Executive summary

On 31 December 2025, the United Arab Emirates (UAE) Federal Tax Authority (FTA) released its first comprehensive Corporate Tax Guide on Advance Pricing Agreements (CTGAPA1) (APA Guide), setting out the procedural, administrative and technical framework for entering into Unilateral Advance Pricing Agreements (UAPAs). The APA program is being introduced in phases, with UAPA applications for domestic controlled transactions accepted from December 2025 and cross-border applications expected to start in 2026 (date to be announced).

The APA Guide sets out the eligibility, scope, materiality thresholds, application processes, monitoring requirements and conditions for revising or cancelling APAs.

Taxpayers with complex or high-value related-party transactions should assess whether entering into a UAPA would provide certainty under the UAE's transfer pricing (TP) framework.

Detailed discussion

Below are key highlights of the APA Guide.

Introduction of the APA program

Article 59 of the UAE Corporate Tax Law (CT Law) permits taxpayers to enter into APAs to determine the arm's-length pricing of controlled transactions under the TP provisions introduced in the UAE CT Law. The program is intended to reduce TP uncertainty, avoid disputes and promote collaborative engagement with the FTA. The first phase is limited to UAPAs, covering only prospective periods.

Types of APAs

The APA Guide introduces UAPAs as the primary mechanism in the initial phase, with bilateral APAs (BAPA, i.e., an agreement between competent authorities of two jurisdictions) and multilateral APAs (MAPA, i.e., a set of agreements between competent authorities of more than two jurisdictions) to follow as the program matures. A UAPA will be binding on the FTA and domestic taxpayers and not be applicable beyond the jurisdiction of the UAE. Cross-border UAPAs will involve information exchanges with foreign tax authorities in accordance with the Organisation for Economic Co-operation and Development (OECD) requirements.

Scope of an APA

An APA will define the arm's-length methodology, criteria, critical assumptions and covered tax periods (minimum of three and maximum of five years). It will specify the transactions included, the TP method and supporting definitions, required documentation and implementation mechanisms, along with key underlying critical assumptions.

Eligibility and materiality threshold

The program is open to taxpayers entering into domestic or cross-border-controlled transactions that are complex in nature or have been historically subject to audit. Transactions subject to TP safe harbor rules, including low-value-adding services, are outside the scope.

An application can be made with respect to domestic or cross-border transactions in which the total expected value of transactions is at least 100 million UAE Dirhams (AED100m) for each tax period. The FTA evaluates each request based on specific facts and retains the discretion to accept or reject the application depending on the complexity and tax risk considerations even if the threshold is met.

APA process

The process consists of four stages — (1) prefiling, (2) filing, (3) evaluation and negotiation, and (4) conclusion.

The prefiling consultation is mandatory and focuses on the scope, complexity, methodology and relevant history, and can take six to nine months. Upon approval, taxpayers must submit their APA application (in Arabic or English) within two months or at least 12 months before the first covered period. Applications require comprehensive functional, economic and industry analysis and are subject to an AED30,000 nonrefundable fee.

Upon submission of the application, the FTA may request additional information, conduct site visits or interview key personnel. During the evaluation and negotiation stage, the FTA will assess the gathered information, issue its TP analysis and engage in discussions. If the parties cannot reach an agreement, the application is closed without refund of the application fees.

Once concluded, the APA becomes binding for the specified periods, provided the taxpayer adheres to all conditions and critical assumptions. APAs do not serve as precedent for other tax years or for entities not covered under the application.

Ongoing obligations

Taxpayers must file an APA Annual Declaration for each covered period within 90 business days of signing the APA or their tax return due date, whichever is later. The FTA may revise, cancel or revoke an APA due to changes in law, business operations or breaches of critical assumptions, including noncompliance or material misrepresentation.

Renewal of APAs

Renewal requests may be filed at least three months before expiry and require updated analysis, though a new prefiling consultation is not necessary. The renewal fee is AED15,000.

Implications

Groups with material or complex cross-border or domestic related-party transactions, including free zone structures, government entities, and extractive or non-extractive businesses should assess whether an APA could reduce their compliance risk and potential TP disputes.

An APA presents an opportunity for businesses to proactively manage their TP risks, but given the extensive documentation, data and analysis required, early preparation is crucial.