Insights Corporate Tax
Transfer Pricing Documentation UAE: the Thresholds Where the Master File and Local File Kick In
Transfer pricing documentation UAE thresholds — AED 200m own revenue, AED 3.15bn group revenue, the 30-day FTA rule, and what to prepare below the line.
Key takeaways
- Every UAE taxable person with related-party or connected-person dealings files a disclosure on the CT return
- Master File and Local File are required at MNE consolidated revenue of AED 3.15bn or own revenue of AED 200m
- Files must reach the FTA within 30 days of a request — there is no drafting grace period after the ask
- Below the thresholds, the arm's-length principle and basic supporting evidence still apply
- Benchmarking studies underpin the pricing and should be kept contemporaneous, not built after an audit
- The connected-person rules reach owners, directors and their relatives — not just corporate group entities
The transfer pricing documentation threshold in the UAE is AED 200 million of own revenue, or AED 3.15 billion of consolidated group revenue for a multinational group. Cross either line and a Master File and Local File become mandatory. Below both, only the related-party disclosure and arm’s-length evidence apply.
Transfer pricing documentation threshold UAE — the tested figures
| Test | Threshold | What it switches on | Source |
|---|---|---|---|
| MNE consolidated group revenue | AED 3.15bn in the relevant period | Master File and Local File | Federal Decree-Law No. 47 of 2022 and the FTA transfer pricing framework |
| Taxable person’s own revenue | AED 200m in the relevant period | Master File and Local File | Federal Decree-Law No. 47 of 2022 and the FTA transfer pricing framework |
| Neither test met | — | Disclosure on the CT return only, plus proportionate arm’s-length evidence | Federal Decree-Law No. 47 of 2022 |
| Submission window once the FTA requests the files | 30 days from the request | Hand-over of an existing file, not time to build one | FTA transfer pricing guidance |
Last reviewed against FTA corporate tax guidance and the Ministry of Finance corporate tax pages: 4 July 2026. Thresholds and documentation requirements are set by Decision and are revised — confirm the current figures against the FTA before relying on them.
Transfer pricing documentation is where UAE corporate tax quietly separates the businesses that planned ahead from the ones that assumed the rules were for someone bigger. The phrase sounds like a large-multinational problem, and for the heaviest layer of paperwork it is — but the underlying obligation reaches almost every taxable person with a related party or a connected person, which in the UAE means a very large share of owner-managed and group companies.
The confusion is understandable, because the requirement is genuinely layered: a light disclosure that everyone files, a formal two-file set that only the largest carry, and an arm’s-length principle that binds everyone in between. This guide sets out the three layers, the exact revenue thresholds that switch the Master File and Local File on, the 30-day rule that trips people up, and what a smaller business below the thresholds still has to hold on file.
Three layers, not one obligation
The single most useful thing to understand about UAE transfer pricing is that “documentation” is not a single document. It is a stack of three obligations, each triggered by a different condition, and businesses get into trouble by assuming that being exempt from the top layer means being exempt from all of it. Transfer pricing documentation in Dubai works no differently from anywhere else in the country, incidentally — corporate tax is federal, so the same three layers apply whether the entity is licensed in Dubai, Abu Dhabi, Sharjah or a free zone.
The first layer is the related-party and connected-person disclosure. This is a schedule that accompanies the corporate tax return. Any taxable person that has transacted with a related party or a connected person during the period reports those transactions — their nature and their value — on this disclosure. Related party transactions are reported here whether or not the business ever gets near the file thresholds, and it applies regardless of size. A small trading company that pays a management fee to its owner completes it just as a large group entity does.
The second layer is the Master File and Local File. This is the formal, structured documentation set, and it is threshold-gated. Only taxable persons that cross the revenue lines set out below are required to prepare and maintain it. It is the layer most people picture when they hear “transfer pricing documentation”, and it is also the layer most smaller businesses are correctly exempt from.
The third layer sits underneath both and applies to everyone: the arm’s-length principle plus supporting evidence. Even a business well below every threshold must price its controlled transactions as independent parties would, and must be able to show — with intercompany agreements and a reasonable pricing rationale — that it did. The paperwork is proportionate to size; the principle is not.
