{"id":3465,"date":"2026-11-12T09:04:14","date_gmt":"2026-11-12T09:04:14","guid":{"rendered":"https:\/\/e-startup.ae\/blogs\/?p=3465"},"modified":"2026-11-12T09:04:14","modified_gmt":"2026-11-12T09:04:14","slug":"uae-transfer-pricing-rules","status":"publish","type":"post","link":"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/","title":{"rendered":"UAE Transfer Pricing Rules: Documentation for Related-Party Transactions"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#Introduction\" >Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#What_Are_UAE_Transfer_Pricing_Rules\" >What Are UAE Transfer Pricing Rules?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#Who_Is_Required_to_Follow_UAE_Transfer_Pricing_Rules\" >Who Is Required to Follow UAE Transfer Pricing Rules?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#What_Are_Related_Party_Transactions_in_the_UAE\" >What Are Related Party Transactions in the UAE?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#Key_UAE_Transfer_Pricing_Documentation_Requirements\" >Key UAE Transfer Pricing Documentation Requirements<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#1_Transfer_Pricing_Disclosure_Form\" >1. Transfer Pricing Disclosure Form<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#2_Master_File\" >2. Master File<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#3_Local_File\" >3. Local File<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#4_Supporting_Documents_and_Agreements\" >4. Supporting Documents and Agreements<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#UAE_Transfer_Pricing_Thresholds_When_Is_Documentation_Required\" >UAE Transfer Pricing Thresholds: When Is Documentation Required?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#Transfer_Pricing_Disclosure_Form_Thresholds\" >Transfer Pricing Disclosure Form Thresholds<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#Which_Transfer_Pricing_Methods_Can_UAE_Businesses_Use\" >Which Transfer Pricing Methods Can UAE Businesses Use?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#What_Are_the_Deadlines_for_Transfer_Pricing_Documentation_in_the_UAE\" >What Are the Deadlines for Transfer Pricing Documentation in the UAE?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#How_Can_Businesses_Prepare_for_UAE_Transfer_Pricing_Compliance\" >How Can Businesses Prepare for UAE Transfer Pricing Compliance?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#Common_Transfer_Pricing_Compliance_Mistakes_to_Avoid\" >Common Transfer Pricing Compliance Mistakes to Avoid<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#FAQs\" >(FAQs)<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#1_Are_UAE_Transfer_Pricing_Rules_applicable_to_Free_Zone_companies\" >1. Are UAE Transfer Pricing Rules applicable to Free Zone companies?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#2_Is_a_Master_File_and_Local_File_mandatory_for_every_UAE_company\" >2. Is a Master File and Local File mandatory for every UAE company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#3_What_happens_if_a_business_does_not_maintain_transfer_pricing_documentation\" >3. What happens if a business does not maintain transfer pricing documentation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#4_Do_domestic_related-party_transactions_need_transfer_pricing_documentation\" >4. Do domestic related-party transactions need transfer pricing documentation?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><b>Introduction<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">For organizations in the UAE, it is important to be able to demonstrate compliance with the way they conduct transactions with related parties. As such, the related party transactions where the organizations offer services, loan money to the shareholders, and trade products between each other must satisfy certain requirements in relation to the tax treatment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In accordance with the <\/span><a href=\"https:\/\/tax.gov.ae\/en\/content\/transfer.pricing.guide.ctgtp1.aspx\" target=\"_blank\" rel=\"noopener\"><b>Transfer Pricing Rules in the UAE<\/b><\/a><span style=\"font-weight: 400;\">, any transactions conducted by the related parties should be at prices which would be acceptable to the unrelated parties under the same conditions, meaning the arm&#8217;s length principle.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In relation to the UAE Corporate Tax, the organizations will need to prepare documentation, make disclosures and reveal some of the details regarding their transactions and corporate groups.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is important to be aware of all the criteria to ensure that the related party transactions are properly justified.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The article below gives an overview of the UAE transfer pricing regime, documentation, disclosures and other issues.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Are_UAE_Transfer_Pricing_Rules\"><\/span><b>What Are UAE Transfer Pricing Rules?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Transfer pricing involves setting prices on transactions between related parties and connected persons, which could be sales of goods, services, finance operations, intellectual property, and other dealings.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The transfer pricing policy under UAE Corporate Tax Law is based on the arm\u2019s length standard.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the arm\u2019s length standard, the terms and prices of a transaction between the parties must be the same as if they were set between independent businesses in the similar situation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For instance, if a company in the UAE offers management services to another company which belongs to the same parent group, and the fee for these services is substantially higher or lower than the commercial price on the market, then the transaction will draw the attention of the Federal Tax Authority (FTA).<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Who_Is_Required_to_Follow_UAE_Transfer_Pricing_Rules\"><\/span><b>Who Is Required to Follow UAE Transfer Pricing Rules?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">UAE transfer pricing requirements apply to taxable persons conducting transactions with related parties or connected persons.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These may include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Entities that operate under the same corporate group.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Entities that have common ownership or similar structure.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Entities that are managed by the same person or entity.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Transaction between directors, shareholders, and other related parties.