The OECD is rewriting the rulebook on intra-group services. Here's what it means for the UAE

For a jurisdiction like the UAE that hosts a number of regional headquarters, shared service centres, and holding structures for MNE groups, the OECD’s recent discussion draft on intra-group services is an interesting read. 

On 1 June 2026, the OECD’s Committee on Fiscal Affairs released a draft proposing to modernise Chapter VII - the rules governing how intra-group services get identified and priced. The consultation is open until 22 July 2026, with a public hearing in November.  

The key shifts at a glance - implications to follow. 

1. Start with what people actually do, then test the benefit 

2. A four-factor benefit test - stricter, yet more practical 

3. A single test for shareholder, duplicate and standby services 

4. No default to cost-plus 

5. Some "routine" services might not be routine at all 

6. Documentation: a higher bar, but a fair one 

7. Pass-through vs. mark-up, drawn more sharply 

8. Low value-adding services: the safe harbour clarified 

Taken together, these changes reshape how service arrangements are structured, documented and defended. Here's what each means in practice for UAE entities. 

1. Start with what people actually do, then test the benefit 

The old habit was to jump straight to the benefit test. The draft flips the order: first you map what each entity actually does - the functions, the assets, the risks - and only then do you price it. The label in the intercompany agreement no longer carries the day. 

For UAE service hubs operating on a fixed cost-plus framework, this means the intra-group service arrangements need to undergo a detailed TP review.  

2. A four-factor benefit test - stricter, yet more practical 

There are now four clear questions: is there value, is it timely, is it direct, and was a benefit reasonably expected when the work was done? Simply put, the benefit has to be expected — not guaranteed. 

Two of the new examples (out of the 21 in the discussion draft) make the point clearly: 

• An ERP rollout that fails. Still chargeable - the expectation was genuine at the time. 

• A cyberattack that lands despite a security review. Same answer.  

This is a helpful clarification for UAE regional hubs, whose centralised IT and risk functions rarely map to a measurable year-on-year outcome. 

3. A single test for shareholder, duplicate and standby services 

The draft folds the shareholder, duplicate and standby services into a single test i.e., would an independent party actually pay for this? 

• A “duplicate” service isn’t dismissed on sight - tested properly, many turn out to be complementary, and chargeable. 

• A standby, on-call service can be charged for just being available, even in a year nobody calls. 

• And an activity isn’t “shareholder” simply because the parent happens to benefit too. 

The upside for UAE HQs: some head-office costs absorbed as shareholder expenses may now be genuinely chargeable - a recharge that earns a return, with less value left untaxed. 

4. No default to cost-plus 

The draft drops any presumption that cost-plus or TNMM is automatically right. The method has to follow the economics. Where a service is deeply woven into what the recipient does, or shares real risk, a profit split may be the better fit. Several of the new examples deal with data-driven and AI-enabled service arrangements. 

For Free Zone or QFZP entities that lean on intercompany service income, now is the time to revisit method selection - particularly where the UAE entity does more than coordinate. 

5. Some "routine" services might not be routine at all 

There’s expanded guidance on services bundled up with other dealings - e.g., goods, licenses, know-how, etc. The point is to look through the packaging. Routine technical support can, in substance, carry intangible value. 

UAE hubs must map activities with care: "routine" technical support may in substance transfer know-how - and command a higher return. 

6. Documentation: a higher bar, but a fair one 

A new section spells out the evidence tax authorities may expect - benefit explanations, internal correspondence, agreements, pricing support, and deliverables. Helpfully, it’s framed as illustration, not a checklist, and it asks for proportionality. 

For UAE Local Files, generic descriptions no longer suffice. Set out the rationale and expected benefit up front and let cost pools and allocation keys evidence the pass-through versus mark-up split — now the crux of the analysis. 

7. Pass-through vs. mark-up, drawn more sharply 

Pass-through costs should be recharged clean, with no mark-up, unless the entity genuinely adds value - do not blend disbursements and real work into one rate.  

For UAE entities, this requires a deep dive into the actual activities performed and underlying cost components.  

8. Low value-adding services: the safe harbour clarified 

On low value-adding services, the 5% safe harbour largely survives: HR, IT and accounting are in; R&D, marketing, treasury, and senior management are out. 

Where a UAE entity's "support services" bundle in marketing or treasury activity, they may not qualify as low value-adding - and applying the 5% mark-up would be exposed on audit. 

The window is open - and it’s worth using 

The OECD has been explicit that this discussion draft does not yet reflect a consensus position, and stakeholder input is invited on virtually every section, including several targeted questions on allocation keys, stock-based compensation, and the scope of corporate governance activities.  

For UAE-based groups and practitioners with direct experience of these issues, the window till 22 July 2026 is a genuine opportunity to shape guidance that will, in time, filter into local practice. 

Contact 
Amit Dattani 

Head of Transfer Pricing 

T: +971 4 2500 290  

M: +971 54 305 3364  

E:  Amit.Dattani@claemirates.com