interquartile range-25th to 75th percentile- considered arm’s length.

Transfer Pricing Insights from Practice

One of the most interesting aspects of working with Transfer Pricing (TP) is how theory meets reality.
Recently, while reviewing a benchmarking analysis, the tested party’s operating margin (OP/OC) came out between the lower quartile and the median of the comparable set.

Here’s the key takeaway 👉 According to both OECD guidelines and the UAE Transfer Pricing framework, any result that falls within the interquartile range (25th to 75th percentile) is considered arm’s length.

In other words, no adjustment is required just because the result is below the median.

That said, many businesses still prefer to “top up” closer to the median as a risk management strategy. This conservative positioning gives added comfort in case of future audits, especially when results are marginally within the lower end of the range and comparables could shift in subsequent years.

The lesson: being inside the interquartile range keeps you compliant. Positioning closer to the median is not a requirement — it’s a strategic choice.
Curious to hear from fellow professionals: how often do you advise clients to adjust to the median versus staying anywhere within the range?