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Entities that conduct business with related parties situated outside the UAE.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Importantly, transfer pricing rules can apply to both domestic and cross-border transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even if two related companies operate within the UAE, their transactions must satisfy the arm&#8217;s length principle.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Are_Related_Party_Transactions_in_the_UAE\"><\/span><b>What Are Related Party Transactions in the UAE?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Related-party transactions are commercial or financial dealings between individuals or entities that have a relationship involving ownership, control, or common influence.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Common examples include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Transaction in the form of sale\/purchase of merchandise between companies of the same group.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Management\/consultation service charges.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Finance\/lending arrangements between related companies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Royalty fees for trademarks, patents or any other intellectual property.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rental charges between related companies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Shared costs of administration and operations.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Businesses should identify these transactions carefully because their pricing and contractual terms may affect taxable profits.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Key_UAE_Transfer_Pricing_Documentation_Requirements\"><\/span><b>Key UAE Transfer Pricing Documentation Requirements<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Proper record keeping is one of the crucial elements of Transfer Pricing Documentation UAE. Documentation requirement will be determined based on the situation of the organization and the transaction amounts involved.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"1_Transfer_Pricing_Disclosure_Form\"><\/span><b>1. Transfer Pricing Disclosure Form<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">UAE <\/span><a href=\"https:\/\/tax.gov.ae\/Datafolder\/Files\/Pdf\/2023\/Transfer%20Pricing%20Guide%20-%20EN%20-%2023%2010%202023.pdf\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Transfer Pricing Disclosure Form<\/span><\/a><span style=\"font-weight: 400;\"> is one of the documents that should be filed in the Corporate Tax return filing process provided certain criteria are met by the business entity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It involves information pertaining to transactions and arrangements with related and connected parties.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the requirements, businesses are required to disclose the following:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Related party transaction types.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Values of transactions in the tax period.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Details about related parties.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Connected person transactions and remunerations.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Transfer pricing methodologies.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Businesses should ensure that the information reported in the disclosure form is consistent with their <\/span><a href=\"https:\/\/e-startup.ae\/blogs\/bookkeeping-requirements-in-uae\/\"><span style=\"font-weight: 400;\">accounting records<\/span><\/a><span style=\"font-weight: 400;\"> and supporting documentation.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Master_File\"><\/span><b>2. Master File<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The Master File gives an insight into the business operations of the MNE group and its organisation and transfer pricing practices.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This document assists the tax administration in understanding the way the MNE works in different jurisdictions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Master Files usually include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Organisational and Ownership Structure of the Group.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Nature of the Activities of the Business and Sources of Income.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Key Intangibles.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Financial Relationships between Companies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Financial Positions of the Group.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Transfer Pricing Policy.<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"3_Local_File\"><\/span><b>3. Local File<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The Local File deals only with the UAE business and its related party transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In contrast to the Master File that gives a general overview, the Local File describes how transactions are conducted between the UAE business and related parties and how their prices are determined.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This typically comprises:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Management structure of the UAE firm and the nature of its activities.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Information on related party transactions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Agreements and contracts between affiliates.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Functional, asset and risk analysis.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Transfer pricing methods selection and application.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Financial information of the transactions.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The Local File helps demonstrate whether the UAE company&#8217;s related-party dealings comply with the arm&#8217;s length principle.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Supporting_Documents_and_Agreements\"><\/span><b>4. Supporting Documents and Agreements<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Apart from formal transfer pricing reports, businesses should maintain supporting records that explain the commercial purpose and pricing of their transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These may include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Agreements between companies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Invoices and accounting for payments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Financial reports.