Corporate Tax Guide on Advance Pricing Agreements
Tax Alert
30 January 2026
30 January 2026
The Federal Tax Authority (FTA) of the United Arab Emirates (UAE) has released its Corporate Tax Guide on Advance Pricing Agreements (APA), which are intended to mitigate transfer pricing (TP) risks by pre-agreeing with the FTA on arm’s-length pricing mechanisms for specific controlled transactions. In this newsletter, we explain the types of APAs, eligibility criteria for entering into an APA, and procedural aspects of the APA process.
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On 30 December 2025, the UAE Federal Tax Authority (the FTA) published the Corporate Tax Guide on Advance Pricing Agreements (CTGAPA1) (the Guide), thereby effectively introducing the possibility of concluding Advance Pricing Agreements (APА) in the UAE.
The Guide provides a structured framework of the APA process, covering the following key aspects:
The Guide provides a structured framework of the APA process, covering the following key aspects:
- APA mechanism and objectives
- Types of APAs
- Eligibility for an APA
- Essential APA particulars
- Grounds on which an APA request or application may be rejected
- Procedures for concluding, revising, canceling or revoking an АРА
Scope and term of an АРА
An АРА is an agreement between the FTA and a taxpayer that sets out the criteria for determining arm’s-length pricing for the taxpayer’s controlled transactions over a fixed period specified in the APA. An APA may include one or more transfer pricing methods applicable to the transactions, along with any relevant adjustments.
АРАs are concluded for a minimum of three tax periods and a maximum of five tax periods, and, at present, cannot be applied retrospectively.
It is important to note that an АРА may be concluded only in respect of transactions where there is significant complexity or uncertainty in applying the arm’s-length principle, which may create the potential for tax risk. The FTA may reject an APA request for transactions where the arm’s-length principle can be reliably applied without significant doubt.
In addition, controlled transactions that fall under safe harbor provisions, such as low value-adding intra-group services, are excluded from the APA scope.
As a general rule, the materiality threshold for applying for an APA is AED 100 million, based on the total or expected value of all controlled transactions determined under the arm’s-length principle for the relevant tax period.
Meeting the materiality threshold, however, is not the sole criterion for approving or rejecting an APA application. The FTA primarily considers the complexity of the transactions and the potential for tax risk. Therefore, an APA application may still be rejected if the threshold is met, or accepted even if the threshold is not met. Applicants are required to provide the FTA with a robust justification for why entering into an APA in their case would help ensure compliance with the applicable legislation.
АРАs are concluded for a minimum of three tax periods and a maximum of five tax periods, and, at present, cannot be applied retrospectively.
It is important to note that an АРА may be concluded only in respect of transactions where there is significant complexity or uncertainty in applying the arm’s-length principle, which may create the potential for tax risk. The FTA may reject an APA request for transactions where the arm’s-length principle can be reliably applied without significant doubt.
In addition, controlled transactions that fall under safe harbor provisions, such as low value-adding intra-group services, are excluded from the APA scope.
As a general rule, the materiality threshold for applying for an APA is AED 100 million, based on the total or expected value of all controlled transactions determined under the arm’s-length principle for the relevant tax period.
Meeting the materiality threshold, however, is not the sole criterion for approving or rejecting an APA application. The FTA primarily considers the complexity of the transactions and the potential for tax risk. Therefore, an APA application may still be rejected if the threshold is met, or accepted even if the threshold is not met. Applicants are required to provide the FTA with a robust justification for why entering into an APA in their case would help ensure compliance with the applicable legislation.
Types of APAs
The Guide currently recognizes three main types of АРАs:
Unilateral APA (UAPA) — an agreement between a taxpayer and the FTA for domestic and cross-border controlled transactions.
A UAPA considers transactions exclusively from a UAE corporate tax law perspective and is not binding on foreign counterparties involved in the covered transactions. Accordingly, the terms and conditions agreed under a UAPA may not be considered as enforceable or applicable outside the UAE and are not binding on foreign tax administrations, which means that applying a UAPA to cross-border transactions carries a risk of double taxation.
At present, it is only possible to conclude a UAPA for domestic transactions. In 2026, the FTA will announce the commencement date for accepting UAPA applications for cross-border transactions.
