UAE Transfer Pricing Documentation & Disclosure Requirements: A Reminder for Businesses

As the UAE’s Corporate Tax regime continues to mature, Transfer Pricing (TP) compliance remains a key focus area for businesses operating in the country. While many businesses are aware of the arm’s length principle and related party rules, there is still uncertainty around the thresholds for Transfer Pricing documentation and disclosure obligations.

With filing deadlines approaching for many taxpayers, this serves as a timely reminder for UAE businesses to assess whether they fall within the Transfer Pricing documentation requirements under the UAE Corporate Tax Law.

Understanding Transfer Pricing in the UAE

The UAE Transfer Pricing framework aligns closely with the OECD Transfer Pricing Guidelines and applies to transactions between related parties and connected persons.

Businesses are required to ensure that transactions with related parties are conducted at arm’s length – meaning the pricing and terms should be consistent with those agreed between independent parties under similar circumstances.

In addition to maintaining supporting documentation, certain businesses must also complete Transfer Pricing disclosures as part of their Corporate Tax filings.

Transfer Pricing Disclosure Requirements

All taxable persons that undertake transactions with related parties or connected persons are generally required to disclose these arrangements in their Corporate Tax Return.

The disclosure requirements apply when aggregate value of related party transactions exceed AED 40 million. Similarly, disclosure threshold for Connected Persons payment/benefit is AED 500,000.

This means that even businesses not required to prepare a Master File or Local File may still need to:

• identify related party transactions,

• maintain supporting records, and

• complete the relevant TP disclosure sections within the tax return.

Businesses should therefore ensure that related party relationships and transactions are properly tracked throughout the financial year.

Threshold for Transfer Pricing Documentation

Under the UAE Corporate Tax framework, businesses may be required to maintain formal Transfer Pricing documentation in the form of:

• a Master File, and/or

• a Local File.

The documentation requirements generally apply where a taxable person meets either of the following thresholds:

1. Standalone Revenue Threshold

A taxable person with revenue exceeding AED 200 million during the relevant tax period may be required to maintain a Local File and Master File.

2. Consolidated Revenue Threshold

A business generating consolidated group revenue of AED 3.15 billion or more during the relevant tax period may be required to maintain a Local File and Master File.

These thresholds are aligned with international OECD standards and are intended to focus compliance obligations on larger business groups and entities with significant related party transactions.

Why Businesses Should Prepare Early

Even where formal TP documentation is not mandatory, businesses should not overlook the importance of maintaining sufficient evidence to support the arm’s length nature of their transactions.

The Federal Tax Authority (FTA) may request supporting information, benchmarking analysis, agreements, or financial records during a tax audit or review.

Businesses should therefore consider:

• reviewing related party arrangements,

• assessing pricing methodologies,

• ensuring intercompany agreements are in place,

• maintaining contemporaneous documentation, and

• evaluating whether TP thresholds are met annually.

Common Areas Overlooked by Businesses

In practice, businesses often underestimate the breadth of transactions that may fall within the UAE TP rules. Common examples include:

• management service charges,

• interest-free loans,

• shared service arrangements,

• royalty or licensing payments,

• expense reallocations,

• guarantees, and

• transactions with owners or connected persons.

Even domestic transactions within the UAE may require consideration under the Transfer Pricing rules.

Final Thoughts

As Transfer Pricing becomes an increasingly important aspect of UAE Corporate Tax compliance, businesses should proactively assess their documentation and disclosure obligations rather than waiting until year-end filing deadlines.

Early assessment can help reduce compliance risks, avoid potential penalties, and ensure businesses are adequately prepared for future FTA reviews or audits.

Businesses that are uncertain about their Transfer Pricing position should seek professional advice to determine whether they meet the UAE documentation thresholds and whether their related party arrangements are appropriately supported.