Who Must Prepare Transfer Pricing Documentation in the UAE?

UAE transfer pricing compliance operates in layers. The first layer is substantive: transactions must be priced at arm's length. The second is disclosure in the Corporate Tax Return. The third is the formal Master File and Local File requirement. A business can fall below the formal documentation threshold and still be required to demonstrate that a controlled transaction was priced as independent parties would have priced it.

The legal foundation is Articles 34 to 36 and Article 55 of Federal Decree-Law No. 47 of 2022, referred to as the Corporate Tax Law. The detailed Master File and Local File thresholds are contained in Ministerial Decision No. 97 of 2023. The FTA Transfer Pricing Guide CTGTP1 explains how the FTA interprets and administers the regime.

The three levels of UAE transfer pricing responsibility

As at 4 September 2026, the main requirements can be summarised as follows:

The return-schedule thresholds are set out in the FTA's official Corporate Tax Returns Guide. The AED 40 million test looks at the aggregate value of transactions with all Related Parties recorded in the financial statements or at market value. Once crossed, transaction categories above AED 4 million are disclosed. Dividends declared between Related Parties are excluded from those two calculations under the guide.

Level 1: the arm's length rule applies broadly

Article 34 requires transactions and arrangements between Related Parties to meet the arm's length standard. The rule applies to domestic as well as cross-border controlled transactions. It is therefore incorrect to assume that transfer pricing only concerns multinational payments leaving the UAE.

The five methods expressly recognised in Article 34 are the comparable uncontrolled price method, resale price method, cost plus method, transactional net margin method and transactional profit split method. Another method may be used when the taxpayer demonstrates that none of the listed methods can reasonably be applied and the alternative produces an arm's length result.

For Connected Persons, Article 36 adds a deductibility condition: a payment or benefit is deductible only to the extent it corresponds with the market value of the service or benefit provided and is incurred wholly and exclusively for the business. The business should therefore retain evidence of both the service or benefit and the pricing.

Level 2: who completes the return schedules?

The FTA's Corporate Tax Return asks whether aggregate Related Party transactions exceed AED 40 million. If they do, the taxpayer completes the Related Party schedule for categories above AED 4 million, reporting items such as goods, services, intellectual property, interest, assets, liabilities and other transactions.

The Connected Person schedule has its own mechanics. It applies where relevant aggregate transactions cross AED 500,000, and it is completed for each Connected Person whose payments or benefits exceed AED 500,000 when combined with their Related Parties. The schedule asks for the payment or benefit, financial-statement value and market value.

These disclosures do not replace transfer pricing analysis. Reporting the selected method is not the same as proving that the method was correctly chosen or applied.

Level 3: who must maintain a Master File and Local File?

Ministerial Decision No. 97 of 2023 requires a Taxable Person to maintain both files when either condition is met during the relevant Tax Period:

1. The Taxable Person is a Constituent Company of an MNE group with total consolidated group revenue of at least AED 3.15 billion; or

2. The Taxable Person's own revenue is at least AED 200 million.

The tests are alternatives. A UAE company can therefore be below the global MNE threshold but still enter the formal documentation regime because its own revenue reaches AED 200 million.

The FTA guide identifies a limited exception for a UAE-headquartered group that is not an MNE group because it has no business establishments outside the UAE. Such a taxpayer is not required to maintain a Master File but should maintain a Local File when the applicable revenue threshold is met. The facts should be documented before relying on that exception.

Which transactions belong in the UAE Local File?

Meeting the threshold does not mean that every transaction automatically belongs in the Local File. Ministerial Decision No. 97 and the FTA guide require inclusion of controlled transactions with:

• a Non-Resident Person, subject to the permanent-establishment exception;

• an Exempt Person;

• a Resident Person that has elected for Small Business Relief and meets its conditions; or

• a Resident Person whose income is subject to a different Corporate Tax rate, such as a relevant transaction involving a Qualifying Free Zone Person.

