Authors: Brian Conn & Pratik Manani
The UAE Federal Tax Authority (FTA) released its corporate tax guide on advance pricing agreements (CTGAPA1, the APA Guide) on 31 December 2025. This sets out the procedural, administrative and technical framework for entering into advance pricing agreements (APAs) in the UAE.
An APA is a binding agreement between the taxpayer and the FTA that determines the appropriate transfer pricing methodology for specified controlled transactions over a defined future period.
The FTA has adopted a phased approach to the implementation of the APA programme. In its initial phase, the regime is limited to unilateral APAs, i.e., agreement solely concluded between the taxpayers and FTA, without the involvement of a foreign tax authority. This measured rollout will allow the FTA to build internal capacity before expanding the programme to bilateral and multilateral arrangements that require treaty-based cooperation and more complex negotiations.
While the guide anticipates the future introduction of bilateral and multilateral APAs, these are expected to be addressed in subsequent phases once the framew
ork matures.
The APA Guide sets out the eligibility, scope, materiality thresholds, application processes, compliance requirements and conditions for revising or cancelling APAs.
In this tax alert, we highlight the key features of the UAE APA programme, including eligibility, timelines, and ongoing compliance obligations, and share insights on how businesses can leverage the regime to enhance tax certainty and manage transfer pricing risk.
What is an APA?
An APA is a formal agreement between a taxpayer and one or more tax authorities that establishes, in advance, the transfer pricing methodology to be applied to specific related party transactions over a defined period of time. The agreement typically specifies the most appropriate transfer pricing method, the selection of comparable data, critical assumptions, and the manner in which prices or margins will be tested.
By agreeing on these elements upfront, an APA provides certainty and predictability regarding tax treatment, significantly reduces the risk of transfer pricing disputes, minimizes the likelihood of double taxation, and can lower compliance and litigation costs. APAs are especially useful for complex or high-value transactions and usually apply for multiple future tax years, sometimes with rollback to prior years if permitted by law.
What are the types of APAs?
APAs are generally classified into three types based on the number of tax authorities involved.
- Unilateral APA (UAPA): UAPA is an agreement between the taxpayer and a single tax authority; while it offers certainty in that jurisdiction, it does not eliminate the risk of double taxation if another country disagrees with the pricing.
- Bilateral APA (BAPA): A BAPA involves the taxpayers and the tax authorities of two countries, under an applicable tax treaty. BAPA provides stronger protection against double taxation and is widely preferred for cross-border transactions.
- Multilateral APA (MAPA): A MAPA involves more than two tax authorities and is used when transactions span multiple jurisdictions; although more complex and time consuming to negotiate, it offers the highest level of certainty for multinational enterprises operating across several countries.
The UAE APA Programme
The basis for the APA programme is provided by Article 59 of the Federal Decree Law No. 47 of 2022 on Taxation of Corporations and Businesses (“UAE CT Law”).
Eligibility and Scope
Any taxable person that has entered into, or proposes to enter into, domestic or cross-border controlled transactions may apply for an APA, subject to meeting the prescribed criteria. In particular, domestic transactions may qualify for inclusion in a unilateral APA where the taxable person and its domestic related party are subject to different tax rates or are eligible for different tax incentives/benefits under the UAE CT Law, such as transactions undertaken by a qualifying free zone person, transactions carried out by a business or business activity of a government entity, or by a government controlled entity in respect of activities that are not its mandated activities.
The APA Guide explicitly excludes certain transactions from UAPA consideration. In particular, controlled transactions that fall within the safe harbor provisions of the UAE CT Law are not eligible for inclusion, either in the scope of an UAPA or for purposes of calculating the materiality threshold. This includes, for example, low value-adding intra-group services, which are specifically recognised under the safe harbor rules as having simplified transfer pricing treatment due to their minimal contribution to value creation.
While UAPAs are available starting December 2025, BAPAs are expected to follow in 2026, with the exact date to be announced.
Materiality Threshold
Under the APA Guide, a taxable person may apply for a UAPA in respect of domestic or cross-border controlled transactions, provided that the total or expected arm’s length value of all controlled transactions proposed to be covered under the APA is at least AED 100 million per tax period.
For tax groups, this materiality threshold is applied at the group level. In calculating whether the threshold is met, only controlled transactions between the tax group and related parties outside the group are considered.
The materiality threshold is intended to ensure that the APA programme is focused on transactions that present meaningful transfer pricing risk and where prospective certainty would provide a tangible compliance and administrative benefit.
Importantly, the APA Guide emphasises that meeting the AED 100 million threshold alone does not guarantee acceptance into the programme. Each application is evaluated on a case-by-case basis, taking into account the complexity of the transactions, the potential for tax risk, and the overall benefit of entering into an APA.
Covered Period
An APA will apply for a minimum of three tax periods and maximum of five tax periods. The APA regime does not cover the filing of applications for prior tax periods, but the regime may evolve to include prior periods in line with OECD guidelines.
