UAE MAP GUIDANCE

Released on 25 June 2025

Background of MAP in UAE

On 25 June 2025, the United Arab Emirates officially issued the mutual agreement procedure (MAP) guidance through the Ministry of Finance

Mutual Agreement Procedure

• The mutual agreement procedure (MAP) is intended to relieve double taxation arising from transfer pricing cases and to resolve double tax treaty disputes and issues surrounding the interpretation/application of a double tax treaty (DTA), as well as to allow for a bilateral mechanism for the Ministry of Finance to engage with other tax authorities

Double Taxation Treaty

• A DTA is an international agreement signed by two countries for the avoidance of double taxation and the prevention of fiscal evasion of taxes on income and capital. DTA will also seek to prevent economic double taxation whereby, for example, the same income is taxed in two different states in the hands of two different taxpayers
• The relevant MAP clause in a DTA is typically based on Article 25 of the OECD Model Tax Convention (‘MTC’) on Income and Capital

UAE Competent Authority and Federal Tax Authority

• In the UAE, the Competent Authority is often defined as ‘the Minister of Finance or his authorised representative’. The UAE Competent Authority (‘UAE CA’) is independent from the Federal Tax Authority (‘FTA’). The role of the UAE CA, under the MAP provisions of the DTA, is to endeavor to eliminate double taxation and not to re-audit the taxpayer
• Dedicated members of the FTA (independent of the tax audit function) will work together with the UAE CA on MAP cases and will be part of the MAP process. The FTA will also be responsible for implementing any MAP agreement reached or assisting the UAE CA to obtain any relevant documents in respect of a MAP claim

Eligibility for MAP

• Withdrawal/reduction of the adjustment imposed
  A corresponding deduction by the foreign tax authority
• Provided in the Applicable DTA applies to the taxpayer (or)
  When there is a conflict between UAE’s general anti-abuse rule under the UAE Corporate Tax law and applicable DTA provisions
• Transfer pricing adjustments
• Anti-abuse Provisions
• Taxpayer
• Payment
• Demand to be tax resident in more than one state
• Adjustment of profits of Permanent Establishment (PE) / Branch
• For determination of tax residency under DTA provisions
• For an increased foreign tax credit
  Request the Competent Authority of the other contracting state to provide relief

The application of the general anti-abuse measure, under UAE Corporate Tax Law, is outside the scope of MAP as it relates to the interpretation of domestic law.

Key Highlights

• Self-initiated adjustments are allowed for MAP Claim
  Done in good faith and are supported by thorough transfer pricing documentation and economic analysis
• Parallel domestic legal remedies application is allowed for MAP Claim
  But cannot pursue simultaneously and to be kept in abeyance
• Multiyear resolution under MAP for recurring issues
  Facts should be same for all the years
• Targeted Resolution within 24 months from the acceptance of MAP claim
  Taxpayer needs to submit the required information within the stipulated time and extend cooperation
• Withdrawal option to the taxpayer at any time during MAP proceedings
  Needs to communicate the same through email
• Option to access the arbitration for unresolved issues under MAP
  If provided under relevant DTA
• Adjustment of penalties (levied by FTA) under MAP agreement
  MAP to be accepted by the taxpayer and should be in line with DTA provisions

It is important to note that certain above highlights are aligned to the OECD best practices and UAE MAP guidance has taken practical approach in MAP procedures. However, the taxpayers, while evaluating the MAP option and while the MAP proceedings are on going, needs to give special attention to the following:

1. Evaluate the outcome of MAP on pillar 2 computations
2. The nuances of practical implications for certain approaches like self initiated adjustments

Important Timelines During MAP Process

• MAP Claim must be filed within 3 years from the first notification of action resulting in the adjustment while considering the timelines specified in the respective DTA
• During the process of MAP, Information sought by the CAs should be submitted by the taxpayer within 1 month
• CA of UAE endeavours to complete the MAP Claim within an average period of 24 months from the date of acceptance of MAP Claim/ application
• The CA of UAE to communicate the acceptance or rejection of MAP Claim within 2 months
• If the taxpayer fails to provide the information sought by the CAs within 3 months, the MAP process may be discontinued

MAP Procedure

Application

• In cases of transfer pricing adjustment, the taxpayer needs to submit a MAP claim from the point it believes an adjustment is probable without even waiting for the formal notification of tax adjustment. The MAP claim is to be submitted to one of the competent authorities. It is better to submit the claim to both the competent authorities for the benefit of the taxpayer.

