What is Transfer Pricing?
Transfer Pricing rules in the UAE were introduced as part of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022), effective June 1, 2023. The FTA Transfer Pricing Guide (October 2023) aligns UAE TP provisions with OECD Guidelines.
All transactions between Related Parties and Connected Persons must be priced at arm's length – meaning the price that would be agreed between independent parties in comparable circumstances.
Arm's Length Principle
Transactions at fair market value
Documentation
Master File & Local File required
OECD Aligned
International standards compliant
Disclosure Form
Filed with CT Return
TP Documentation Requirements
Per Ministerial Decision No. 97 of 2023, documentation requirements depend on revenue thresholds:
Documentation Thresholds (2024-2025)
TP Disclosure Form: Required if aggregate related party transactions exceed AED 40 million. Individual transaction categories exceeding AED 4 million must be separately disclosed.
Connected Persons: Disclose if aggregate payments/benefits exceed AED 500,000.
Who are Related Parties?
Under Article 35 of the UAE CT Law, Related Parties include:
| Relationship Type | Definition |
|---|---|
| Ownership | 50% or more direct/indirect ownership interest |
| Control | 50% or more voting rights or board control |
| Profit Entitlement | Entitled to 50% or more of profits |
| Kinship | Related up to 4th degree of kinship |
| Connected Persons | Partners, directors, officers, or their related parties |
Filing Requirements
| Requirement | Deadline |
|---|---|
| TP Disclosure Form | Filed with CT Return (9 months after year-end) |
| Master File / Local File | Submit within 30 days upon FTA request |
| Documentation Preparation | Contemporaneous (by CT return filing date) |
| Record Retention | Minimum 7 years after tax period |
Frequently Asked Questions
Entities electing for Small Business Relief are not required to maintain TP documentation. However, transactions must still be at arm's length.
UAE accepts OECD methods: Comparable Uncontrolled Price (CUP), Resale Price, Cost Plus, Transactional Net Margin (TNMM), and Profit Split.
Yes. UAE TP rules apply to both cross-border and domestic transactions between related parties, including Free Zone entities.
Penalties range from AED 10,000 to AED 100,000. FTA can also adjust taxable income to reflect arm's length pricing.