30 days
Time allowed to submit transfer pricing documentation to the FTA once a request is issued — which is why the files must be prepared contemporaneously, not reconstructed on demand
The transfer pricing documentation threshold in the UAE: two revenue tests
The Master File and Local File become mandatory when either of two revenue tests is met. Either test on its own is enough — you do not need to satisfy both.
| Test | Condition | Result |
|---|---|---|
| Group revenue | Taxable person is in an MNE group with total consolidated group revenue ≥ AED 3.15bn in the period | Master File + Local File required |
| Own revenue | Taxable person’s own revenue in the period ≥ AED 200m | Master File + Local File required |
| Below both | Neither test met | Disclosure only; arm’s-length pricing + proportionate support still required |
The AED 3.15bn group figure is the multinational-enterprise test. It looks at the whole group’s consolidated revenue, so a modestly sized UAE subsidiary of a very large international group can be pulled into the full documentation requirement even though the UAE entity itself is small. If your parent group prepares consolidated accounts running into billions, the UAE arm almost certainly needs a Local File — check the group number, not just your own.
The AED 200m own-revenue figure is the standalone test. A UAE business with no large foreign parent still has to prepare the two files once its own revenue in the period reaches this line. This is the threshold that catches successful domestic groups and larger single companies that never thought of themselves as “transfer pricing” businesses.
Cross either line and both files are required together. The local file and master file are not alternatives you choose between — the Master File describes the group and the Local File describes the UAE entity, and the same threshold switches on both. The relationship between the two, and exactly what each contains, is worth understanding in its own right, which we cover in our Master File and Local File guide.
What each document actually contains
The two files answer different questions, and the FTA expects to read them together.
The Master File
The Master File is the group-level view. It is designed to give a tax authority a clear picture of the multinational group as a whole: its legal and ownership structure, a description of its businesses and the main value drivers, its intangibles and who owns them, its intercompany financing arrangements, and its overall transfer pricing policy. It deliberately stays at group altitude — it is not about any single transaction, but about how the group is organised and how it thinks about pricing across borders.
The Local File
The Local File is the UAE entity’s own chapter. It sets out the specific controlled transactions the UAE taxable person entered into — the intercompany sales, services, financing, royalties or management charges — and for each one it records the functional analysis (who does what, who owns what, who bears which risks), the transfer pricing method selected, and the benchmarking that demonstrates the price falls within an arm’s-length range. Where the Master File explains the group, the Local File proves the UAE numbers.
The benchmarking underneath
Both files rest on benchmarking — the comparison against independent, uncontrolled transactions or comparable companies that shows a controlled price is at arm’s length. A benchmarking study is not a formality bolted on at the end; it is the evidence that the whole documentation set stands on. It should be prepared for the relevant period and kept current, because a study built to defend a price after the FTA has already questioned it carries far less weight than one prepared contemporaneously.
From related party to connected person — who is actually in scope
A recurring misunderstanding is that transfer pricing only concerns cross-border transactions between corporate group members. In the UAE, the net is wider, and it is the connected-person rules that catch owner-managed businesses.
Related parties are, broadly, entities and individuals linked through ownership or control — parent and subsidiary companies, sister companies under common ownership, and parties where one controls the other. Transactions between related parties must be priced at arm’s length.
Connected persons reach into the people behind the business. A connected person includes an owner of the taxable person, a director or officer of it, and a relative of either of those — plus entities those people control. This is where a great deal of domestic exposure sits. A management fee paid to a shareholder, rent paid to a director’s relative, or remuneration paid to an owner are all payments to connected persons. For the payment to be deductible, it must correspond to the market value of the service or benefit actually provided — in other words, it must be at arm’s length, and it must be real.
The practical consequence is that a small UAE company with a single owner, no foreign parent, and revenue nowhere near AED 200m can still have connected-person transactions that must be priced at arm’s length and reported on the disclosure. Being below the Master File and Local File thresholds does not remove that obligation — it only changes how much formal documentation the FTA expects to see behind it.
What a business below the thresholds still has to do
If your UAE entity is below AED 200m own revenue and not part of an AED 3.15bn group, you are exempt from the Master File and Local File — but “exempt from the files” is not “exempt from transfer pricing”. Four obligations remain.
Complete the disclosure. If you transacted with a related party or connected person, that goes on the corporate tax return’s disclosure schedule. This is not optional and does not depend on size.
Price at arm’s length. Every controlled transaction — the intercompany sale, the management fee, the loan between sister companies, the owner’s salary — has to be set at the price independent parties would have agreed. This is the substantive rule, and it binds regardless of documentation thresholds.
Keep proportionate supporting evidence. You should hold intercompany agreements that actually reflect the arrangement, a note explaining how each price was determined, and whatever market comparison you relied on. It does not need to be a formal 40-page benchmarking study, but it does need to exist and to make sense.