Certain transactions with ordinary same-rate resident persons are excluded from the formal Local File. Transactions with a natural person or a partnership-related juridical person can also be excluded in specified circumstances where the parties act as if independent; a same-rate UAE permanent establishment may qualify for another exclusion.

However, an exclusion from the Local File is not an exclusion from Article 34. The FTA guide says the taxpayer should still be able to provide documentation supporting the arm's length nature of those transactions when requested.

Do Free Zone Persons have transfer pricing obligations?

Yes. The Corporate Tax Law applies the arm's length rule to Related Party transactions, including mainland-free zone and qualifying-rate interactions. A Qualifying Free Zone Person also has to satisfy the conditions relevant to its preferential treatment. The Corporate Tax Return guide specifically asks whether Related Party transactions have been undertaken in accordance with Article 34 and whether documentation has been prepared under Article 55.

Free zone status should not therefore be treated as a transfer pricing exemption. The pricing of services, financing, intellectual property and goods across a free zone boundary requires the same factual and economic discipline as other controlled transactions.

What does “reasonable supporting evidence” mean below the thresholds?

The legislation does not create one abbreviated template for every sub-threshold taxpayer. Proportionate support should nevertheless establish:

• the parties and relationship;

• nature, value, terms and business purpose of the transaction;

• evidence that the transaction occurred;

• functions, assets and risks relevant to the price;

• method or market evidence used;

• calculations and source data; and

• reconciliation to the financial statements and tax return.

A straightforward rental or loan with reliable third-party evidence may need a focused file. A complex management fee, intangible licence or business restructuring will generally need more extensive support even if the formal Master File/Local File threshold is not met.

How should a UAE business prepare?

First, build a complete Related Party and Connected Person register using Article 35 and Article 36 definitions. Second, reconcile controlled transactions to the trial balance and financial statements. Third, apply the AED 40 million, AED 4 million and AED 500,000 return tests. Fourth, test the AED 200 million entity threshold and AED 3.15 billion MNE group threshold. Fifth, identify which transactions are included in the Local File and preserve the basis for exclusions.

The Local File should then be prepared contemporaneously. Article 55 allows the FTA to request formal files and other arm's length support within 30 days, or a later date directed by the Authority. Thirty days is a production period, not a sensible period in which to discover missing agreements, conduct interviews and build a comparable search from the beginning.

How TP DocGen AI supports UAE documentation

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Frequently asked questions

Does a UAE company below AED 200 million have no transfer pricing obligation?

No. AED 200 million is one trigger for the formal Master File and Local File requirement. Article 34's arm's length rule can apply below that level, and return schedules or supporting-information requests may still be relevant.

Does the AED 40 million threshold trigger a Local File?

Not by itself. It triggers the Related Party schedule in the Corporate Tax Return. The Master File and Local File tests are AED 3.15 billion of MNE group revenue or AED 200 million of taxable-person revenue.

Are all domestic UAE related-party transactions included in the Local File?

No. Ministerial Decision No. 97 specifies inclusion and exclusion categories. Nevertheless, all relevant controlled transactions must meet the arm's length principle, and excluded transactions may still need supporting evidence.

How quickly must the documents be supplied to the FTA?

Article 55 states 30 days after an FTA request for the formal documentation or other arm's length support, unless the FTA directs a later date.

Is a Master File required for a UAE-only group?

The FTA guide provides an exception for a UAE-headquartered group that is not an MNE group. If the entity threshold is met, a Local File may still be required. The precise group facts should be documented.

Primary sources and further reading

1. UAE Corporate Tax Law - Federal Decree-Law No. 47 of 2022

2. UAE Ministerial Decision No. 97 of 2023

3. FTA Transfer Pricing Guide CTGTP1

4. FTA Corporate Tax Returns Guide

5. FTA Corporate Tax guides and references

6. UAE Ministry of Finance - Financial Legislation

7. OECD Transfer Pricing Guidelines 2022

8. OECD BEPS Action 13 Final Report

9. OECD Transfer Pricing Country Profiles