professionals to ensure both technical accuracy and compliance strength. Our deliverables align valuation conclusions with the selected TP method, ensuring consistency across your Local File, Master File, and TP Disclosure Form. For restructuring or exit cases, we quantify compensation in accordance with OECD Chapter IX guidance, providing defensible valuations recognized by auditors and regulators alike.
In an environment where valuation and transfer pricing intersect, defensible valuation analysis is key to compliance. At Young Global, we deliver end to end valuation support covering business, intangible, financial, and restructuring valuations integrated seamlessly into your Transfer Pricing framework. Our multidisciplinary team ensures every figure disclosed to the FTA stands on solid economic and legal footing.
Contact Young Global today to obtain robust, audit ready valuations that align with UAE Corporate Tax Law, OECD Guidelines, and IFRS standards.
FAQs to Guide Your Business Decisions
Concise insights on our core services
A valuation is required whenever a taxable person transfers or acquires assets, functions, or risks within the group such as business restructurings, IP transfers, intercompany loans, or equity infusions.
While the Corporate Tax Law does not prescribe a fixed valuation format, substantiating the arm’s length nature of intra group transactions is mandatory. A defendable valuation is therefore essential evidence for compliance.
Valuations should be refreshed whenever there is a material change in business model, economic environment, or transaction terms typically every one to three years.
Yes, provided that the assumptions and methodologies align with both IFRS 13 and OECD principles. Young Global ensures such reconciliation to avoid inconsistencies.
Yes. During Transfer Pricing or Corporate Tax audits, the FTA may request supporting valuations to verify the arm’s length basis of prices or compensation.