Keep it contemporaneous. Support prepared at the time the transaction and the return were done is far more credible than support assembled after a query lands. Build the evidence into your normal corporate tax close, not into a scramble later.
The gap between the light and heavy regimes is real, but it is a gap in the volume of paperwork, not in whether the arm’s-length principle applies. A business that treats “we’re under the threshold” as “transfer pricing doesn’t apply to us” is misreading the rule in the most expensive possible way.
Nobody is ever caught out by the threshold they cleared. They are caught out by the connected-person payment they never thought of as a transaction — the management fee to the shareholder, the rent to the director’s brother — priced on instinct and documented not at all.
Where the two thresholds actually come from
The AED 200m and AED 3.15bn figures get quoted without a citation more often than not, which is a problem when materially different numbers also circulate. They come from one place: Article 2(1) of Ministerial Decision No. 97 of 2023, issued on 27 April 2023, made for the purposes of Clause (2) of Article 55 of the Corporate Tax Law.
| Art. 2(1) limb | The exact text | What it tests |
|---|---|---|
| (a) | Constituent company of a multinational enterprises group as defined in Cabinet Decision No. 44 of 2020, with total consolidated group revenue of AED 3,150,000,000 or more in the relevant tax period | The group |
| (b) | The taxable person’s revenue in the relevant tax period is AED 200,000,000 or more | The entity |
The opening words matter as much as the numbers: a taxable person “that meets either of the following conditions” shall maintain both a master file and a local file. There is no requirement to meet both, and there is no reduced obligation for meeting only one — cross either line and both files are due.
The group test borrows its definition from Cabinet Decision No. 44 of 2020, which defines a multinational enterprise group as two or more companies tax resident in different jurisdictions (or a single company taxed on activity through a permanent establishment in another country) with total consolidated group revenue equal to or more than AED 3,150,000,000 during the fiscal year immediately preceding the reporting fiscal year, as shown in the consolidated financial statements for that preceding year. Note the timing: the group figure is read off the preceding fiscal year’s consolidated accounts.
If you have been quoted thresholds an order of magnitude below these — figures in the single-digit millions and tens of millions do circulate in UAE commentary on this topic — check them against Article 2(1) before you build a compliance plan around them. A fiftyfold understatement of a documentation threshold pulls businesses into expensive work they do not owe, and the reverse error is worse.
What the FTA can ask for below the thresholds
Sitting under both lines removes the two-file obligation. It removes nothing else, and the Corporate Tax Law gives the FTA three separate levers that apply at any size.
| Provision | What the FTA may do | Your window |
|---|---|---|
| Art. 55(1) | Require a disclosure of transactions and arrangements with related parties and connected persons, filed together with the tax return, in the prescribed form | With the return |
| Art. 55(4) | Request any information supporting the arm’s length nature of those transactions or arrangements | 30 days, or a later date the FTA directs |
| Art. 56(1) | Expect the records supporting the return, and enabling taxable income to be readily ascertained, to still exist | 7 years after the end of the tax period |
Article 55(4) is the one that catches sub-threshold businesses. It is not limited to master-file and local-file populations, it carries the same thirty-day clock as Article 55(3), and it is drafted broadly enough to reach whatever the FTA considers supports the arm’s length position. A business that priced an intercompany management fee on instinct three years ago has thirty days to produce a rationale it never wrote down.
Connected persons add a further layer that has nothing to do with revenue size. Article 36(1) makes a payment or benefit to a connected person deductible only to the extent it corresponds with the market value of what was provided and was incurred wholly and exclusively for the business. Article 36(2) defines a connected person as an owner of the taxable person, a director or officer, or a related party of either. Article 36(3) treats as an owner any natural person who directly or indirectly holds an ownership interest or controls the taxable person, and Article 36(4) extends the net to fellow partners in an unincorporated partnership and their related parties. Article 36(5) then applies the Article 34 arm’s length machinery to test market value.
Read together, Articles 36(1) to (5) reach the owner-managed UAE company that has never heard of transfer pricing: the shareholder’s salary, the director’s fee, the rent paid to a property the owner holds personally. None of that is inside the AED 200m population, and all of it is inside Article 36. The deduction stands or falls on market value, and the evidence for market value is a document somebody has to have written.
Where documentation goes wrong in practice
The failures we see are rarely about companies over the AED 200m line — those businesses usually have advisers and a process. The exposure clusters in a handful of predictable places.
