Executive Summary
General Requirements
- Transfer pricing regulations are integrated within the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
- The arm’s length principle serves as the foundational standard for transactions between related parties and connected persons.
- Compliance obligations apply to both international and domestic transactions.
- Taxable persons are required to determine arm’s length values at the time the controlled transaction is undertaken or by the time the tax return is filed.
Documentation Requirements
- The Federal Tax Authority mandates a three-tiered documentation approach, consisting of a Master File, a Local File, and a Country-by-Country (CbC) Report.
- All taxable persons engaging in transactions with related parties or connected persons must submit a Transfer Pricing Disclosure Form alongside their annual tax return.
- Documentation must be contemporaneously maintained and is expected to be prepared in the English language.
- Qualitative records such as benchmarking studies, functional analyses, and intercompany agreements are required to substantiate the arm’s length nature of dealings.
Results of Non-Compliance
- Failure to maintain required transfer pricing documentation for a period of five years results in a fixed administrative penalty of AED 100,000.
- Late filing of a Country-by-Country Report can trigger substantial fines up to AED 1,000,000 plus daily penalties of AED 10,000.
- Inaccurate or incomplete CbC reporting is subject to specific administrative fines ranging from AED 50,000 to AED 500,000.
- The tax authority is empowered to adjust taxable income to reflect arm’s length outcomes, which may lead to secondary adjustments and additional interest on overdue payments.
Country Specific Information
- Domestic organisations headquartered in the UAE with no commercial premises abroad are exempt from maintaining a Master File.
- Organizations categorized as UAE-headquartered must still maintain a Local File if they meet the specific individual revenue thresholds.
- The mandatory Transfer Pricing Disclosure Form serves as a primary risk assessment tool for the tax authority to select candidates for audit.
- Article 36 of the Corporate Tax Law imposes specific scrutiny on payments to “Connected Persons” to ensure they are wholly and exclusively for business purposes.
Compliance Table
| Document | Deadline | Language | Thresholds, Scope & Penalties |
| Local File | Maintained by return date (9 months post-FY); submitted within 30 days of request. | English. | Mandatory if individual revenue $\ge$ AED 200m or group consolidated revenue $\ge$ AED 3.15bn. Applies to domestic and cross-border transactions. Penalty: AED 100,000 for failure to maintain records. |
| Master File | Maintained by return date (9 months post-FY); submitted within 30 days of request. | English. | Mandatory for constituent companies of MNE groups with consolidated revenue $\ge$ AED 3.15bn or where entity revenue $\ge$ AED 200m. Exempts UAE-only headquartered groups. AED 100,000 record-keeping penalty. |
| CbC Notification | No later than the last day of the reporting fiscal year. | English. | Required for all constituent entities of groups with consolidated revenue $\ge$ AED 3.15bn. Penalties as per Tax Procedures Law. |
| CbC Report | Within 12 months after the last day of the reporting fiscal year. | English. | Mandatory for UAE-resident UPEs of groups with consolidated revenue $\ge$ AED 3.15bn. Penalty: Up to AED 1m plus AED 10k/day for late filing. |
| TP Disclosure Form | Submitted alongside the tax return (within 9 months post-FY). | English. | Mandatory for all taxable persons conducting transactions with related parties or connected persons. Thresholds for form proposed but not yet prescribed. |
Disclaimer: This information is obtained from secondary sources and is included for informative purposes. It should be confirmed by a local advisor.
