UAE transfer pricing documentation is built on three tiers that follow the OECD framework, a Master File, a Local File, and a Country-by-Country Report (CbCR), sitting alongside a separate Transfer Pricing Disclosure Form that is filed with the corporate tax return. A business must maintain a Master File and Local File if its revenue in the relevant tax period is at least AED 200 million, or if it belongs to a multinational group with consolidated revenue of at least AED 3.15 billion. Every business with related party or connected person transactions must apply the arm’s length principle and be able to prove it, whether or not it crosses those thresholds.
The legal framework behind UAE transfer pricing
The UAE moved from a near zero tax environment to a rules based corporate tax regime for financial years beginning on or after 1 June 2023. Transfer pricing sits at the centre of that regime because it governs how profit is allocated between connected businesses and therefore how much of it falls into the 9 percent corporate tax base that applies to taxable income above AED 375,000.
Four instruments define the documentation obligations:
- Federal Decree-Law No. 47 of 2022 (the Corporate Tax Law). Articles 34 to 36 set the arm’s length principle and define Related Parties and Connected Persons. Article 55 requires qualifying taxpayers to maintain a Master File and a Local File.
- Ministerial Decision No. 97 of 2023. Issued by the Ministry of Finance, this sets the thresholds, conditions and the transactions that must be included in or excluded from the Local File.
- The FTA Transfer Pricing Guide. First released on 23 October 2023, it explains the FTA’s expectations and broadly aligns the UAE with the OECD Transfer Pricing Guidelines.
- Cabinet Decision No. 44 of 2020. This governs Country-by-Country Reporting for large multinational groups headquartered in the UAE.
Together these follow the OECD’s three tiered documentation model under BEPS Action 13. In practice this means the UAE intends to administer transfer pricing with the same rigour used in mature OECD jurisdictions, and the FTA’s audit programme is informed by the data you disclose on your return.
The three layers of UAE transfer pricing documentation
It helps to separate two different questions. The Disclosure Form is about the size of your dealings. The Master File and Local File are about the size of your entity or group. A taxpayer can clear one test and fall inside the other, so the two must be assessed independently.
| Document | Who must prepare it | When it is due |
| TP Disclosure Form | Any taxpayer whose related party or connected person transactions exceed the disclosure thresholds | Filed with the corporate tax return via EmaraTax |
| Local File | Taxpayer with revenue at or above AED 200 million, or a member of a group with consolidated revenue at or above AED 3.15 billion | Retained; produced within 30 days of an FTA request |
| Master File | Same threshold test as the Local File, applied to members of a multinational group | Retained; produced within 30 days of an FTA request |
| Country-by-Country Report | UAE-headquartered multinational groups with consolidated revenue at or above AED 3.15 billion | Notification and report filed with the FTA after year-end |
Who must prepare a Master File and Local File?
Under Ministerial Decision No. 97 of 2023, a taxable person must maintain both a Master File and a Local File for a tax period if it meets either of these conditions:
- It is a constituent entity of a multinational group whose total consolidated group revenue is AED 3.15 billion or more in the relevant tax period, or
- Its own revenue in the relevant tax period is AED 200 million or more.
There is a useful practical carve out. If your group operates only inside the UAE and has no foreign entities, you generally do not need a Master File, because a Master File describes a multinational group. You would still need a Local File if your revenue reaches AED 200 million.
What goes into the Master File?
The Master File is the global business passport for the group. It gives the FTA a high level view of the multinational’s worldwide operations. Typical contents include:
- The group’s legal and ownership structure and the geographic location of operating entities.
- A description of the group’s business, key value drivers and supply chain for its main products and services.
- The group’s intangibles: what they are, who owns them and how they are exploited.
- The group’s intercompany financing arrangements.
- The group’s consolidated financial and tax positions, including any advance pricing agreements.
What goes into the Local File?
The Local File is entity specific and far more granular. It is where you demonstrate that the UAE entity’s controlled transactions are priced at arm’s length. It typically covers:
- A description of the local entity, its management structure and its business strategy.
- Details of each material controlled transaction, including amounts and the counterparties involved.
- A functional analysis of functions performed, assets used and risks assumed by each party.
- The selected transfer pricing method and the reason it is the most appropriate.
- A benchmarking or comparability study supporting the arm’s length result.
- Copies of relevant intercompany agreements and the entity’s financial information.
Which transactions belong in the Local File?
Ministerial Decision No. 97 takes a risk based approach. It targets transactions where profit shifting risk is highest, and it excludes many purely domestic, same rate dealings. Getting this scoping right is one of the most technical parts of the exercise.
| Must be included | Generally excluded |
| Transactions with non-resident related parties | Transactions with UAE resident persons, unless they fall in an inclusion category |
| Transactions with a party that has a UAE permanent establishment or derives State Sourced Income | Transactions with a natural person, where the parties act independently |
| Transactions with a person who has elected Small Business Relief | Transactions with a juridical partner in an unincorporated partnership, where the parties act independently |
| Transactions with an Exempt Person, such as a government entity or an extractive business | Transactions with a UAE permanent establishment taxed at the same corporate tax rate |
| Transactions with a party on a different corporate tax rate, such as a Qualifying Free Zone Person on 0 percent |
Note that an Exempt Person does not have to keep its own Local File, but its related party will often still need to document those dealings, so the exemption does not remove the transaction from view.