Filing Fees
An APA application must be accompanied by a non-refundable fee of AED 30,000 at the time of filing.
A non-refundable fee of AED 15,000 is payable for renewals.
The APA Process
The APA process begins with a pre-filing consultation, during which the taxpayer engages with the FTA to discuss the proposed APA, its scope, and its suitability for the programme.
Following the pre-filing stage, the taxpayer submits a formal APA application supported by detailed transfer pricing documentation. The FTA then undertakes a technical review, which may involve requests for additional information, meetings, and negotiations. Once agreement is reached on all material terms, the APA is formally concluded and becomes binding for the agreed period.
A summary of the different stages of the APA process is provided below:
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Stage I – Pre filing consultation |
| The taxpayer requests a pre-filing consultation with the FTA to discuss the scope of the proposed APA, covered transactions, transfer pricing issues, methodology, and suitability for an APA. The pre-filing consultation must be submitted by the taxpayer, its tax agent (registered for corporate tax), or legal representative. The FTA reviews the request, may hold one or more meetings, and assesses whether an APA is feasible. This stage is non-binding, and the FTA may allow the taxpayer to proceed or reject the request. The FTA aims to conclude this stage within six to nine months from receipt of the request. During this period, the taxpayer must respond to any FTA queries within 40 business days, and the FTA communicates its understanding of the TP issues within 60 business days of the pre-filing meeting. |
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Stage II – Filing of an APA Application |
| If permitted to proceed, the taxpayer submits a formal APA application with detailed information on the covered transactions, period, transfer pricing method, analysis, and critical assumptions, within two months of the FTA’s approval of the pre-filing consultation or at least 12 months before the first covered tax period, whichever is earlier. The FTA reviews the application, may request additional information, conduct site visits or interviews, and evaluate the reliability and completeness of the submission. The application may be accepted or rejected. Throughout this stage, the taxpayer is expected to respond to any additional FTA requests for information within 40 business days. |
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Stage III - Evaluation and Negotiation |
| The FTA performs a detailed transfer pricing evaluation and prepares its analysis of the arm’s length pricing and terms. This analysis is shared with the taxpayer for written feedback, within 30 business days from the date of receipt of such analysis. Negotiations take place to reach a mutually acceptable position. If agreement cannot be reached, the APA process may be closed without conclusion. |
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Stage IV - Conclusion and implementation |
| Once agreement is reached, the final APA is signed and becomes binding for the covered transactions and tax periods. The taxpayer must comply with its terms, after which the FTA will not challenge the agreed transfer pricing. The taxpayer may withdraw before conclusion, but fees are non-refundable, and the APA does not create a precedent for other periods or taxpayers. No specific timeline is provided for the conclusion of this stage, as it depends on the complexity of the negotiations and implementation. |
APA Monitoring and Review
Once UAPA is concluded, the FTA requires taxpayers to maintain ongoing compliance through annual monitoring and reporting.
Annual Declaration Form
Any taxable person who has entered into anAPA must submit an Annual declaration for each tax period covered under the agreement, using the form prescribed in the APA Guide (Appendix 4). The declaration must address all aspects of the APA, including the terms, conditions, and critical assumptions agreed upon. It is to be filed within 90 business days from the date of the signed APA or by the due date of filing the relevant tax return, whichever is later.
The FTA may review the APA annual declaration to assess whether the taxpayer has adhered to the agreed methodology and complied with the APA’s terms and conditions. The review focuses on several key areas: whether the material representations made in the APA application and supporting documents remain accurate and reflective of the taxpayer’s and related parties’ operations; whether the agreed upon transfer pricing method has been consistently and correctly applied; whether the supporting data and calculations used to implement the methodology are materially accurate; and whether the critical assumptions underlying the APA remain valid.
If the FTA identifies any issues during its review, it will notify the taxpayer. Depending on the nature and significance of these issues, the outcome may range from no change being required, to a revision of the APA upon mutual agreement, or, in cases where resolution is not possible, prospective cancellation of the APA.
Revision of APA
The FTA may revise an APA where there is a change in law affecting the corporate tax treatment of the covered transactions, where business, economic, or other relevant conditions change (such as the entry or exit of group members), or where exceptional circumstances arise.
In such cases, the taxable person is required to self-assess whether a revision is needed and must notify the FTA within 20 business days of the relevant event. If a mutually acceptable revision cannot be agreed, the APA may be cancelled on a prospective basis from the tax period in which the event occurred, while remaining effective for prior periods.
Revocation or Cancellation of APA
The FTA may revoke or cancel an APA if a taxpayer makes a material misrepresentation, fails to comply with key terms, or breaches critical assumptions. Revocation takes effect from the first tax period covered by the APA, applying retrospectively.
Following revocation, the previously covered transactions fall under the general provisions of the UAE CT Law and Tax Procedures Law.