Information to be submitted

• the name, address and the taxpayer identification number of any related foreign taxpayer involved, details of foreign and local tax administration office and officers proposing/ making adjustment, fiscal years involved; transaction details and related party details. A summary of facts and analysis of the issue (transfer pricing documentation prepared in line with domestic market pricing regulations, details of any prior requests) will CAE of the contracting risky company relevant things or AAA complete the Documentary required should be the right or Arabic with bilingual translation option on request from CAE. UAE CAs may request additional information from the taxpayer which is to be submitted within stipulated timeframe.

Acceptance of claim

• MAP claim will be assessed by the UAE CAs to verify that it is complete, submitted within the time limit of the relevant DTA and whether the objection raised by the taxpayer is justified. The UAE CA will respond to the taxpayer on its decision as to whether or not MAP claim is accepted.

Negotiation process

• UAE CA will first assess whether unilateral relief can be granted. If not, they will initiate the bilateral negotiation process after informing the corresponding competent authority. This would involve preparation and exchange of position papers based on the information and facts provided by the taxpayer. Taxpayers will not be privy to communication and negotiations between the CAe of the countries involved except for making a presentation of Facts of the case to the CAe at the direction of CAe. As such, the UAE CA will seek to provide updates via telephone/sideo conference after each significant milestone. In case of failure of negotiation lack of agreement between the CAe, the MAP claim will be considered closed.

Outcome

• If an agreement has been reached between the CAe, the UAE CA will notify the taxpayer via e-mail within two months from the conclusion of such agreement, where such MAP claim has been filed with the UAE CA. The taxpayer should then seek to reply to the UAE CA confirming the corrective or rejection of the outcome within one month. In case of MAP claims, the taxpayer should confirm in writing the withdrawal of domestic legal remedies filed. Both the UAE CA and taxpayer should share the written acceptance of the taxpayer to the FTA for the implementation of the agreement under UAE. In case of rejection of the agreement by the taxpayer, the MAP claim will be considered closed, and the taxpayer is free to pursue the available domestic legal remedies in the UAE or the other jurisdiction where relevant.

MAP claims to the UAE CA should be submitted to: usemap@mof.gov.ae

Key Takeaways For The Taxpayer

• Timely application in accordance with the double tax treaty
• Maintenance of robust documentation with strong functional/value chain analysis and appropriate economic analysis to support the value chain analysis
• Timely interaction with domestic legal remedies while considering the MAP
• Cooperation and timely submission of accurate and complete information to the CAs as and when required

How VSTN Can Help

• Assessment and advice of double taxation incidents including timelines in light of the applicable double tax treaty
• Conduct a cost benefit analysis between MAP and domestic legal remedies and advice on the option that is beneficial to them
• Review available transfer pricing documentation and highlight the additional information to be submitted to the CAe to strengthen the case
• Preparation and submission of various information as per the UAE MAP guidance while coordinating with the CAe in other countries wherever application is being filed
• Thorough evaluation of value chain of the group and the UAE entity including updating of economic analysis wherever applicable
• Documenting all the above relevant information that supports the case. Presentation of the same before the authorities as and when called for
• Provide timely updates on each milestone of the MAP claim to the client while maintaining constant communication with the CAe
• Assist the client in timely interaction/application of domestic legal remedies while providing assistance in MAP claim
• Coordinate with the client and CAe for timely submission of accurate and complete information submission to the CAe within the stipulated timeframe

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