We work with company directors, corporate tax advisers, accounting firms and corporate groups to provide financial valuation analysis suited to the particular transaction and its circumstances. Not every transaction needs one; where it does, the valuation must be prepared on the right basis and documented well enough to stand up to review.
Situations
When UAE clients ask for this valuation
- 1A business, shares or an intangible asset is transferred to a related party or connected person.
- 2Assets move between a Qualifying Free Zone Person and a mainland group company.
- 3A group reorganisation needs values to establish whether and how relief applies.
- 4An asset is contributed to a company in exchange for shares.
- 5The Federal Tax Authority queries the value used in a transaction.
Who asks us
Typical clients
- Corporate tax advisers and accounting firms
- Group CFOs and tax managers
- Directors of owner-managed groups
What we value
The subject of the valuation
Businesses and business units, shares in mainland, free-zone, DIFC and ADGM companies, and intangible assets such as brands, software and customer relationships transferred within groups or between related parties.
Our method
How we reach the figure
The Corporate Tax Law requires transactions between related parties and connected persons to meet the arm's-length standard, and some provisions refer to market value. Where a business, shares or an intangible asset changes hands, establishing that value usually requires a business valuation rather than a routine benchmarking study.
We apply the income, market and asset approaches appropriate to the subject and document the reasoning, data and assumptions so the valuation can sit within your adviser's transfer pricing and tax documentation.
| Income | Sustainable profit or projected cash flows | Usual starting point |
|---|---|---|
| Market | GCC and international deal and listed-company evidence | Cross-check |
| Asset | Restated balance sheet value | Where relevant |
Valued on the basis the transaction requires, as if between independent parties. The tax treatment is for your corporate tax adviser.
In the UAE
Transfer pricing and business valuation
Transfer pricing and valuation are related but different disciplines. Transfer pricing benchmarking typically tests recurring transactions, such as management fees or the margin on intra-group sales, against comparable data. A business valuation estimates the value of a whole business, a shareholding or an intangible asset at a point in time.
Routine transfer pricing work does not always need a valuation. A one-off transfer of a business, shares or valuable intellectual property usually does.
- Qualifying group transfers and business restructuring relief can change the tax treatment of a transfer.
- Whether relief is available, and whether market value must be recognised, is determined under the tax rules.
- Corporate tax conclusions should be confirmed by appropriately qualified tax specialists.
Value drivers
Points that move the value
- Basis of value
- Market value and arm's-length price, as defined for the transaction in question.
- Nature of the transfer
- A whole business, a share transfer or an individual intangible asset.
- Free-zone status
- Whether either party is a Qualifying Free Zone Person.
- Contemporaneous evidence
- Information available at the transaction date, recorded as such.
Documents
What we will ask you for
- Details of the transaction, the parties and their relationship
- Financial statements and forecasts for the subject
- Group structure and intercompany agreements
- Your tax adviser's analysis of the provisions engaged
The full list is tailored to your company once the scope is agreed.
Report, timing & fees
What you receive, and when
A valuation report recording the purpose, basis of value, valuation date, approaches and evidence, designed to be read alongside tax and transfer pricing documentation.
We provide valuation evidence, not tax advice. Whether a transaction must be priced at market value, whether a relief applies and how the result is reported are matters for your corporate tax adviser under the applicable rules.
Timing
Usually three to five weeks, aligned with tax filing deadlines where relevant.
Compare report levels on our reports and deliverables page.
Questions
Questions clients ask about this service
- Does every related-party transaction need a valuation?
- No. Many are covered by ordinary transfer pricing analysis. Valuations are usually needed where a business, shares or a significant intangible asset changes hands.
- Do you prepare transfer pricing documentation?
- No. We prepare the valuation that your transfer pricing or tax adviser relies on and works into their documentation.
- Can you value a transfer that has already happened?
- Yes, at the transaction date, using information available then.