In cases of cancellation due to breaches or non-compliance, the APA is cancelled prospectively from the tax period in which the breach occurred and for all subsequent periods, while remaining effective for prior compliant periods.
Renewal of APA
Taxpayers may also seek renewal of an APA if there are no material changes to the business operations or critical assumptions underlying the covered transactions. Renewal applications must be submitted at least three months before the APA’s expiry, accompanied by updated documentation, analyses, and supporting information.
The renewal process follows the same procedures as the initial application, except that a pre-filing consultation is not required, and a reduced fee of AED 15,000 applies.
Key Considerations for Taxpayers
Taxpayers considering the UAE APA regime should approach the process as both a technical transfer pricing exercise and a broader tax governance initiative. The following considerations are particularly relevant in the context of the FTA’s initial rollout of the programme.
- Readiness of Transfer Pricing Framework
An APA requires robust, defensible transfer pricing documentation and consistent historical application. Taxpayers should assess whether their policies, benchmarking, and data are sufficiently mature to withstand detailed scrutiny by the FTA.
- Ownership of the APA Filing Process
The APA Guide makes it clear that APA requests, including pre-filing consultations and formal applications, must be submitted by the taxable person itself, or through an authorised tax agent or legal representative. In the case of a tax group, only the parent entity is permitted to submit an APA application on behalf of the group or its members.
Taxpayers should therefore ensure that appropriate internal authorisations, powers of attorney, and group level governance protocols are in place before initiating the APA process.
- Transaction Selection and Scope
Given the AED 100 million materiality threshold and the exclusion of safe-harbour transactions, taxpayers should strategically identify high-risk or high-value transactions where advance certainty delivers the greatest benefit.
- Resource and Time Commitment
The APA process is resource intensive and involves ongoing engagement with the FTA, including annual compliance reporting. Businesses should ensure adequate internal and advisory resources are available throughout the APA lifecycle.
- Managing Critical Assumptions Over the APA Term
APAs rely heavily on critical assumptions regarding business models, functions, risks, and market conditions. Taxpayers must actively monitor changes to ensure continued compliance and avoid the risk of revocation or cancellation.
- Group Wide Alignment and Stakeholder Involvement
For multinational groups, the decision to pursue a UAE APA should not be made in isolation at the local entity level. Given the potential implications for cross-border pricing, foreign tax authority positions, and future bilateral APA discussions, early involvement of global tax teams and key stakeholders is critical.
As the UAE APA framework matures, APAs are likely to evolve from a purely compliance driven mechanism into a strategic instrument for tax certainty and risk management. The pre-filing consultation stage should be viewed as an opportunity for constructive engagement with the FTA, allowing taxpayers to discuss proposed methodologies, profit-level indicators, and testing approaches in advance.
Robust forecasting, prospective testing, and clear articulation of value drivers will be increasingly important in supporting defensible outcomes. Taxpayers that adopt a forward looking and transparent approach will be better positioned to use APAs as an integral element of effective tax governance in the UAE and as a platform for future bilateral or multilateral agreements.
How BDO can help
Navigating the APA regime requires a careful balance of technical transfer pricing expertise, procedural experience, and strategic foresight. We support taxpayers at every stage of the APA lifecycle to help them achieve certainty while managing compliance and tax risk effectively.
Our services include:
- APA Feasibility and Readiness Assessments
We assess whether an APA is appropriate for your business by evaluating transaction materiality, transfer pricing risk, data availability, and alignment with the FTA’s eligibility and acceptance criteria.
- Pre-filing Consultation Support
We assist in preparing for and participating in pre-filing consultations with the FTA, including defining the scope of the APA, identifying covered transactions, and anticipating key technical and procedural questions.
- APA Application Preparation and Submission
We lead the preparation of APA applications, including robust transfer pricing analyses, benchmarking studies, critical assumptions, and supporting documentation aligned with UAE CT Law, OECD guidelines, and FTA expectations.
- Negotiation and Technical Engagement with the FTA
Our team supports taxpayers through discussions and negotiations with the FTA, responding to information requests, addressing technical challenges, and helping reach agreement on pricing methodologies and terms.
- Ongoing Compliance and APA Monitoring
We assist with annual APA declarations, ongoing compliance reviews, and monitoring critical assumptions to ensure continued adherence and minimise the risk of revision or cancellation.
- APA Renewal and Change Management
Where business operations remain stable, we support APA renewals. Where changes arise, we advise on managing revisions or disclosures to the FTA in a proactive and controlled manner.
- Strategic Transfer Pricing Advisory
Beyond APAs, we help align transfer pricing policies with the broader UAE corporate tax framework, free zone considerations, and future bilateral APA planning.
By combining technical depth with practical execution, we help businesses use the UAE APA programme not just as a compliance tool, but as a strategic mechanism to enhance certainty, protect value, and support sustainable growth.