TP Audit Support

Common triggers include an inconsistency between the Related Party Transactions disclosure figures and the audited financial statements, a related-party or connected-person transaction value that appears disproportionate to the entity's size or function, a Qualifying Free Zone Person whose related-party dealings are being checked for arm's length compliance, or simply routine risk-based selection as part of the FTA's broader Corporate Tax compliance programme. The specific trigger is not always disclosed in the request itself.

The FTA generally sets a stipulated period for producing a Local File or Master File on request — commonly around 30 days, though the exact window is stated in the specific request and can vary. Desk review queries and full audit timelines can differ from this. The response deadline stated in the actual notice governs, not a general assumption carried over from a different engagement.

Only after it has been checked against the specific request and the current facts. A Local File prepared a year or more ago may reference transaction values, entities, or a FAR profile that has since moved, and producing an outdated file without review can create a new inconsistency rather than resolve the FTA's query. PNPC always stress-tests existing documentation before it goes to the FTA, even where PNPC originally prepared it.

It depends on how much underlying data — ledgers, agreements, financial statements — is readily available, and how compressed the FTA's deadline is. PNPC prioritises live audit engagements and moves as quickly as the facts allow, but a genuine first-time build under audit pressure is a materially harder and more constrained exercise than the same build with no deadline, because comparable data availability and FAR interviews cannot always be rushed without weakening the result.

Missing the stipulated response period can itself be treated as non-compliance, separate from and in addition to any substantive finding on the transfer pricing position itself, and can expose the taxable person to administrative penalties. It can also affect how the FTA weighs the eventual submission once it does arrive. PNPC treats the deadline as a hard constraint from day one of any audit support engagement.

Not necessarily. A desk-based query on a single disclosure figure is often narrower than a full Corporate Tax audit, and can sometimes be resolved with a focused reconciliation showing how the figure was derived and how it ties to the financial statements. It can, however, escalate into a broader review if the response raises further questions, so PNPC treats even a narrow query with the same rigour as a full audit response.

Yes. PNPC regularly steps into audit support where another firm, or an in-house team, prepared the original Local File, Master File, or benchmarking study. We review the existing work on its own merits, identify what holds up and what does not, and build the audit response from that assessment rather than assuming the prior work is either entirely sound or entirely inadequate.

A proposed adjustment is the FTA's determination that a related-party or connected-person transaction was not priced at arm's length, and its recalculation of what the taxable income would have been on an arm's length basis. It is a proposal, not a final, unchallengeable outcome — the taxable person can respond with a reconsideration request backed by technical and economic analysis before it becomes final, or, where the merits support it, accept the adjustment and the resulting additional tax, penalties and interest.

We assess the technical merits independently — whether the FAR analysis, method selection, and comparable set underlying the original pricing genuinely support an arm's length conclusion, and whether the FTA's own basis for the adjustment has a defensible flaw. This is a case-by-case judgement, not a default posture of contesting everything or accepting everything, and we give the client a clear, reasoned recommendation either way.

Yes, in principle. If the FTA increases UAE taxable income through a transfer pricing adjustment but the counterparty jurisdiction does not make a corresponding downward adjustment for the same transaction, the group can face the same profit taxed twice. Where the UAE has a Double Taxation Avoidance Agreement with the counterparty's jurisdiction, a Mutual Agreement Procedure (MAP) request can be pursued between the two tax authorities — a formal, longer process, but a genuine remedy.

It can, if the entity under review is a Qualifying Free Zone Person and the audit finds that related-party pricing was not arm's length in a way that pushes non-qualifying revenue past the permitted de minimis threshold for Qualifying Income. PNPC treats this QFZP interaction as a distinct checkpoint within any audit response involving a Free Zone entity, because the consequence — losing the 0% rate — is disproportionate to the transfer pricing adjustment amount itself.

These are frequently the weakest point in an existing file because they were originally categorised as ordinary payroll or overheads rather than benchmarked under Article 36. During audit support, PNPC independently checks whether owner and director remuneration, related-party rent, and shareholder loan interest have a defensible market benchmark on file, and builds one where none exists.

Depending on the request, this can include the Local File and/or Master File itself, a benchmarking study with its full screening and rejection trail, a FAR analysis narrative, a reconciliation of the disclosed figures to the audited financial statements, and a covering narrative explaining the pricing approach for the FTA reviewer — assembled and submitted within the stipulated deadline, with the correspondence trail retained.

Yes. Audit support is a documentation, analysis and correspondence exercise — there is no physical-presence or biometric step. Almost all of it is delivered through document exchange, video calls with finance and operations leads to confirm the FAR narrative, and EmaraTax or direct FTA correspondence. The binding constraint is timely access to records and to people who can explain what each entity actually does, not geography.

Yes. Where a UAE audit response touches a transaction with an Indian related party, PNPC's India and Dubai desks coordinate so the UAE audit response and any parallel Indian transfer pricing position — under Section 92 to 92F of the Income-tax Act — tell a consistent story, rather than the two jurisdictions' filings inadvertently contradicting each other.

PNPC scopes a fee based on the complexity of the request, the state of existing documentation, and the deadline pressure involved — agreed as quickly as the urgency allows, typically within the first day or two of engagement, so there is no delay to actual work starting. Live audit engagements are prioritised operationally ahead of routine advisory work once a stipulated FTA deadline is confirmed.

As soon as possible. The stipulated response window starts running from the date of the FTA's request, not from whenever the internal review concludes, and the first few days are often the most valuable for confirming scope and beginning documentation assembly. Waiting to fully understand the request internally before engaging PNPC typically compresses the available response time unnecessarily.

PNPC's transfer pricing audit support is scoped specifically around the related-party and connected-person pricing dimension of an audit. Where a broader Corporate Tax or VAT audit surfaces other issues, PNPC's wider tax and compliance teams can be engaged alongside the transfer pricing desk so the full audit is handled coherently rather than in disconnected pieces.

No. A reconsideration request is an administrative step asking the FTA itself to review its own determination, generally submitted within a specific window after a decision or adjustment is issued. It sits before, and is distinct from, any formal escalation through the Tax Disputes Resolution Committee or the courts, which involves a different process and typically legal counsel rather than a CA-led response.