Shaping Certainty in a New Tax Landscape: Reflections on the UAE’s APA Programme

The UAE's introduction of an Advance Pricing Agreement ('APA') framework marks a significant milestone in the country's corporate tax evolution. With the release of the Federal Tax Authority's Corporate Tax Guide on Advance Pricing Agreements (CTGAPA1), taxpayers now have a structured mechanism to obtain prospective certainty on transfer pricing outcomes. Beginning with domestic unilateral APAs from December 2025 and cross‑border applications expected in 2026, the framework arrives at a pivotal moment, offering businesses a forward‑looking tool for risk management, planning, and governance.

Many businesses are encountering, for the first time, the formal expectation that related‑party transactions adhere to the arm's‑length standard outlined in Article 34 of the Corporate Tax Law, while Article 59 provides statutory authority for APAs. The ability to agree in advance on transfer pricing methodology can be invaluable—reducing uncertainty, preventing disputes, and supporting multi‑year commercial strategies. In this context, the APA programme represents not only a procedural advancement but an important step toward cultivating a predictable and collaborative tax environment.

A topic that has naturally generated interest is the AED 100 million materiality threshold in the APA Guide. While the APA Guide sets this threshold for the value of controlled transactions proposed for coverage per tax period, it also clarifies that lower‑value transactions may still be considered where arrangements are complex or raise material transfer pricing uncertainty. This balance—clear criteria paired with administrative flexibility—reflects the diverse nature of UAE business models, where complexity does not always correlate with the size of the transaction.

One aspect that warrants careful reflection is the nature of the APA Guide itself. As a non‑binding administrative guide, it mirrors global practice for early‑stage APA regimes. This approach enables the tax authority to refine processes, incorporate feedback, and build internal capability before formalising elements through legislation. Over time, however, many jurisdictions choose to introduce more defined legislative backstops—such as codified access thresholds or procedural timelines—to enhance long‑term predictability for taxpayers.

Within the UAE context, one of the most distinctive features of the APA programme is the ability to seek domestic APAs, particularly where related parties operate under different corporate tax rates or incentive regimes—such as Qualifying Free Zone Persons engaging with mainland entities. Historically, intra‑UAE pricing carried limited tax consequences; however, as corporate tax becomes embedded in business models, APAs may play an increasingly important role in managing domestic tax positions and ensuring consistent access to incentives.

As regional tax frameworks develop, it is natural to observe how neighbouring jurisdictions have approached similar questions. Saudi Arabia's APA guidance, for example, includes a SAR 100 million threshold but allows aggregation of closely linked transactions to meet that requirement. Beyond the region, emerging markets such as Malaysia, Indonesia and Vietnam have also refined their APA legislation over the years, gradually expanding eligibility criteria and strengthening administrative guidance as their programmes matured. While each country designs its rules to reflect its own administrative and policy context, these experiences illustrate the types of refinements that jurisdictions often introduce as their APA regimes evolve. In the UAE, clarifying whether transactions may be aggregated in assessing the AED 100 million threshold could similarly offer businesses additional clarity—without altering the substance of the programme.

Looking ahead to cross‑border APAs, the UAE's approach also aligns with global transparency expectations. The OECD's BEPS Action 5 framework requires the spontaneous exchange of certain tax rulings, and with updated transparency standards and XML schema applying to new rulings from January 2027, the UAE has already incorporated relevant information requests—such as ultimate parent entity details—into its APA application form. This demonstrates clear alignment with international norms and reinforces the importance for businesses of ensuring consistency between APA positions, transfer pricing documentation, and global tax narratives.

For taxpayers evaluating whether to pursue an APA, the decision will depend on the nature of their transactions, the complexity of their supply chains, and their long‑term objectives. APAs may be especially relevant where transfer pricing outcomes affect incentive regimes, underpin significant operational arrangements, or require stability across multiple reporting periods. Because APAs operate prospectively, they encourage greater alignment between commercial planning and tax strategy—an increasingly important consideration as the UAE's corporate tax system matures.

Overall, the UAE's APA programme reflects a careful and forward‑looking approach by the Federal Tax Authority. While opportunities for refinement will naturally arise over time—including potential legislative strengthening of key elements—the existing framework provides businesses with a robust foundation for achieving certainty, supporting governance, and navigating an evolving tax environment.

Originally published on Taxmann. https://www.taxmann.com/research/international-tax/top-story/105010000000027812/shaping-certainty-in-a-new-tax-landscape-reflections-on-the-uaes-apa-programme-experts-opinion