The first is the assumed exemption. A profitable domestic group sits comfortably under every threshold, concludes transfer pricing is a big-company issue, and keeps nothing to support the pricing of substantial intercompany flows. When a query arrives, there is a disclosure but nothing behind it.
The second is the overlooked connected person. Owner remuneration, shareholder management fees and related-party rent get treated as ordinary business costs rather than as connected-person transactions that must be at arm’s length and market-supported. If they are above market, the excess may not be deductible.
The third is the reactive benchmarking study. The business waits until the FTA asks, then commissions a study to justify a price already charged. A study prepared after the fact, reverse-engineered to defend a number, is visibly weaker than one prepared contemporaneously — and 30 days is not long enough to do it properly anyway.
The fourth is the group-number blind spot. A small UAE subsidiary looks at its own modest revenue, concludes it is below AED 200m, and misses that its international parent group clears AED 3.15bn — which pulls the UAE entity into the full Master File and Local File requirement on the group test alone.
How transfer pricing fits the wider corporate tax picture
Transfer pricing documentation is not a standalone exercise — it is one strand of a properly run UAE corporate tax function, and it works best when it is built into the same annual rhythm as the return itself.
It starts with mapping. Before you can document anything, you need a clear map of every related party and connected person the business deals with, and every controlled transaction between them — intercompany sales, services, financing, royalties, management charges, owner remuneration, related-party rent. That map feeds two things at once: the disclosure schedule on the corporate tax return, and, where the thresholds are met, the Local File.
It runs through pricing discipline. Each controlled transaction needs a defensible arm’s-length price and a method behind that price, applied consistently period to period. Where the business is over the threshold, that method and its benchmarking are formalised in the Local File; where it is under, the same thinking still has to sit behind a lighter set of supporting evidence.
And it lands in the annual close. The cleanest approach is to prepare the transfer pricing support at the same time as the corporate tax return for the relevant period — disclosure completed, intercompany agreements refreshed, benchmarking current, files ready to release. Done this way, a future FTA request within its 30-day window is a retrieval exercise, not an emergency. Done reactively, the same request becomes a month of scrambling to reconstruct evidence that should have existed all along.
Where this leaves your business
UAE transfer pricing documentation is layered by design, and the design rewards businesses that read all three layers rather than just the top one. The Master File and Local File are threshold events — AED 3.15bn at group level or AED 200m at entity level — and if you cross either, the files should be built contemporaneously and kept ready for the 30-day window. The disclosure is universal, filed with every return that carries related-party or connected-person transactions. And the arm’s-length principle underneath binds every business at every size, whether or not it ever has to produce a formal file. The firms that stay calm are the ones that treated the pricing and its evidence as a normal part of the corporate tax close, not as a special project triggered by an audit letter.
Two related decisions usually land in the same conversation. If the entities you are pricing between are commonly owned, tax group registration UAE may change the picture entirely, because a consolidated return removes intra-group transactions from the equation. And because the Local File leans on the numbers in your statutory accounts, the audited financial statements UAE obligations that apply to your entity determine how much of the benchmarking rests on figures an auditor has already signed off.
We help UAE businesses map their related parties and connected persons, complete the disclosure correctly, and prepare proportionate documentation — from light supporting evidence below the thresholds to full Master File and Local File sets above them. Pair that with a well-run corporate tax service so the pricing evidence is prepared alongside the return rather than after it, and the whole obligation becomes a matter of routine rather than risk. For a closer look at how we approach the two-file set specifically, see our transfer pricing service.
Velmont Crest is a DED-licensed UAE accounting firm providing advisory, preparation and compliance support across the corporate tax cycle — related-party disclosures, arm’s-length pricing support, and Master File and Local File preparation — for mainland and free zone businesses. Read more on our insights hub or get in touch via our contact page.
Disclaimer: Velmont Crest is a DED-licensed accounting firm providing advisory, preparation and compliance support services. We are not a law firm, the FTA, or an FTA-registered tax agent representing taxable persons before the FTA. UAE corporate tax and transfer pricing rules, thresholds and documentation requirements change — verify all figures and obligations against current FTA guidance and the Federal Decree-Law before acting, and consult a licensed professional for advice specific to your circumstances.
References
Frequently asked questions
- Who actually has to prepare a Master File and Local File in the UAE?
