The short answer
Transfer pricing (TP) documentation in the UAE consists of four possible components under the Corporate Tax regime: a Transfer Pricing Disclosure Form filed with the annual Corporate Tax return, a Local File, a Master File, and, for the largest multinational groups, a Country-by-Country Report (CbCR). Which of these a business must prepare depends on its revenue, the size of its group, and the value of its related party and connected person transactions. Every taxable person with such transactions must apply the arm’s length principle, whether or not the formal file thresholds are met.
The legal foundation
The UAE introduced Corporate Tax through Federal Decree-Law No. 47 of 2022, which applies to financial years beginning on or after 1 June 2023. Transfer pricing sits at the core of this law. Article 34 sets out the arm’s length principle, Article 35 defines related parties and control, Article 36 covers connected persons, and Article 55 establishes the documentation obligations.
The detailed thresholds and content requirements come from Ministerial Decision No. 97 of 2023, issued by the Ministry of Finance on 11 May 2023. The Federal Tax Authority (FTA) supplemented this with its Transfer Pricing Guide in October 2023, and Country-by-Country Reporting is governed separately by Cabinet Decision No. 44 of 2020 (which replaced Resolution No. 32 of 2019). The framework follows the OECD’s three-tier documentation model under BEPS Action 13.
The four documentation components at a glance
The table below summarises who has to prepare each document and what triggers the obligation.
| Document | Who must prepare it | Trigger |
| TP Disclosure Form | Taxable persons with material related party or connected person transactions | Related party transactions above AED 40 million in aggregate (categories above AED 4 million), or connected person payments above AED 500,000 |
| Local File | Taxable persons meeting the MD 97 threshold | Revenue of AED 200 million or more in the tax period, OR membership of an MNE group with consolidated revenue of AED 3.15 billion or more |
| Master File | The same taxable persons that must prepare a Local File | Same threshold as the Local File |
| Country-by-Country Report | UAE-resident Ultimate Parent Entity of a multinational group | Consolidated group revenue of AED 3.15 billion or more in the preceding fiscal year |
1. The Transfer Pricing Disclosure Form
The Disclosure Form is the most common obligation because it is filed with the Corporate Tax return itself, through the EmaraTax portal, and is due within nine months of the end of the tax period. It is a summary schedule that gives the FTA an early view of a taxpayer’s controlled transactions and flags where deeper scrutiny may be warranted.
The form has two main schedules, each with its own materiality threshold:
- Related Party schedule: required once the aggregate value of transactions with related parties, taken from the financial statements or at market value, exceeds AED 40 million. Once that threshold is crossed, each individual category (goods, services, intellectual property, interest, assets and so on) that exceeds AED 4 million must be disclosed separately.
- Connected Persons schedule: required where the aggregate payment or benefit to a single connected person, together with their related parties, exceeds AED 500,000. This captures a distinctly UAE feature, since payments to owners, directors and their relatives must also meet the arm’s length standard.
A frequent and costly mistake is to treat these thresholds as the whole of TP compliance. The Disclosure Form is a reporting tool, not a determinant of the underlying obligation. A business below AED 40 million still has to price its transactions at arm’s length and be able to prove it.
2. The Local File
The Local File provides granular, entity-level detail on the UAE taxpayer’s controlled transactions. A taxable person must prepare one for a tax period if it meets either of these conditions under Ministerial Decision No. 97 of 2023:
- Its own revenue in the relevant tax period is AED 200 million or more, or
- It is a constituent entity of a multinational group with total consolidated group revenue of AED 3.15 billion or more in the relevant tax period.
A well-prepared Local File typically contains:
- A description of the entity’s management structure, business strategy and the industry in which it operates.
- Details of each material controlled transaction, including amounts, counterparties and intercompany agreements.
- A functional analysis covering the functions performed, assets used and risks assumed (a FAR analysis).
- The selected transfer pricing method, the reasons for choosing it, and a benchmarking or comparability study supporting the arm’s length result.
- Financial information for the entity and reconciliations to the amounts used in the analysis.
What goes into the Local File, and what stays out?
MD 97 narrows the Local File to the transactions where the risk of profit shifting is highest. The following transactions are generally excluded:
- Transactions with UAE resident persons (subject to the exceptions below).
- Transactions with a natural person, provided the parties act as if they were independent of each other.
- Transactions with a juridical person that is a related party or connected person solely because it is a partner in an unincorporated partnership, again provided the parties act independently.
- Transactions with a permanent establishment of a non-resident whose income is subject to the same Corporate Tax rate.
However, transactions with certain counterparties must be included even though they are resident, because a tax rate differential exists. These are transactions with exempt persons, persons who have elected for Small Business Relief, and Qualifying Free Zone Persons, as well as transactions with non-residents and any counterparty taxed at a different rate.
3. The Master File
The Master File gives the FTA a high-level overview of the entire multinational group, effectively a global business passport. It is required from the same taxable persons that must prepare a Local File, meaning those meeting the AED 200 million entity threshold or belonging to a group above AED 3.15 billion in consolidated revenue.
A Master File usually covers:
- The group’s legal and ownership structure and the geographic location of its operations.
- A description of the group’s business, including the main value drivers and supply chain for its key products and services.
- The group’s intangibles, research and development strategy, and how intellectual property is owned and exploited.
- Intercompany financial activities and the group’s overall financial and tax positions.
There is a useful simplification for purely domestic groups: where a group operates only in the UAE with no foreign entities, the Master File requirement generally does not apply, although a qualifying entity may still need a Local File.