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Calculations of cost allocation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Market comparisons.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Service agreements.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Loans and calculation of interest.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Maintaining these documents makes it easier to explain transactions if the FTA requests additional information.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"UAE_Transfer_Pricing_Thresholds_When_Is_Documentation_Required\"><\/span><b>UAE Transfer Pricing Thresholds: When Is Documentation Required?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">It should be noted that not all enterprises have to make a Master File and a Local File. In order to decide about this, the UAE has set certain thresholds.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the UAE&#8217;s Ministerial Decision No. 97 of 2023, an enterprise has to have the two files if one of the following requirements is satisfied:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Requirement<\/b><\/td>\n<td><b>Applicable Threshold<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">UAE entity revenue<\/span><\/td>\n<td><span style=\"font-weight: 400;\">AED 200 million or more during the relevant tax period<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">MNE group consolidated revenue<\/span><\/td>\n<td><span style=\"font-weight: 400;\">AED 3.15 billion or more during the relevant tax period<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">These thresholds apply independently. Meeting either condition triggers the Master File and Local File requirement.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Transfer_Pricing_Disclosure_Form_Thresholds\"><\/span><b>Transfer Pricing Disclosure Form Thresholds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The disclosure requirements have separate thresholds:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Related party transactions: <\/b><span style=\"font-weight: 400;\">The total must be above AED 40 million.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Individual transaction classifications:<\/b><span style=\"font-weight: 400;\"> Once AED 40 million is exceeded, the individual classifications that exceed AED 4 million will have to be reported.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Connected party transactions: <\/b><span style=\"font-weight: 400;\">Payments or benefits above AED 500,000 by each connected party along with the related party must be reported.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These transaction categories encompass goods, services, intellectual property, interest, assets, liabilities, and other transactions. The setting of these threshold levels does not absolve one from compliance with the arm\u2019s length principle.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Which_Transfer_Pricing_Methods_Can_UAE_Businesses_Use\"><\/span><b>Which Transfer Pricing Methods Can UAE Businesses Use?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Businesses must select an appropriate method to determine whether their related-party transactions follow the arm&#8217;s length principle.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The UAE recognises five internationally accepted transfer pricing methods.<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Comparative Uncontrolled Price (CUP) Method: <\/b><span style=\"font-weight: 400;\">Involves the comparison between the price charged in the related party transaction and the price charged in the comparative transaction in independent companies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Resale Price Method: <\/b><span style=\"font-weight: 400;\">Involves establishing an appropriate purchase price by considering the resale price charged in independent customers minus an appropriate gross margin.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Cost Plus Method:<\/b><span style=\"font-weight: 400;\"> Involves establishing the transaction price through addition of an appropriate profit margin to the cost of the goods supplied.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Transactional Net Margin Method (TNMM): <\/b><span style=\"font-weight: 400;\">Involves analysis of the net profit margin made by the company from the controlled transaction and its comparability to that of independent companies<\/span><b>.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Transactional Profit Split Method:<\/b><span style=\"font-weight: 400;\"> Involves splitting the joint profits made from the related party transaction among associated companies.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">The selected method should be appropriate for the transaction, available information, and economic circumstances.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Are_the_Deadlines_for_Transfer_Pricing_Documentation_in_the_UAE\"><\/span><b>What Are the Deadlines for Transfer Pricing Documentation in the UAE?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Businesses should understand the difference between submitting a disclosure form and maintaining detailed transfer pricing reports.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Transfer Pricing Disclosure Form: <\/b><span style=\"font-weight: 400;\">Presented together with the Corporate Tax Return on an annual basis in accordance with certain thresholds.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Corporate Tax Return:<\/b><span style=\"font-weight: 400;\"> Usually submitted within nine months after the relevant tax period has expired.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Master File and Local File: <\/b><span style=\"font-weight: 400;\">Should be kept and presented to the FTA within 30 days after the request is received.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Companies should not wait until the FTA requests documentation. Preparing the required files in advance helps avoid delays and ensures that supporting information is available when needed.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_Can_Businesses_Prepare_for_UAE_Transfer_Pricing_Compliance\"><\/span><b>How Can Businesses Prepare for UAE Transfer Pricing Compliance?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Following a systematic approach can help businesses manage their transfer pricing obligations effectively.<\/span><\/p>\n<p><b>Step 1: Identify Related Parties and Connected Persons<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Review the company&#8217;s ownership structure, management relationships, shareholders, directors, and associated entities to identify relevant parties.<\/span><\/p>\n<p><b>Step 2: Review Intercompany Transactions<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Prepare a complete list of transactions involving related parties and connected persons, including loans, services, goods, royalties, and shared expenses.