Introduction
Cabinet Decision No. 174 of 2025 introduces targeted but significant updates to the schedule of fees charged by the Federal Tax Authority (FTA) under Cabinet Decision No. 65 of 2020. Effective 1 January 2026, these amendments formally integrate unilateral Advance Pricing Agreement (APA) fees into the FTA’s service-fee framework. This article analyses the substance of these amendments and their practical implications for taxpayers, with brief contextual reference to FTA Decision No. 2 of 2025, which would governs procedural requirements for fee-based submissions.
What Is an APA?
An APA is a mechanism used in transfer-pricing to provide advance certainty on how the arm’s-length principle will be applied to related-party transactions. Under an APA, the tax authority agrees with a taxpayer, for a fixed period, on the appropriate transfer-pricing method and the parameters (such as margins or pricing ranges) to apply to specific transactions. APAs prevent transfer-pricing disputes before they arise, reduce the likelihood of adjustments on audit and give multinationals predictable tax outcomes.
Why Are APAs Useful?
APAs are especially valuable in situations where:
- transactions are high-value or recurring
- pricing is sensitive to economic assumptions
- multiple jurisdictions are involved
- business models involve complex functional profiles
- taxpayers want to avoid costly and time-consuming transfer-pricing disputes
For the UAE, APAs are a major step forward in strengthening the corporate tax environment by providing multinational groups with an internationally recognised risk-mitigation tool.
What Is a Unilateral APA?
A unilateral APA is an agreement concluded solely between the taxpayer and a single tax authority, in this case, the FTA. As it is negotiated solely with the FTA, without involvement of foreign tax authorities, the process is generally more streamlined and quicker to conclude than bilateral or multilateral APAs. A unilateral APA gives certainty for UAE tax purposes only, but it still provides significant risk reduction, especially where the key pricing decisions are made or implemented in the UAE.
Legislative and Administrative Context
Article 59 of the Federal Decree-Law No. 47 of 2022 [EK1] provides the statutory basis for taxpayers to request clarifications from the FTA and, importantly, contains the earliest statutory reference to the FTA entering into an APA with taxpayers in respect of proposed or actual arrangements. This signalled the UAE’s intention to embed APAs within its tax certainty tools.
Subsequently, FTA Decision No. 2 of 2025 became the first implementing instrument to refer explicitly to APAs, indicating that the FTA anticipated an APA mechanism even before a formal fee structure existed. With the introduction of APA fees under Cabinet Decision No. 174 of 2025, the administrative framework required to operationalise Article 59 has now begun to take shape. Together, these developments laid the groundwork for the fee framework introduced by Cabinet Decision No. 174 of 2025.
Cabinet Decision No. 65 of 2020 establishes the full list of service fees payable for requests made to the FTA. The latest amendment, Cabinet Decision No. 174 of 2025, is expressly noted in the consolidated text as taking effect on 1 January 2026 under Article 6 (page 3).
The Actual Amendments Introduced by Cabinet Decision No. 174 of 2025
The amendments are narrow and focus solely on introducing APA-related fees.
Two new items are inserted into the fee table:
- AED 30,000 for submitting a request to conclude a unilateral APA for the first time; and
- AED 15,000 for renewing or amending an APA.
These entries appear for the first time in rows 16 and 17 of the updated table (page 5) and are labelled as added by Cabinet Decision No. 174 of 2025, effective from 1 January 2026. All other fees remain unchanged.
Policy Rationale Behind the Introduction of APA Fees
The introduction of APA fees serves several purposes. It aligns the UAE with mature international transfer-pricing systems by creating a structured, fee-based certainty mechanism. It supports the UAE’s maturing corporate tax framework and gives businesses a forward-looking tool to manage tax risk. It also promotes administrative efficiency by signalling the resource-intensive nature of APA evaluations and encouraging well-prepared submissions.
Practical Implications for Businesses
Taxpayers with significant related-party transactions should now assess whether an APA is appropriate. APAs may be particularly beneficial for groups with complex distribution, financing, licensing or procurement models. Substantive preparation will be required, including transfer-pricing functional analyses, benchmarking studies, business forecasts and value-chain descriptions. Given the technical complexity of APAs, the FTA is likely to apply a high standard of scrutiny to ensure that applications are supported by robust economic analysis and reliable data.
Looking Forward
The introduction of APA fees under Cabinet Decision No. 174 of 2025 marks a clear step toward embedding transfer-pricing certainty tools within the UAE tax system. The next phase will depend on how the FTA operationalises the APA framework in practice. We now await further details from the FTA on the procedural steps, documentation requirements, timelines and review criteria that will govern the APA process once implemented. These forthcoming guidelines will be essential in determining how taxpayers should prepare and how APAs will function as part of the UAE’s broader transfer-pricing regime.
Conclusion
Cabinet Decision No. 174 of 2025 marks a meaningful development in the UAE’s transfer-pricing landscape by formally introducing fees for unilateral APAs. This signals the UAE’s commitment to strengthening tax certainty, improving administrative governance and aligning more closely with international practice. FTA Decision No. 2 of 2025, while unchanged, provides important context for how the FTA will likely administer APA submissions. Our Tax Department at Habib Al Mulla & Partners stands ready to assist clients with APA feasibility assessments, documentation preparation and engagement with the FTA throughout the APA process.
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For further information, please contact, Mohamed El Baghdady, Partner, Head of Tax and Financial Crimes, on mohamed.elbaghdady@habibalmulla.com.
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