Bilateral APA (BAPA) — an agreement between the competent authorities of two jurisdictions reached through a Mutual Agreement Procedure (MAP). A BAPA provides tax certainty in relation to controlled transactions in the UAE and the relevant foreign jurisdiction.
Multilateral APA (MAPA) — a set of agreements between the competent authorities of more than two jurisdictions reached through a MAP. MAPAs provide greater tax certainty than BAPAs in cases where controlled transactions involve more than two jurisdictions.
АРА procedures
The Guide outlines the key stages of the АРА process:
A non-refundable registration fee of AED 30,000 applies upon filing of an APA application.
The fee for APA renewal is AED 15,000.
The Guide currently recognizes three main types of АРАs:
Unilateral APA (UAPA) — an agreement between a taxpayer and the FTA for domestic and cross-border controlled transactions.
A UAPA considers transactions exclusively from a UAE corporate tax law perspective and is not binding on foreign counterparties involved in the covered transactions. Accordingly, the terms and conditions agreed under a UAPA may not be considered as enforceable or applicable outside the UAE and are not binding on foreign tax administrations, which means that applying a UAPA to cross-border transactions carries a risk of double taxation.
At present, it is only possible to conclude a UAPA for domestic transactions. In 2026, the FTA will announce the commencement date for accepting UAPA applications for cross-border transactions.
Bilateral APA (BAPA) — an agreement between the competent authorities of two jurisdictions reached through a Mutual Agreement Procedure (MAP). A BAPA provides tax certainty in relation to controlled transactions in the UAE and the relevant foreign jurisdiction.
Multilateral APA (MAPA) — a set of agreements between the competent authorities of more than two jurisdictions reached through a MAP. MAPAs provide greater tax certainty than BAPAs in cases where controlled transactions involve more than two jurisdictions.
АРА procedures
The Guide outlines the key stages of the АРА process:
- Stage 1 — Pre-filing consultation: the taxpayer contacts the FTA to request a pre-filing consultation using the prescribed form and meets with FTA officials to assess the possibility of entering into an АРА
- Stage 2 — Filing an АРА application: the FTA and the taxpayer agree on the main steps of the АРА process and indicative timelines; the FTA may request additional information, then conducts reviews or expert assessments, and ultimately issues a final decision on whether the АРА can be concluded
- Stage 3 — Evaluation and negotiation: the FTA analyzes the transactions under consideration and discusses potential pricing mechanisms with the taxpayer
- Stage 4 — Concluding an АРА and implementation: the taxpayer complies with the pricing criteria set out in the АРА and maintains the required documentation, while the FTA monitors compliance with the APA terms
A non-refundable registration fee of AED 30,000 applies upon filing of an APA application.
The fee for APA renewal is AED 15,000.
Key considerations
While the Guide is not legally binding, it provides a useful overview of how the APA mechanism works in the UAE.
The introduction of АРАs marks an important step forward, giving taxpayers the ability to align their pricing approaches with the FTA, gain certainty over controlled transactions for the APA period, and reduce the risk of tax disputes.
That said, some areas — particularly the practical application of ВАРАs and МАРАs — remain to be clarified, as they are not yet addressed in the Guide.
While the Guide is not legally binding, it provides a useful overview of how the APA mechanism works in the UAE.
The introduction of АРАs marks an important step forward, giving taxpayers the ability to align their pricing approaches with the FTA, gain certainty over controlled transactions for the APA period, and reduce the risk of tax disputes.
That said, some areas — particularly the practical application of ВАРАs and МАРАs — remain to be clarified, as they are not yet addressed in the Guide.
What we recommend
- Assess the suitability of an APA for transactions that involve high complexity or significant uncertainty in applying the arm’s-length principle, particularly where potential tax risks exist
- Do not treat the AED 100 million threshold as a strict barrier: an APA may be appropriate for transactions below this level if there is a robust business and tax rationale behind them
- Exclude transactions falling under safe harbor rules, such as low value-adding intra-group services, as these are ineligible for an APA
- Prepare thoroughly for the pre-filing consultation, including a description of your business model, functional analysis, pre-selection of TP methods and identification of critical assumptions
- Assess cross-border risks, given that a unilateral APA is not binding on foreign tax authorities and does not always eliminate the risk of double taxation
- Plan for long-term monitoring, including annual submission of APA reports and regular checks to ensure critical assumptions are met throughout the APA term
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