Since UAE corporate tax took effect on 1 June 2023 under Federal Decree-Law No. 47 of 2022, transfer pricing has become a core compliance obligation for any business that transacts with related parties or connected persons. A transfer pricing report is the evidence that those transactions are priced at arm’s length, exactly as unrelated parties would have priced them. This guide walks through who must prepare one, the exact steps involved, the deadlines, and the mistakes that trigger Federal Tax Authority (FTA) scrutiny.
What Is a Transfer Pricing Report and Why Does Dubai Require One?
A transfer pricing report is the documentation that demonstrates your intra-group and connected-person transactions comply with the arm’s length principle. Under Articles 34 to 36 of the UAE Corporate Tax Law, the price charged between related parties must match the price that independent parties would have agreed under comparable circumstances. If it does not, the FTA can adjust your taxable income upward and apply the 9% corporate tax rate to the difference.
The rules apply to both cross-border and purely domestic transactions. That means a payment between a Dubai mainland company and its own free zone affiliate is squarely within scope, even though no money leaves the UAE. Free zone persons claiming the 0% qualifying rate face additional exposure: mispriced related-party dealings can jeopardise that status.
Who Needs to Prepare a Transfer Pricing Report in Dubai?
Every taxable person with related-party or connected-person transactions must apply the arm’s length principle. The level of documentation, however, depends on thresholds set out in Article 55 of the Corporate Tax Law and Ministerial Decision No. 97 of 2023.
Transfer Pricing Disclosure Form (filed with the tax return)
- Required when aggregate related-party transactions exceed AED 40 million in the tax period.
- Within that, any single category (goods, services, financing, or intellectual property) exceeding AED 4 million must be disclosed.
- Transactions with connected persons are disclosed once the aggregate exceeds AED 500,000.
Local File and Master File (kept on record, produced on request)
You must prepare and maintain both a Local File and a Master File if, during the tax period, you meet either of the following:
- Your entity’s revenue is AED 200 million or more; or
- You are part of a multinational enterprise (MNE) group with consolidated revenue of AED 3.15 billion or more.
Note the useful exception: if your group is entirely UAE-resident with no foreign parent, subsidiary or affiliate, you are not required to prepare a Master File, though you still need a Local File if you cross the AED 200 million entity threshold. Businesses should also confirm they are citing the current instruments, as Ministerial Decision No. 301 of 2025 updated certain provisions that previously sat in earlier decisions.
How to Prepare a Transfer Pricing Report in Dubai: Step by Step
Follow these seven steps to build a defensible, FTA-ready transfer pricing report.
Step 1: Identify Your Related Parties and Connected Persons
Start by mapping who counts as a related party under Article 35 of the Corporate Tax Law. This definition differs from the IAS 24 accounting definition, so you cannot simply copy your financial-statement disclosures. Related parties include entities under common ownership or control (generally a 50% or greater link), while connected persons include owners, directors, officers, and their relatives. Getting this population right is the foundation of the entire report.
Step 2: Map and Characterise Every Controlled Transaction
List each transaction with those parties: intra-group services, management charges, financing and loans, royalties and licensing, and the sale or purchase of goods. For each one, record the counterparty, the value at book and market, the contractual terms, and the transaction category. This inventory drives both your disclosure form and your documentation.
Step 3: Perform a Functional Analysis (Functions, Assets, Risks)
A functional analysis characterises what each party actually does: the functions performed, the assets employed, and the risks assumed (often abbreviated FAR). This is where you determine which entity is the more complex, value-adding party and which is the routine or tested party. For intangibles, the FTA follows the OECD DEMPE framework, which looks at who develops, enhances, maintains, protects and exploits the intangible rather than who legally owns it.
Step 4: Select the Most Appropriate Transfer Pricing Method
UAE rules adopt the five OECD methods. You must choose the one best suited to the transaction and the availability of reliable data:
- Comparable Uncontrolled Price (CUP) method: compares the price of a controlled transaction to a comparable independent one.
- Resale Price method: works back from the resale price to an arm’s length gross margin.
- Cost Plus method: adds an arm’s length mark-up to the supplier’s costs.
- Transactional Net Margin Method (TNMM): tests the net profit margin against comparables.
- Profit Split method: allocates combined profit between highly integrated parties.
Where none of the five fits, the Law permits any other method that produces a reliable arm’s length outcome, provided you can justify the choice.
Step 5: Run a Benchmarking Study and Comparability Analysis
Benchmarking is the evidence that your chosen method produces an arm’s length result. Using recognised commercial databases, you identify independent companies or transactions comparable to yours, derive an arm’s length range (typically an interquartile range), and test whether your intra-group pricing falls inside it. If it does not, you make a compensating adjustment. This is the most technical and most frequently challenged part of any report, which is why access to reliable comparable data matters.
