The introduction of corporate tax and transfer pricing regulations in the UAE, along with existing customs and VAT rules, has created a complex web of tax considerations for businesses. Consistency in the approach to direct and indirect tax regulations is crucial to avoid disputes with tax authorities. The article discusses the implications and interplay of transfer pricing, customs, and VAT, as well as practical approaches to deal with any inconsistencies. With the changing tax landscape in the UAE, it’s important for businesses to understand the alignment of transfer pricing, customs, and VAT. Customs valuation in the UAE follows the WTO Valuation Agreement, but related-party transactions may face scrutiny from customs authorities. The introduction of VAT at a standard rate of 5% in 2018 adds complexity to cross-border and domestic related-party transactions, creating challenges in its interaction with transfer pricing and customs.
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