UAE Corporate Tax Transfer Pricing — Documentation, Arm's Length & Compliance
Transfer pricing (TP) rules under Federal Decree-Law No. 47 of 2022 require all transactions between related parties and connected persons in the UAE to be priced on an arm's length basis. These rules apply regardless of whether the entities involved are domestic or cross-border, and failure to comply can result in income adjustments, penalties, and increased audit risk. Abdelhamid & Co. Certified Public Accountants & Auditors LLC SP — UAE Ministry of Economy Licence LC0106-01, FTA Tax Agent TAN: 30003958 — provides end-to-end transfer pricing documentation and compliance services for UAE businesses of all sizes.
Key Facts — UAE Transfer Pricing at a Glance
- Legal basis: Articles 34–36, Federal Decree-Law No. 47 of 2022
- Key decision: Ministerial Decision No. 97 of 2023
- Arm's length standard: Mandatory for all related-party and connected-person transactions
- TP Disclosure Form: Required where transactions exceed the prescribed thresholds
- Local File + Master File: Required where revenue exceeds AED 200,000,000
- CbCR: Required for UAE-HQ MNE groups with consolidated revenue ≥ AED 3.15 billion
Who Are Related Parties and Connected Persons?
Under the Corporate Tax Law, related parties include entities under common ownership or control — for example, a parent and its subsidiaries, or two companies owned by the same shareholders. Connected persons are individuals with a direct or indirect ownership interest of 50% or more, directors, officers, and their close family members. Transactions with both categories must be priced at arm's length and may require disclosure.
The Arm's Length Principle
The arm's length principle requires that the conditions of a controlled transaction — price, margin, terms — must be consistent with what independent parties would agree in comparable circumstances. The OECD Transfer Pricing Guidelines are the primary reference for applying the arm's length principle in the UAE. The five OECD-recognised methods are: Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost Plus Method (C+), Transactional Net Margin Method (TNMM), and Profit Split Method (PSM).
Transfer Pricing Disclosure Form
Taxpayers whose related-party transactions exceed the thresholds in Ministerial Decision No. 97 of 2023 must submit a Transfer Pricing Disclosure Form with their Corporate Tax return. The form requires disclosure of the nature, value, and TP method applied to each category of related-party transaction. This is filed electronically through EmaraTax as part of the annual return.
Local File and Master File Requirements
Businesses with annual revenue exceeding AED 200,000,000 must prepare and maintain a Local File (detailed analysis of the taxpayer's controlled transactions) and, where part of a multinational group, a Master File (group-level overview of the MNE's global business, TP policies, and value chain). These documents must be prepared by the filing due date and provided to the FTA upon request.
Country-by-Country Reporting (CbCR)
UAE-based multinational enterprise (MNE) groups with consolidated annual revenue of AED 3,150,000,000 (approximately EUR 750 million) or more must file a Country-by-Country Report with the FTA. CbCR requires disclosure of revenue, profit before tax, income tax paid, employees, and assets by jurisdiction, enabling tax authorities to assess whether profits are allocated in line with substance. Secondary filing obligations may apply to UAE constituent entities of foreign-parented MNE groups.
Penalties for Non-Compliance
Failure to maintain adequate transfer pricing documentation or to file the TP Disclosure Form may result in:
- Administrative penalties under Cabinet Decision No. 75 of 2023
- Income adjustments by the FTA, increasing taxable income
- Potential double taxation where the counterparty jurisdiction does not make a corresponding adjustment
- Reputational risk and increased scrutiny in future audit cycles
How Abdelhamid & Co. Assists with Transfer Pricing
- Related-party transaction mapping and arm's length benchmarking
- Selection of the most appropriate TP method for each transaction type
- Preparation of Local File and Master File documentation
- Transfer Pricing Disclosure Form preparation and filing
- CbCR filing support for UAE-headquartered MNE groups
- Advance Pricing Agreement (APA) advisory
- TP documentation review for FTA audit readiness
Frequently Asked Questions
Do UAE transfer pricing rules apply to domestic related-party transactions?
Yes. UAE transfer pricing rules apply to all transactions between related parties and connected persons, including purely domestic ones between two UAE-resident entities. The arm's length requirement and disclosure obligations are not limited to cross-border transactions.
Which companies must prepare a Local File in the UAE?
Businesses with annual revenue exceeding AED 200,000,000 are required to maintain a Local File under Ministerial Decision No. 97 of 2023. The Local File must be prepared by the Corporate Tax return filing date and provided to the FTA upon request.
What is the Transfer Pricing Disclosure Form and when must it be filed?
The TP Disclosure Form is a schedule filed as part of the annual Corporate Tax return, disclosing the nature, value, and pricing method applied to related-party transactions that exceed the prescribed thresholds. It is submitted via EmaraTax at the same time as the Corporate Tax return — within nine months of the financial year end.
Are intercompany loans between UAE group companies subject to transfer pricing rules?
Yes. Intercompany financing arrangements — including loans, guarantees, and cash pooling — must be priced at arm's length. The interest rate on an intercompany loan must be consistent with what an independent lender would charge for a comparable loan. Additionally, the general interest limitation rule (30% of adjusted EBITDA) may cap the deductibility of net interest expense.
Does the UAE have Advance Pricing Agreements (APAs)?
The UAE Corporate Tax framework includes provisions for taxpayers to seek certainty on the arm's length pricing of future controlled transactions through an APA with the FTA. APA procedures and eligibility conditions are subject to FTA guidance. APAs can provide valuable certainty for high-value or complex intercompany arrangements.
What happens if the FTA makes a transfer pricing adjustment?
If the FTA determines that a controlled transaction was not priced at arm's length, it may make an upward adjustment to the taxpayer's taxable income. The taxpayer is also liable for any additional Corporate Tax and may face penalties for understatement of income. Robust contemporaneous documentation is the primary defence against such adjustments.
Last reviewed: May 2026