Transfer Pricing in the UAE

Transfer pricing arrived in the UAE with corporate tax, and it is widely misread as a big-company problem. It is not. The documentation thresholds are high, but the obligation to price related-party dealings at arm’s length has no threshold at all, and the disclosure form reaches much further down than the master file does. Everything below is from the Federal Tax Authority Transfer Pricing Guide, reference CTGTP1, issued October 2023 and read on 8 August 2026.

Who counts as related, and it is wider than you think

The 50 per cent test does most of the work. Two juridical persons are Related Parties where one owns a 50 per cent or greater ownership interest in the other, or where a third person owns 50 per cent or more of both. Control counts too, and the guide lists four separate ways it can arise: being able to exercise 50 per cent or more of the voting rights, to determine the composition of 50 per cent or more of the board, to receive 50 per cent or more of the profits, or otherwise to exercise significant influence.

For individuals the reach is unusual by international standards: kinship or affiliation up to the fourth degree, including by adoption or guardianship, and including relationships by marriage. A transaction between a company and a business owned by a cousin’s spouse can therefore be a controlled transaction. If your group has grown by family, map the tree before you map the transactions.

The three obligations, and what triggers each

The distinction in the third row matters more than any other point on this page. The master file and local file are not submitted with the return. They are prepared as the year runs and held. When the FTA asks, you have 30 days, or longer only if the FTA agrees. Thirty days is not enough time to build a transfer pricing file from scratch, which is the entire reason the obligation is worded as contemporaneous.

Below the threshold you are not exempt, you are exposed differently

The guide is explicit that the FTA may request information from taxable persons who are not required to maintain a master file or local file. Falling under AED 200 million removes the obligation to keep those two documents. It does not remove the arm’s length requirement, the disclosure form, or the FTA’s power to ask you to justify a price. What it removes is the formal format, not the substance.

The five methods, and the split that decides which you use

The guide follows the OECD framework and accepts five methods in two families. The traditional transaction methods are the comparable uncontrolled price method, the resale price method and the cost plus method; the guide calls these the most direct means of testing whether the terms between related parties are at arm’s length. The transactional profit methods are the transactional net margin method and the profit split method.

The choice is not a matter of preference. Profit methods come into their own where each side makes a valuable and unique contribution, where the activities are highly integrated, or where there is little or no public data on comparable third parties. Where both parties contribute something unique, a two-sided method is likely to fit better than a one-sided one.

What to do this year if you are unsure

List every counterparty that meets the 50 per cent test or the fourth-degree kinship test, including dormant ones. Put a value against each flow. That list is what determines whether the disclosure form applies and how much work the arm’s length requirement implies. It is also the first thing any adviser will ask for, so producing it yourself shortens the engagement and the bill. Corporate tax filing generally is a separate service line from transfer pricing work, and the two are often quoted separately.