4. The Country-by-Country Report
CbCR is the top tier of the OECD model and applies to a narrow population of very large groups. Under Cabinet Decision No. 44 of 2020, it applies to a UAE-resident Ultimate Parent Entity of a multinational group whose consolidated global revenue equalled or exceeded AED 3.15 billion (roughly EUR 750 million) in the fiscal year immediately preceding the reporting year.
There are two distinct obligations with separate deadlines:
- A CbCR notification, due on or before the last day of the group’s reporting fiscal year, confirming the reporting entity.
- The CbC Report itself, due within 12 months of the end of the reporting fiscal year, giving a jurisdiction-by-jurisdiction breakdown of revenue, profit, tax paid, employees and tangible assets.
Even where CbCR does not apply directly, a UAE subsidiary of a foreign group should know whether its parent files a CbC report elsewhere, because that data shapes the group’s global transfer pricing risk profile.
Key deadlines
| Requirement | Deadline |
| TP Disclosure Form | Filed with the Corporate Tax return, within 9 months of the end of the tax period |
| Local File and Master File | Not filed automatically; produced within 30 days of a written FTA request |
| CbCR notification | On or before the last day of the group’s reporting fiscal year |
| CbC Report | Within 12 months of the end of the reporting fiscal year |
The 30-day window for the Local File and Master File is the point businesses most often underestimate. Because the FTA does not ask for these files up front, it is tempting to defer them. Yet properly prepared files, including a benchmarking study, can take months to build. The files should be prepared contemporaneously, meaning they exist by the time the return is filed, not reconstructed after a request lands. Corporate Tax records should generally be retained for seven years.
The arm’s length principle applies to everyone
The single most important point about UAE transfer pricing is that the arm’s length principle applies to all related party and connected person transactions, regardless of the documentation thresholds. A business below AED 40 million and below AED 200 million still has to price its intercompany dealings as independent parties would, and must be able to demonstrate this if asked.
The UAE recognises the five OECD transfer pricing methods for testing arm’s length outcomes:
- Comparable Uncontrolled Price (CUP) method.
- Resale Price method.
- Cost Plus method.
- Transactional Net Margin Method (TNMM).
- Transactional Profit Split method.
Where none of these can be reasonably applied, a taxpayer may use another method, provided it can justify the choice. In practice this means maintaining intercompany agreements, comparable market pricing evidence and a clear commercial rationale, even where full files are not formally required.
Free zones and connected persons: two UAE-specific points
Free zone entities are not outside the TP net. A Qualifying Free Zone Person must comply with the arm’s length principle to keep its 0 percent tax rate, and free zone companies with related party transactions are fully subject to TP rules. If a free zone entity provides services to a related mainland company at below-market rates, the FTA will not simply accept the arrangement as commercially justified.
The connected person rules are the other feature that catches UAE businesses by surprise. Because the country has no personal income tax, the law brings payments to owners, directors, partners and their relatives within the arm’s length remit. Director salaries, partner fees and reimbursements to related parties can all be scrutinised, and payments that exceed a market rate can be disallowed as deductions.
Penalties for non-compliance
Failing to meet TP obligations exposes a business to administrative penalties and, more significantly, to adjustments of taxable income if the FTA concludes that transactions were not at arm’s length. The dedicated CbCR penalty regime under Cabinet Decision No. 44 of 2020 illustrates how seriously non-compliance is treated:
- Late filing of the CbC Report or notification: up to AED 1,000,000, plus AED 10,000 for each day the failure continues (capped at AED 250,000 for the daily element).
- Incomplete or inaccurate information: between AED 50,000 and AED 500,000.
- Failure to keep required records or provide other requested information: AED 100,000 in each case.
Beyond the direct fines, weak documentation undermines a taxpayer’s position whenever the FTA challenges its pricing, which can lead to upward adjustments and additional tax. Strong contemporaneous documentation is the most effective form of audit defence.
How BCL Globiz helps UAE businesses stay compliant
Getting UAE transfer pricing right calls for local regulatory knowledge combined with OECD-standard analysis. BCL Globiz, part of the BCL Group and a recognised transfer pricing specialist in Dubai and across the UAE, supports businesses of every size through the full compliance cycle: mapping related parties and connected persons, assessing whether Local File or Master File obligations apply, preparing FTA-ready documentation, and running benchmarking studies on leading databases such as S&P Capital IQ and Orbis to establish defensible arm’s length positions.
You can explore the firm’s UAE transfer pricing services here: bcl.ae/transfer-pricing-services-dubai.
Frequently asked questions
Who has to prepare a Local File and Master File in the UAE?
Any taxable person whose revenue is AED 200 million or more in the tax period, or that belongs to a multinational group with consolidated revenue of AED 3.15 billion or more, must prepare both a Local File and a Master File under Ministerial Decision No. 97 of 2023.
When are UAE transfer pricing documents due?
The TP Disclosure Form is filed with the Corporate Tax return, within nine months of the end of the tax period. The Local File and Master File are not filed automatically but must be provided within 30 days of an FTA request. The CbCR notification is due by the last day of the reporting fiscal year and the CbC Report within 12 months of the fiscal year end.
Do small businesses and free zone companies need transfer pricing documentation?
Businesses below the file thresholds may not need a full Local File or Master File, but every taxable person with related party or connected person transactions must still apply the arm’s length principle and be able to support it. Free zone entities, including Qualifying Free Zone Persons, are fully within the TP rules.
What is the difference between the Disclosure Form and the Local File?
The Disclosure Form is a summary schedule filed with the tax return that flags controlled transactions above set materiality thresholds. The Local File is a detailed, transaction-level document, with functional and benchmarking analysis, that the FTA can request separately to test whether pricing is at arm’s length.
