An Advance Pricing Agreement (APA) is a binding agreement between a business and the UAE Federal Tax Authority (FTA) that sets, in advance, the arm's length price for specified related-party transactions. Introduced under Article 59 of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022), the programme opened for domestic unilateral applications in December 2025.
Key takeaways
- The APA programme launched for domestic unilateral APAs (UAPAs) in December 2025; pre-filing consultations and applications can be submitted from 30 December 2025, initially by email to APA@tax.gov.ae.
- Only related-party (Controlled) transactions worth at least AED 100 million per Tax Period qualify, measured on their aggregate arm's length value.
- An APA application carries a non-refundable fee of AED 30,000; renewing an existing APA costs AED 15,000.
- Every APA covers a minimum of three and a maximum of five Tax Periods, and at this stage applies only to future (prospective) periods.
- The process runs through four stages — pre-filing, application, evaluation and negotiation, and conclusion — with the FTA targeting six to nine months for the pre-filing review alone.
- Once signed, the FTA will not challenge the agreed pricing method for covered transactions, provided the business honours every term and critical assumption.
What an Advance Pricing Agreement actually does
An APA fixes, in advance, the arm's length method for specified related-party transactions with the FTA and locks it in for the covered years, so the price cannot be reopened and adjusted in a later tax audit. Article 34 of the Corporate Tax Law requires those transactions — its "Controlled Transactions" — to meet the arm's length standard, meaning the price two independent businesses would have agreed. Without that certainty, the pricing can be reopened years later during an audit, exposing the business to extra tax and penalties — the exposure Article 59 lets a business remove up front.
An APA can take three forms. A unilateral APA (UAPA) is between the business and the FTA alone and provides certainty only from the UAE side. A bilateral APA (BAPA) is agreed between two tax authorities through a mutual agreement procedure, and a multilateral APA (MAPA) involves more than two jurisdictions. The FTA is rolling the programme out in phases: domestic UAPAs first, from December 2025; cross-border UAPAs on a date to be announced in 2026; and BAPAs and MAPAs later. The practical consequence is that a UAPA gives UAE-side comfort but does not bind a foreign authority, so cross-border double taxation can still arise until bilateral agreements become available — a point to weigh with international tax advice.
Who qualifies, and when an APA is worth pursuing
Any business with proposed or existing controlled transactions can apply, provided the transactions meet the materiality threshold. That threshold is AED 100 million per Tax Period, measured on the aggregate arm's length value of the transactions proposed for cover. Transactions that fall under safe harbour rules — such as certain low value-adding intra-group services — sit outside both the scope of an APA and the threshold count. For a Tax Group, the threshold is tested at group level, aggregating dealings with related parties outside the group.
The AED 100 million threshold is an indicator of materiality, not an absolute cut-off. An application below it can still be accepted with robust justification, and one above it can still be rejected on its facts.
Domestic UAPAs are most useful where two UAE parties sit in different tax positions — for example, a Qualifying Free Zone Person taxed at 0% dealing with a mainland entity taxed at 9%. More broadly, an APA earns its keep when related-party flows are high in value, when pricing is judgment-heavy (intellectual property, unique services or new markets), when the business is restructuring or adopting a new model, or where significant tax-rate differentials invite scrutiny.
| Item | Detail |
|---|---|
| Materiality threshold | AED 100 million of covered transactions per Tax Period |
| Application fee | AED 30,000 (non-refundable) |
| Renewal fee | AED 15,000 |
| APA term | 3 to 5 Tax Periods (prospective only) |
| Pre-filing review | 6 to 9 months (indicative) |
Inside the four-stage APA process
The APA runs through four stages: pre-filing consultation, formal application, evaluation and negotiation, and conclusion and implementation. Quality matters more than speed across all four — a well-supported submission reduces review cycles. In practice, SBC advisers find the pre-filing consultation decides the case, because a scoping request that arrives with the functional analysis and benchmarking already framed shortens the FTA's review.
| Stage | What happens | Indicative timeline |
|---|---|---|
| 1. Pre-filing consultation | Submit the scoping request; the FTA tests suitability and may hold one or more meetings | Around 6-9 months for the FTA's review |
| 2. Formal application | File the full application with functional, economic and benchmarking analysis, plus the AED 30,000 fee | Within two months of FTA approval, or 12 months before the first covered period, whichever is earlier |
| 3. Evaluation and negotiation | The FTA prepares its own transfer pricing analysis and negotiates terms | Respond within 40 Business Days to information requests and 30 Business Days on the analysis; overall duration varies |
| 4. Conclusion and implementation | Both parties sign; the APA binds for the covered periods | Term of 3-5 Tax Periods, followed by annual declarations |
The application fee of AED 30,000 is non-refundable and covers any later revisions. If the FTA and the business cannot reach agreement during negotiation, the case is closed and the fee is not returned. A signed APA applies only to prospective periods at this stage, so the journey should begin well before the first year the business wants to cover.
Keeping an APA valid after signing
An APA is a multi-year commitment, not a one-off filing. For each covered Tax Period the business must file an APA Annual Declaration within 90 Business Days of the signed agreement or the tax return due date, whichever is later, confirming it has followed the agreed method and that the critical assumptions still hold. Critical assumptions are the facts the pricing depends on; any change or breach must be reported to the FTA within 20 Business Days.
Where circumstances shift, the FTA may revise the APA by mutual agreement — for instance, after a change in law or a material change in business or economic conditions. A revocation, triggered by material misrepresentation, non-compliance or a breach of a critical assumption, takes effect retroactively from the first covered period, whereas a cancellation applies prospectively from the period in which the breach occurred. A business can renew an APA by applying at least three months before it expires, using the same forms but without a fresh pre-filing consultation and at the reduced AED 15,000 fee.
Frequently asked questions
How much does a UAE APA cost?
An APA application carries a non-refundable fee of AED 30,000, payable when the formal application is filed and inclusive of any later revisions or amendments. Renewing an existing APA costs a reduced AED 15,000. The fee is not returned even if negotiations end without an agreement or the business withdraws its application, so preparation quality is critical.
What is the minimum transaction value to apply for an APA?
The covered related-party transactions must be worth at least AED 100 million per Tax Period, measured on their aggregate arm's length value. This is a materiality indicator rather than a hard limit — the FTA can accept a smaller case with strong justification, or decline a larger one on its facts. Safe harbour transactions are excluded from the count.
How long does the APA process take?
The FTA aims to complete the pre-filing consultation within six to nine months, and the full process runs through four stages before a binding agreement is signed. Timelines depend heavily on the quality of the submission and how quickly the business answers the FTA's questions — 40 Business Days is the standard window for responding to information requests.
How many years does a UAE APA cover?
An APA covers a minimum of three and a maximum of five Tax Periods. At the current stage of the programme it applies only to prospective (future) periods, not past years. A business can seek a further term by filing a renewal request at least three months before the existing agreement expires, which skips the pre-filing stage and attracts the reduced fee.
How SBC Tax Consulting can help
SBC's transfer pricing advisory team helps UAE businesses decide whether an APA is worth pursuing, then builds the case — functional and economic analysis, benchmarking, and a robust pre-filing submission — and represents you through negotiation with the FTA. We align the outcome with your wider corporate tax position and manage the annual declarations once the agreement is signed. To assess whether your related-party transactions qualify, contact our team.
This publication is for general information only and does not constitute professional advice. Please consult your SBC advisor before acting on any matter covered here.