The Transfer Pricing Disclosure Form and its thresholds
The Disclosure Form is a schedule inside the corporate tax return, submitted through the EmaraTax portal. It is a reporting tool, not a determinant of your underlying obligations, and it gives the FTA an early data point for deciding where to look more closely. The FTA’s Corporate Tax Guide for tax returns, released in November 2024, set out the thresholds that trigger each schedule.
| Schedule | Trigger threshold |
| Related Party Transactions | Aggregate value of all related party transactions exceeds AED 40 million in the tax period |
| Per-category detail | Once AED 40 million is crossed, any single category (goods, services, intellectual property, interest, assets, liabilities, other) above AED 4 million must be itemised |
| Connected Persons | Aggregate payment or benefit to a single connected person, together with their related parties, exceeds AED 500,000 |
Country-by-Country Reporting
CbCR applies only to the largest groups. Under Cabinet Decision No. 44 of 2020, a UAE-headquartered multinational group with consolidated revenue of AED 3.15 billion or more in the preceding financial year must file both a CbCR notification and the report itself with the FTA. The report allocates the group’s revenue, profit, tax and economic activity across every country in which it operates. Groups headquartered elsewhere usually meet this obligation through their parent, but UAE members may still have a notification duty.
Two rules that catch businesses out
Documentation must be contemporaneous
The Master File and Local File must exist at the time the transactions take place, not be reconstructed after the FTA asks. Documentation assembled only in response to a request is weak evidence and, in practice, close to admitting that a defensible position was not in place when the pricing was set.
The 30-day production window
When the FTA requests your files, the clock starts on the day the request is sent, and you have 30 days to produce them unless the FTA grants an extension. A robust benchmarking study and a complete Local File cannot be built from scratch inside that window, which is why serious businesses maintain their documentation on an annual cycle.
Free zone companies are not exempt
A common and costly assumption is that free zone entities sit outside transfer pricing. They do not. Every free zone entity with related party transactions must apply the arm’s length principle. For a Qualifying Free Zone Person that benefits from the 0 percent rate on qualifying income, transfer pricing compliance is directly tied to keeping that status. Because a QFZP is on a different tax rate from mainland entities, its dealings with related parties are exactly the kind of transaction the Local File rules single out for inclusion. Weak documentation here can put the 0 percent benefit itself at risk.
What if you are below every threshold?
You are still not off the hook. The arm’s length principle applies to every related party and connected person transaction regardless of size. A business below the AED 200 million documentation threshold and below the AED 40 million disclosure threshold must still be able to show, if asked, that its intercompany prices are market based. In practice that means keeping intercompany agreements, a clear pricing rationale and supporting comparables even when a full Master File and Local File are not formally required. Businesses that have elected Small Business Relief, available where revenue is at or below AED 3 million, are relieved from the formal documentation burden but remain within the arm’s length principle.
Why this matters: the cost of getting it wrong
Weak or missing documentation exposes a business on several fronts at once:
- Administrative penalties for failing to maintain the records the law requires.
- A weaker position if the FTA challenges your pricing, which can lead to an upward adjustment of taxable income and additional tax.
- For downward adjustments that reduce taxable income, relief is only allowed with FTA approval, so poor documentation removes a lever you might otherwise use.
- For free zone entities, the potential loss of the 0 percent qualifying status.
Set against the cost of preparing documentation in advance, these outcomes make contemporaneous compliance the far cheaper path.
A practical compliance checklist
- Map every related party and connected person transaction, including balance sheet items such as intercompany loans.
- Assess related parties under Article 35 of the Corporate Tax Law, not the IAS 24 accounting definition.
- Test your dealings against the AED 40 million, AED 4 million and AED 500,000 disclosure thresholds.
- Test your entity and group against the AED 200 million and AED 3.15 billion documentation thresholds.
- Select the most appropriate transfer pricing method and document why.
- Commission a benchmarking study using reliable commercial databases.
- Prepare the Master File and Local File contemporaneously and refresh them annually.
- Keep everything ready to produce within 30 days of an FTA request.
How BCL Globiz supports UAE transfer pricing compliance
BCL Globiz is a Dubai-based accounting and tax advisory firm, part of the BCL Group, with a dedicated focus on UAE corporate tax, transfer pricing and international taxation. The firm supports SMEs, mid-sized groups and inbound multinationals with practical, defensible transfer pricing frameworks, and its team applies OECD-compliant methodologies together with leading benchmarking databases to establish arm’s length positions that stand up to FTA scrutiny.
A typical engagement covers the full lifecycle:
- Identifying related parties correctly under UAE tax rules rather than accounting rules.
- Mapping and classifying every controlled transaction against the disclosure and documentation thresholds.
- Preparing the Master File, Local File and benchmarking studies that meet FTA and OECD requirements.
- Completing the TP Disclosure Form consistently with the corporate tax return.
- Coordinating CbCR notifications and data for multinational groups.
- Providing audit defence if the FTA opens a review.
You can see the firm’s full transfer pricing offering on the BCL Globiz Transfer Pricing Services in Dubai page.
Frequently asked questions
Do I have to submit the Master File and Local File with my tax return?
No. You keep them and produce them to the FTA within 30 days of a request. Only the TP Disclosure Form is filed with the return.
When did UAE transfer pricing documentation rules take effect?
They apply to financial years beginning on or after 1 June 2023, which made 2024 the first full tax period for most calendar-year businesses.
Do free zone companies need transfer pricing documentation?
Yes. Free zone entities must apply the arm’s length principle, and a Qualifying Free Zone Person’s 0 percent status depends on it. Their related party dealings are specifically within the Local File scope.
What triggers the TP Disclosure Form?
Aggregate related party transactions above AED 40 million, with individual categories above AED 4 million itemised, plus a separate schedule where payments or benefits to a single connected person exceed AED 500,000.
What if my business is small?
You still have to price related party transactions at arm’s length and keep supporting evidence. Businesses electing Small Business Relief, where revenue is at or below AED 3 million, are relieved from formal documentation but not from the arm’s length principle.
