The UAE has taken significant steps to align its tax framework with international standards by implementing Federal Decree-Law No. 47 of 2022, which governs the Taxation of Corporations and Businesses. To ensure fair taxation of related-party transactions, the Ministry of Finance issued Ministerial Decision No. 97 of 2023 on Requirements for Maintaining Transfer Pricing Documentation, supported by the Federal Tax Authority’s Transfer Pricing Guide.

Together, these two resources provide businesses with clarity on when transfer pricing documentation is required, what it must include, and how to stay compliant. MD 97 and CTGTP1 align with OECD Guidelines to emphasise international consistency. In this blog, we explore both the legal requirements and the practical guidance for UAE taxpayers.

What is Transfer Pricing and Why Does It Matter in the UAE?

Transfer Pricing refers to the pricing of transactions between related parties, such as group companies or connected entities. It ensures that these dealings follow the arm’s length principle, meaning they are conducted as if between independent parties.

For the UAE, which aims to strengthen transparency and attract global investment, transfer pricing rules are crucial to:

• Preventing Profit Shifting – Ensures multinational groups don’t artificially shift profits to low-tax jurisdictions.
• Fair Tax Base Protection – Secures tax revenues for the UAE government while maintaining fairness for compliant businesses.
• Global Credibility – Demonstrates the UAE’s commitment to OECD standards, strengthening its position as a trusted global investment hub.
• Risk Reduction – Proper documentation protects businesses from disputes, penalties, and prolonged audits.

All UAE taxpayers are required to maintain records for arm’s-length compliance, even if the thresholds are not met.

Ministerial Decision No. 97 of 2023: UAE Transfer Pricing Documentation Requirements

Who Must Prepare UAE Transfer Pricing Documentation?

MD 97 creates two alternative triggers — meeting either one requires the taxpayer to maintain a Master File + Local File for the relevant tax period:

• Group (CbCR) trigger: the taxable person is a Constituent Company of an MNE group whose consolidated group revenue for the relevant tax period is AED 3.15 billion or more. (This is the same consolidated revenue number used for Country-by-Country Reporting rules in Cabinet Resolution No. 44/2020.)
• Domestic revenue trigger: the taxable person’s own revenue in the relevant tax period is AED 200 million or more.

Key point: These are alternative tests; meeting either one (not both) means the Master File and Local File must be maintained for that tax period. If neither test is met, the taxpayer is not required to prepare MF/LF, but must still be ready to demonstrate that transactions were at arm’s length if requested.

For example, a UAE entity with AED 250 million revenue meets the domestic revenue trigger and must prepare MF/LF, even if the group’s consolidated revenue is below AED 3.15 billion.

Master File vs Local File — what each must contain (practical substance)

Master File (high level): An overview of the MNE group as a whole — ownership & organisational chart, description of global business activities, location of essential intangibles, group-level financing arrangements, and consolidated financial & tax positions. The UAE follows the OECD Master File structure in scope and intent.

Local File (entity-specific): Detailed documentation about the local (UAE) entity and each material category of controlled transactions. The FTA’s CTGTP1 provides sample headings and expects the Local File to justify the arm’s-length nature of the UAE entity’s results.

The Local File should include functional, asset, and risk analysis for each material transaction to demonstrate arm’s-length compliance.

Why two files? The Master File provides the global context; the Local File demonstrates the arm’s-length nature of the local entity’s intercompany transactions, given that context. This two-tier structure reduces duplication while providing the tax authority with both group and local details when needed.

Country-by-Country Reporting (CbCR) link & thresholds

CbCR link: The AED 3.15 billion consolidated revenue threshold links TP documentation policy to the UAE’s CbCR rules (Cabinet Resolution No. 44 of 2020).

If your group meets the CbCR threshold, not only may you need to file MF/LF locally, but the group also has separate CbCR filing obligations. These are distinct obligations and must be filed according to Cabinet Resolution timelines.

Exceptions & exceptional cases (significant practical reliefs)

• UAE-headquartered groups that are not MNEs: The FTA clarifies that a taxable person that is part of a UAE-headquartered group that does not have business establishments outside the UAE (i.e., not an MNE group) is not required to maintain a Master File. However, the Local File may still be needed where thresholds apply. That prevents duplication for purely domestic groups.
• Small business relief / exempt persons: Entities covered by exemptions or that have made certain small-business elections may be excluded from Master File and Local File obligations, but they must still follow the arm’s-length principle and keep basic records to justify pricing if requested.

Even where MF/LF is not required, maintain documentation to demonstrate that related-party transactions comply with the arm’s-length principle.

Timing & Submission Requirements

• Documentation must be ready when the tax return is filed (contemporaneous).
• A Transfer Pricing Disclosure Form must be filed with the return within 9 months of the tax period’s end.
• Upon request, businesses must provide the Master File and Local File to the FTA within 30 days.
• Failure to comply exposes businesses to penalties, reputational risk, and increased audit scrutiny.

Non-compliance can result in penalties under MD 97, additional assessments, or extended audits.

Transfer Pricing Guide | CTGTP1: Insights from the FTA

The Transfer Pricing Guide | CTGTP1 complements the legislation by offering interpretations, examples, and clarifications.

Key Insights from CTGTP1:

1. Documentation Format in Line with OECD Guidelines
   • The UAE follows the OECD Annex I (Master File) and Annex II (Local File) templates.
   • This ensures global consistency for multinational groups.
2. Materiality Test in UAE Transfer Pricing
   • Not all transactions need in-depth documentation.
   • Focus is on material and high-value transactions that could affect the UAE’s tax base.
3. Arm’s Length Comparability Analysis in the UAE
   • Businesses must benchmark intercompany transactions against independent third-party deals.
   • Accepted TP methods include CUP, Resale Price, Cost Plus, TNMM, and Profit Split.
4. FTA’s Expectations for UAE Businesses
   • Even where some transactions are excluded, the arm’s length principle applies universally.
   • Businesses should maintain evidence to justify their pricing.

CTGTP1 expects businesses to document functions performed, assets used, and risks assumed in all material transactions.

1. Annual Review and Documentation Updates
   • TP positions are not one-time exercises.
   • Documentation must be updated annually to reflect changes in group structures, market conditions, or related-party dealings.

How German Fintax Consultancy Helps UAE Businesses?

At German Fintax Consultancy, we specialise in guiding businesses through the complexities of UAE Corporate Tax and Transfer Pricing. Our services include:

• Assessing your business against thresholds under MD No. 97 of 2023.
• Preparing Master File and Local File in line with OECD and FTA guidelines.
• Assisting with Transfer Pricing Disclosure Form submission.
• Providing strategic advice to structure intercompany transactions efficiently and compliantly.

We assist with intercompany financing, connected person transactions, and functional risk analyses to optimise compliance and operational efficiency.

By combining our expertise with our knowledge, we ensure your business remains compliant while staying focused on growth.

Conclusion: Why UAE Businesses Must Act Now

The combination of Ministerial Decision No. 97 of 2023 and the Transfer Pricing Guide | CTGTP1 underscores the UAE’s commitment to global tax standards. For businesses that cross the revenue threshold, maintaining robust documentation is no longer optional—it’s essential.

With the right expertise, compliance can be leveraged as an opportunity for enhanced corporate governance and increased investor trust.

Partner with German Fintax Consultancy to ensure your transfer pricing documentation is accurate, compliant, and strategically aligned.

Start assessing your transactions and thresholds now to avoid last-minute compliance pressures and penalties.