Step 6: Prepare the Local File and Master File
Assemble the documentation. The Local File gives an entity-specific analysis of your UAE controlled transactions, including the functional analysis, the method selected, the benchmarking results, and the demonstration that pricing is arm’s length. The Master File gives a high-level overview of the whole MNE group: its structure, business lines, intangibles, intercompany financing, and overall financial and tax position. Both must be prepared contemporaneously, meaning they should exist at the time the transactions occur, not only when the FTA asks.
Step 7: Complete the Transfer Pricing Disclosure Form and File
Finally, complete the Transfer Pricing Disclosure Form within your corporate tax return on the EmaraTax portal, reporting related-party and connected-person transactions above the thresholds. The return, including the disclosure, is due nine months after the end of your tax period. For a financial year ending 31 December 2024, for example, the deadline was 30 September 2025.
Deadlines, Retention and Penalties
- Filing deadline: the corporate tax return and disclosure form are due nine months after your tax period ends.
- FTA request window: if the FTA asks for your Local File or Master File under Article 55, you have 30 days to produce it. That window is far too short to build documentation from scratch, so prepare it in advance.
- Consequences: non-compliance can lead to income adjustments, administrative penalties, audits, and for free zone persons, loss of the 0% qualifying rate.
New in 2026: Advance Pricing Agreements (APAs)
On 30 December 2025, the FTA issued its first Advance Pricing Agreement Corporate Tax Guide, operationalising Article 59 of the Corporate Tax Law. An APA lets you agree your transfer pricing methodology with the FTA in advance, giving certainty and reducing audit risk. The rollout is phased: Unilateral APAs for domestic controlled transactions have been accepted from December 2025, with cross-border unilateral APAs, and later bilateral and multilateral APAs, to follow from 2026. APAs currently apply prospectively and typically cover three to five tax periods.
Common Mistakes That Trigger FTA Scrutiny
- Assuming small businesses or free zone entities are exempt from the arm’s length principle. They are not.
- Reusing the IAS 24 accounting definition of related parties instead of the Article 35 tax definition.
- Ignoring domestic transactions, such as mainland-to-free-zone dealings within the same group.
- Treating shareholder or director payments as outside scope when they are connected-person transactions.
- Preparing documentation only after the FTA asks, rather than contemporaneously.
- Weak or outdated benchmarking that cannot survive review.
Why Prepare Your Transfer Pricing Report with BCL Globiz?
BCL Globiz is a Dubai-based, FTA-registered accounting and tax advisory firm focused on UAE corporate tax, transfer pricing, and international taxation. With 35+ years of combined experience and a team of 300+ professionals, including chartered accountants and CPAs, the firm has served over 1,000 clients across more than 20 industries.
For transfer pricing specifically, BCL Globiz:
- Identifies related parties and connected persons correctly under Article 35, not just IAS 24.
- Conducts functional analyses and selects defensible OECD-compliant methods.
- Runs benchmarking studies using leading global databases for reliable comparable data.
- Prepares audit-ready Local Files, Master Files and Disclosure Forms.
- Provides FTA audit defence so your documentation withstands scrutiny.
The goal is not just compliance, but defensibility: documentation ready to stand up the day the FTA walks in. To discuss your transfer pricing obligations, visit bcl.ae.
Frequently Asked Questions
Do free zone companies in Dubai need a transfer pricing report?
Yes. Free zone persons must apply the arm’s length principle to related-party and connected-person transactions and meet the same documentation thresholds (AED 200 million entity revenue or AED 3.15 billion group revenue) as mainland companies. Mispriced transactions can also put the 0% qualifying rate at risk.
When is the transfer pricing disclosure due?
It is filed with your corporate tax return, which is due nine months after the end of your tax period. A 31 December 2024 year-end had a 30 September 2025 deadline.
What is the threshold for a Local File and Master File in the UAE?
You must maintain both if your entity revenue is AED 200 million or more, or your MNE group’s consolidated revenue is AED 3.15 billion or more. A purely UAE-resident group with no foreign entities is exempt from the Master File but still needs a Local File above AED 200 million.
How long do I have to give documentation to the FTA?
Thirty days from the FTA’s request under Article 55. Because that is not enough time to build a report from scratch, documentation should be prepared contemporaneously.
Which transfer pricing methods are accepted in the UAE?
The five OECD methods: CUP, Resale Price, Cost Plus, TNMM, and Profit Split, plus any other reliable method where none of the five fits.