- Two triggers, and either one is enough. First, if the taxable person is part of a multinational enterprise group whose total consolidated group revenue is AED 3.15bn or more in the relevant period, the UAE entity has to maintain a Master File and a Local File. Second, if the taxable person's own revenue in the period is AED 200m or more, the same obligation applies even without the group test. Below both lines, you still have to price related-party transactions at arm's length and keep sensible supporting documentation, but you are not required to produce the formal two-file set unless the FTA specifically asks.
- What is the difference between the disclosure, the Master File and the Local File?
- They are three different layers. The related-party and connected-person disclosure is a schedule filed with the corporate tax return itself — it summarises the transactions and their values, and every taxable person with such dealings completes it regardless of size. The Master File is a group-level document: it describes the whole multinational group's structure, business, intangibles, financing and overall transfer pricing policy. The Local File zooms in on the UAE entity specifically — its controlled transactions, the pricing method chosen for each, and the benchmarking that shows the price is at arm's length. Disclosure is universal; the two files are threshold-gated.
- How long do I have to give transfer pricing documentation to the FTA?
- Thirty days from the date of the request. That is the part businesses underestimate — the clock does not start when the file is convenient to prepare, it starts when the FTA asks. If the Master File and Local File were never built, thirty days is not enough time to reconstruct a defensible benchmarking study, gather intercompany agreements and write up the functional analysis from scratch. This is exactly why the documentation should be contemporaneous: prepared alongside the return for the relevant period, kept on file, and ready to hand over on request rather than assembled reactively.
- We are below AED 200m — does transfer pricing still apply to us?
- Yes, the pricing rules apply to everyone; only the formal documentation set is threshold-gated. Every taxable person must price transactions with related parties and connected persons at arm's length — the price two independent parties would have agreed. You still complete the disclosure on the CT return, and you still need enough supporting evidence to show a given price is reasonable: intercompany agreements, a note on how the price was set, and any market comparison you relied on. What changes above the threshold is that the FTA expects the full Master File and Local File with formal benchmarking, rather than lighter proportionate support.
- Do I need a full transfer pricing report if I am below the thresholds?
- No, and buying one before you need it is money spent early. What a business below AED 200m needs is proportionate: signed intercompany agreements, a short written note per transaction type explaining how the price was arrived at and what it was compared against, and the disclosure schedule on the corporate tax return. That is enough to show the arm's-length principle was applied. A formal transfer pricing report with a commissioned benchmarking study belongs to the threshold population, or to a business with an unusual related-party structure where the exposure justifies it. If the FTA asks questions, the difference between a thin file and a defensible one is usually whether the reasoning was written down at the time.
- What is the transfer pricing documentation threshold in the UAE?
- Two figures, and either one triggers the obligation on its own. The first is AED 3.15 billion of total consolidated revenue for the multinational group the taxable person belongs to. The second is AED 200 million of the taxable person's own revenue in the relevant period. Meet either and the UAE entity must maintain a Master File and a Local File. Sit below both and the formal two-file set is not required — but the related-party and connected-person disclosure on the corporate tax return still is, and every controlled transaction still has to be priced at arm's length with evidence you could produce if asked. Check the group number as well as your own; a small UAE subsidiary of a very large parent is caught by the group test alone.
- Which decision sets the UAE master file and local file thresholds?
- Article 2(1) of Ministerial Decision No. 97 of 2023, issued on 27 April 2023 for the purposes of Clause (2) of Article 55 of the Corporate Tax Law. Limb (a) covers a constituent company of a multinational enterprises group, as defined in Cabinet Decision No. 44 of 2020, with total consolidated group revenue of AED 3,150,000,000 or more in the relevant tax period. Limb (b) covers a taxable person whose own revenue in the relevant tax period is AED 200,000,000 or more. The wording is "meets either of the following conditions", so one limb is enough and both files are then due. If you have been quoted thresholds far below these, check them against the Decision before planning to them.
- Who counts as a connected person for UAE transfer pricing?
- Connected persons reach into the ownership and management layer, which catches a lot of owner-managed UAE businesses off guard. Broadly, a connected person includes an owner of the taxable person, a director or officer, and a relative of either — as well as any entity in which those people hold an interest. So a management fee paid to a shareholder, rent paid to a director's family member, or a salary paid to an owner all fall within scope. Payments to connected persons have to be at arm's length and, for the deduction to hold, must correspond to market value for the service or benefit actually provided to the business.
Filed under: transfer pricing documentation uae, transfer pricing, master file, local file, FTA, corporate tax, arm's length, related party disclosure
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