The UAE implemented comprehensive Transfer Pricing (TP) Rules under its Corporate Tax Law effective June 1, 2023. These rules apply the arm’s length principle to related-party transactions, in line with OECD standards.

Transfer Pricing Regulations

The TP framework is governed by:

• Federal Decree-Law No. 47 of 2022 (Articles 34–36)

• Ministerial Decision No. 97 of 2023 (documentation thresholds)

• FTA Transfer Pricing Guide (2023)
  These regulations cover cross-border and domestic related-party transactions involving goods, services, IP, and financing.

References to International Rules

The UAE is a member of the OECD Inclusive Framework and has adopted the BEPS Action 13 standards for documentation and reporting.

Definition of Related Party

“Related parties” include entities under common control, direct/indirect ownership, or influence over business or financial decisions, as defined in Article 35 of the law.

Transfer Pricing Documentation - Two-tier documentation is required:

• Master File and Local File
  Mandatory if:

• Consolidated group revenue ≥ AED 3.15 billion, or

• UAE business revenue ≥ AED 200 million

  Documentation must be contemporaneous and submitted upon request.

Tax Havens & Blacklists

No formal blacklist exists, but all related-party dealings must comply with the arm’s length standard, including those involving free zones or exempt persons.

Audit Practice

The Federal Tax Authority (FTA) is empowered to conduct TP audits and adjust taxable income if transactions deviate from the arm’s length principle.

Documentation Details

Master File: group overview, value chain, IP ownership.

Local File: UAE entity’s functional and economic profile, comparables.

A TP Disclosure Form be submitted with the corporate tax return. Documentation must be submitted within 30 days of request.

Country-by-country Reporting (CbCR)

CbCR applies to UAE-headquartered MNEs with global revenue ≥ AED 3.15 billion. Filing is due within 12 months of the fiscal year-end.

Record Keeping

Taxpayers must maintain TP documentation for at least 7 years and ensure it is available promptly on request.

Penalties and Interest

Four types of administrative penalties are imposed on eligible UAE taxable persons, ranging from AED 10,000 to AED 1,000,000.

Specific penalties include:

• Late filing of CbCR: Up to AED 1,000,000 plus AED 10,000 for each day of delay, capped at AED 250,000.

• Inaccurate or incomplete CbCR: Fines range from AED 50,000 to AED 500,000.

• Failure to maintain required documentation for five years: AED 100,000.

• Failure to provide requested information: AED 100,000