The UAE introduced federal Corporate Tax for financial years starting on or after 1 June 2023, under Federal Decree-Law No. 47 of 2022. The standard rate is 9 percent on taxable income above AED 375,000. Transfer pricing rules sit inside this law in Articles 34 to 36, and are explained further in the Federal Tax Authority Transfer Pricing Guide issued in October 2023. The framework follows the OECD approach and the Base Erosion and Profit Shifting standards.
In plain terms, transfer pricing requires that transactions between connected businesses or people are priced as if they had taken place between independent parties. This is the arm’s length principle. Article 35 covers related parties, such as a parent and its subsidiary or companies under common ownership. Article 36 covers connected persons, meaning owners, directors, partners, key managers and their relatives. The goal is to stop profit being shifted artificially so that taxable income in the UAE reflects the real economic value created here.
Who needs transfer pricing compliance in Dubai?
The following categories of business are all within scope. In practice this covers the large majority of companies operating in the emirate.
1. Small and medium enterprises and owner managed companies
This is the group most often caught out. An SME does not need cross border dealings to be within transfer pricing. A salary or bonus paid to the owner, a director’s fee, rent paid to a shareholder for the company’s premises, or an interest free loan from the founder are all connected person transactions. Each has to be set at market value, and any payment above market value can be treated as non-deductible. Size does not remove this obligation.
2. Family businesses and local groups with intercompany dealings
Many UAE groups run several companies that trade with each other, share staff, allocate management fees or move funds between entities. These are related party transactions even when every company sits inside the UAE. Intra UAE dealings, including a mainland company transacting with its own free zone affiliate, must still meet the arm’s length standard.
3. Free zone companies, including Qualifying Free Zone Persons
A common myth is that free zone status means transfer pricing does not apply. It does apply. A Qualifying Free Zone Person can enjoy a 0 percent rate on qualifying income, but it is still inside the Corporate Tax system. It must register, file a return, keep audited financial statements, and comply with the arm’s length and transfer pricing rules. In fact, the arm’s length pricing of transactions with the mainland and with group members is central to keeping that 0 percent benefit.
4. Subsidiaries and branches of foreign parent companies
Any UAE entity that is part of an international group is squarely within transfer pricing. Management charges from the parent, royalties for the use of a brand or technology, intra group loans and shared service costs all need to be benchmarked and documented. These are the transactions the Federal Tax Authority reviews most closely.
5. Businesses with significant related party or connected person values
Once transaction values become material, disclosure and documentation obligations are added on top of the arm’s length rule. These thresholds are set out in the next section.
The three layers of compliance, and their thresholds
The confusion around who needs to comply usually comes from mixing up these three layers. The table below separates them.
| Compliance layer | What triggers it | Who it affects |
| Arm’s length principle (Article 34) | No threshold at all. It applies to every transaction with a related party or connected person. | Every taxable person that trades, lends, pays or shares costs with a related party or connected person. |
| TP Disclosure Form (filed with the tax return) | Related party transactions above AED 40 million in total, then each category above AED 4 million. Connected person payments above AED 500,000 to any single person. | Mid sized and larger businesses, plus any company with sizeable owner, director or shareholder payments. |
| Master File and Local File (Ministerial Decision No. 97 of 2023) | Revenue of AED 200 million or more in the tax period, or membership of a group with consolidated revenue of AED 3.15 billion or more. | Large UAE companies and UAE members of large multinational groups. |
The Disclosure Form is filed through the EmaraTax portal alongside the Corporate Tax return, which is due within nine months of the end of the tax period. The Master File and Local File do not need to be filed automatically, but they must be produced within 30 days if the Federal Tax Authority asks for them.
Being below the thresholds does not mean you are exempt
This is the point that costs businesses the most. The AED 40 million and AED 200 million figures decide whether you file a Disclosure Form or prepare a Master File and Local File. They do not decide whether the arm’s length principle applies to you. It always applies. Even a company well below every threshold must be able to show that its related party and connected person transactions were priced fairly, and must keep reasonable records to support that position.
Small Business Relief is a good example. Under Article 21, a resident business with revenue of AED 3 million or less can elect to be treated as having no taxable income. This relief was recently extended by Ministerial Decision No. 131 of 2026, announced on 7 August 2026, so that it now covers tax periods ending on or before 31 December 2029. A business that elects this relief is released from preparing formal transfer pricing documentation, but it must still comply with the arm’s length principle. Qualifying Free Zone Persons and members of large multinational groups cannot elect the relief at all.
One further trap is worth naming. If you want to make a downward adjustment, meaning one that reduces your taxable income, you need prior approval from the Federal Tax Authority before it can be reflected in your return.
Deadlines and the cost of getting it wrong
For a business with a financial year ending 31 December 2025, the Corporate Tax return and the Transfer Pricing Disclosure Form are due by 30 September 2026. There are no separate transfer pricing penalties in the law, but the general Corporate Tax penalties under Cabinet Decision No. 75 of 2023 apply. That means failing to keep proper records, or filing inaccurate information, can lead to fines and to reassessment of your tax position, on top of any adjustment to the tax itself.
For businesses with large and recurring related party transactions, the Federal Tax Authority also introduced an Advance Pricing Agreement programme in December 2025. This lets a taxpayer agree the arm’s length price of specified transactions with the authority in advance, giving certainty for the covered period.
How BCL Globiz helps businesses in Dubai stay compliant
BCL Globiz Accounting and Consulting L.L.C. is a Dubai based accounting and tax advisory firm and part of the BCL Group. The firm is registered with the Dubai Department of Economic Development under licence number 1072657 and is based at Al Moosa Tower 1 on Sheikh Zayed Road, near the World Trade Centre. Its team of more than 300 professionals includes Chartered Accountants, Certified Public Accountants and Company Secretaries, and the firm is registered with the Federal Tax Authority.
For transfer pricing specifically, BCL Globiz brings senior specialists with Big Four and multinational experience, and applies OECD compliant methodologies supported by leading global benchmarking databases. The firm helps businesses of every size across the following areas:
- Identifying related parties and connected persons, and mapping every transaction that falls within scope.
- Designing practical, defensible transfer pricing policies for related party dealings.
- Preparing benchmarking studies, the Transfer Pricing Disclosure Form, the Master File and the Local File.
- Reviewing owner, director and shareholder payments so that they hold up as market value.
- Supporting clients during Federal Tax Authority queries and audits.
Because transfer pricing packages are offered in clear tiers, from salary benchmarking through to full intercompany analysis, businesses can match the level of support to their actual exposure rather than paying for more than they need.
The takeaway
Transfer pricing compliance in Dubai is far broader than most owners assume. If your company deals with a related party or a connected person, and almost every company does, the arm’s length principle applies to you today, regardless of size. The thresholds only decide how much paperwork sits on top. Getting the position right early protects your deductions, your free zone benefits and your standing with the regulator.
To review where your business stands, speak to the transfer pricing team at BCL Globiz. Learn more at