<\/span><\/p>\n<p><b>Step 3: Evaluate Transaction Pricing<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Check whether the prices and commercial conditions are consistent with the arm&#8217;s length principle. Use appropriate benchmarking and comparable market information.<\/span><\/p>\n<p><b>Step 4: Prepare Supporting Documentation<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Keep agreements, invoices, financial statements, benchmark studies, and other documents that support the transaction amounts.<\/span><\/p>\n<p><b>Step 5: Review Disclosure Requirements<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Check if the company satisfies the relevant thresholds for the UAE Transfer Pricing Disclosure Form and whether the Master File and Local File is required.<\/span><\/p>\n<p><b>Step 6: Review Documentation Regularly<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Update transfer pricing documentation in case there is any modification in business operation, transaction structure, ownership or pricing policy.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Common_Transfer_Pricing_Compliance_Mistakes_to_Avoid\"><\/span><b>Common Transfer Pricing Compliance Mistakes to Avoid<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Businesses can face unnecessary tax complications when they do not maintain proper transfer pricing records.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some common mistakes include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Under the assumption that transfer pricing rules apply exclusively to international dealings.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Using unreasonably high or low prices for dealing with other businesses within the company.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lack of documentation for intercompany agreements.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Non-inclusion of dealings with shareholders and directors.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Creation of documentation at FTA\u2019s request.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Use of the wrong transfer pricing method.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Recording of transaction amounts differing from those recorded in accounting.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Avoiding these mistakes requires proper financial recordkeeping, regular reviews, and a clear understanding of the UAE Corporate Tax requirements.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/p>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><b>Conclusion<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Compliance with UAE Transfer Pricing Regulations is vital for companies engaging in any transaction with related parties and connected parties. Proper documentation, arm\u2019s length approach, and proper disclosure can aid companies in dealing with their Corporate Tax liabilities.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Companies need to review their intercompany transactions on a regular basis, maintain agreements and documentation prior to preparing their Corporate Tax returns.<\/span><\/p>\n<p><b>E-Startup offers Corporate Tax and business compliance services in the UAE. Companies can get the guidance of E-Startup in understanding their regulatory compliance requirements and fulfilling their compliance obligations.<\/b><\/p>\n<h2><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><b>(FAQs)<br \/>\n<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_Are_UAE_Transfer_Pricing_Rules_applicable_to_Free_Zone_companies\"><\/span><b>1. Are UAE Transfer Pricing Rules applicable to Free Zone companies?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Yes. Companies operating under Free Zone status should also comply with the arm\u2019s length principle in their transactions with related entities or individuals. Their tax status will not necessarily exempt them from applying transfer pricing regulations.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Is_a_Master_File_and_Local_File_mandatory_for_every_UAE_company\"><\/span><b>2. Is a Master File and Local File mandatory for every UAE company?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">No. The requirement for these documents arises where the annual income of the taxable person is AED 200 million or more or where the company forms part of an MNE Group whose combined income is AED 3.15 billion or more.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_What_happens_if_a_business_does_not_maintain_transfer_pricing_documentation\"><\/span><b>3. What happens if a business does not maintain transfer pricing documentation?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">It may ask for additional information to support the claim that the transactions are at arm\u2019s length. Lack of documentation could result in difficulties in justifying the prices and might even be a reason for making tax adjustments.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Do_domestic_related-party_transactions_need_transfer_pricing_documentation\"><\/span><b>4. Do domestic related-party transactions need transfer pricing documentation?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Yes. UAE Transfer Pricing Regulations apply to both intra-UAE as well as international transactions. Businesses need to adhere to the arm\u2019s length principle irrespective of whether their associated enterprises are operating within the UAE mainland, the Free Zone or another country.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Introduction For organizations in the UAE, it is important to &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"UAE Transfer Pricing Rules: Documentation for Related-Party Transactions\" class=\"read-more button\" href=\"https:\/\/e-startup.ae\/blogs\/uae-transfer-pricing-rules\/#more-3465\" aria-label=\"Read more about UAE Transfer Pricing Rules: Documentation for Related-Party Transactions\">Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":3466,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3465","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","resize-featured-image"],"_links":{"self":[{"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/posts\/3465","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/comments?post=3465"}],"version-history":[{"count":1,"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/posts\/3465\/revisions"}],"predecessor-version":[{"id":3467,"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/posts\/3465\/revisions\/3467"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/media\/3466"}],"wp:attachment":[{"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/media?parent=3465"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/categories?post=3465"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/e-startup.ae\/blogs\/wp-json\/wp\/v2\/tags?post=3465"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}