CASC Article on “Understanding Resale Price Method”

VSTN has recently published an article “Understanding Resale Price Method” co-authored by Nithya Srinivasan and Saranya Nagarajan in the CASC Monthly Bulletin of March 2025.

The Resale Price Method (RPM), is one of the methods used to determine the arm’s length price of international transactions between related parties. This article delves into the key concepts of RPM and provides an insight on the following:

• Importance of choosing the Most Appropriate Method
• What, When and How of RPM
• Instances where RPM can be applied
• Comparability requirements under RPM
• Key Economic circumstances to be considered while using RPM
• Other Transactional Profits Method that could be used by a distributor
• Interplay between RPM and Berry Ratio
• Benefits & Limitations of using RPM
• Legal jurisprudence on RPM – from India and International perspective

If you’re looking to understand RPM and its applications to evaluate pricing strategies effectively to ensure compliance with tax regulations, this article is for you.

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FTA’s Policy on Issuing Clarifications and Directives – APA

The Federal Tax Authority (FTA) on 19 February 2025 has released a revised policy on issuing clarifications and directives vide Decision No. 2 of 2025 (“the Policy”) and is made effective from 1 March 2025. Among other things, the decision has pronounced the mechanism for issuing directives through Administrative exceptions, Input tax apportionment decisions and Advance pricing agreements (“APA”).

While Article 59 of Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses have specified about taxpayers seeking clarification in respect of an APA vide an application, the Policy states that applications for Unilateral APA shall be received from 4th quarter of 2025 onwards and it also states that the date of receiving other applications (i.e., Bilateral or Multilateral) shall be announced later.

Considering that UAE has recently implemented the Transfer pricing (TP) regulations, accepting APA applications during the initial years of implementing the TP law is a welcome move by FTA. It marks a significant step towards enhancing tax transparency and compliance for multinational enterprises operating in UAE and it would aid in fostering a cooperative relationship between the taxpayer and the FTA.

The Policy merely outlines the broad framework for issuing clarifications and directives, whereas the detailed process and procedures will be specified by FTA separately. Hence one has to await further clarity on the detailed procedures and guidelines relating to APA programme.