What is Transfer Pricing?

The Arm's Length Principle Under UAE Corporate Tax

Transfer pricing governs the prices at which related companies transact with each other — goods, services, intellectual property, and financing. Under the UAE's Federal Decree-Law No. 47 of 2022, all controlled transactions between Related Parties and Connected Persons (whether domestic or cross-border, and including Free Zone companies) must be conducted at arm's length — that is, on the same terms that would apply between independent parties under similar circumstances.

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Article 34 — Arm's Length Principle (Federal Decree-Law No. 47 of 2022)
In determining Taxable Income, transactions and arrangements between Related Parties must meet the arm's length standard as specified in the CT Law. A transaction meets the arm's length standard if its results are consistent with what would have been realised if the parties had engaged in the same transaction under similar circumstances as independent parties. Where transactions fall outside the arm's length range, the FTA shall adjust the Taxable Income to reflect the result that best reflects the facts and circumstances.
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Free Zone Persons Are Not Exempt from Transfer Pricing
All Free Zone Persons — including Qualifying Free Zone Persons (QFZPs) benefiting from the 0% Corporate Tax rate — must comply with the arm's length principle for all transactions with Related Parties. Maintaining robust TP documentation is one of the conditions for retaining QFZP status. This is explicitly confirmed in the FTA's Corporate Tax Guide for Free Zone Persons (CTGFZP1, May 2024).
Documentation Requirements

Which Threshold Applies to You?

UAE Transfer Pricing compliance involves three distinct documentation obligations, each triggered by separate thresholds under different legal instruments. Not all entities need all three — but every Taxable Person with related party transactions must assess their position each Tax Period.

Most Companies
AED 40M
Disclosure Form

If aggregate related party transactions (excluding dividends) exceed AED 40M, the Related Party Transaction Schedule must be filed with your CT Return. Individual transaction categories exceeding AED 4M per category (with all Related Parties combined) must each be separately identified with the applicable TP method.

CT Return Guide p.117 · Article 35, CT Law
Larger UAE Entities
AED 200M
Local File

If the UAE entity's standalone revenue exceeds AED 200 million in the Tax Period, a Local File providing transaction-level TP analysis (functional analysis, benchmarking, arm's length conclusion) must be maintained and produced to the FTA within 30 days of request.

Ministerial Decision No. 97 of 2023
Multinationals
AED 3.15B
Local File + Master File

If the entity belongs to an MNE Group with total consolidated group revenue of AED 3,150,000,000 or more, both a Master File (group-level) and Local File (UAE-entity level) must be maintained. If the MNE is UAE-headquartered, a Local File alone suffices — no Master File required.

Ministerial Decision No. 97 of 2023
📄 Disclosure Form
Filed with the CT Return. Discloses transaction categories, values, and TP methods for related party transactions. Gross income and expenditure reported separately per related party. Dividends excluded from both thresholds.
AED 40M (aggregate)
+ AED 4M per category
🗂 Local File
Detailed analysis of each intercompany transaction type — functional analysis (functions, assets, risks), benchmarking study, TP method application, and arm's length conclusion. Submitted on FTA request within 30 days.
AED 200M (UAE entity)
or AED 3.15B (MNE group)
🌐 Master File
Group-level overview: global operations, intercompany pricing policies, group structure, intangibles, intercompany financing, and financial positions. Required only for non-UAE-headquartered MNE Groups.
AED 3.15B group revenue
Not required if UAE HQ
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Connected Persons Schedule — Separate AED 500,000 Threshold (CT Return Guide, Page 119)
A separate Connected Persons Schedule must be completed if aggregate payments or benefits to Connected Persons (broadly, owners, directors, and their related parties) exceed AED 500,000 per Connected Person (together with their Related Parties) in the Tax Period. This obligation applies independently of the Related Party Disclosure Form thresholds and has different reporting requirements.
Our Services & Fees

Transfer Pricing Services — Transparent AED Pricing

Most TP advisory firms in Dubai refuse to publish fees, requiring lengthy scoping calls before any numbers are shared. Fastlane publishes clear starting fees so you can plan your compliance budget. Final fees are confirmed before engagement based on your specific transaction profile.

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Transfer Pricing Disclosure Form
Triggered when: Aggregate related party transactions > AED 40M

We review your intercompany transactions, identify reportable categories, select the most appropriate TP method for each transaction type, and prepare the complete Related Party Transaction Schedule for filing alongside your Corporate Tax Return. Dividends are correctly excluded from threshold calculations. Gross income and expenditure reported separately per related party.

Transaction analysis TP method identification Category mapping CT Return integration Dividend exclusion check Arm's length adjustments
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Starting from
AED 2,499
Per tax period. Increases with number of related parties & transaction categories disclosed.
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Local File Preparation
Triggered when: UAE entity revenue > AED 200M or MNE group revenue > AED 3.15B

A comprehensive Local File documenting your UAE entity's controlled transactions — functional analysis (functions performed, assets employed, risks assumed), selection and application of the most appropriate TP method, benchmarking study, arm's length range, and arm's length conclusion. Prepared on a contemporaneous basis and ready for FTA submission within 30 days of any request. Covers all transaction types: goods, services, IP, financing, and management fees.

Functional analysis (FAR) Benchmarking study 5 TP methods evaluated Comparability analysis Interquartile range FTA-ready within 30 days
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Starting from
AED 18,000
Per entity per tax period. Scoped to number of transaction types & benchmarking complexity.
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Master File Preparation
Triggered when: Non-UAE-headquartered MNE group with revenue > AED 3.15B

A group-level Master File covering the MNE's worldwide business operations, organisational structure, global TP policies, intangibles (IP, goodwill, know-how), intercompany financing arrangements, and consolidated financial positions. Prepared to OECD BEPS Action 13 standards, aligned with Ministerial Decision No. 97 of 2023. Note: Where the MNE group is UAE-headquartered, the Master File obligation is replaced by an enhanced Local File.

Group organisational chart Global TP policies Intangibles overview Intercompany financing BEPS Action 13 compliant Multi-jurisdiction
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Custom
Scoped engagement
Fee depends on number of jurisdictions, entities, and transaction types in the group.
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Benchmarking Study
Required for: Local File preparation & FTA audit defence

Standalone or embedded benchmarking analysis to establish an arm's length price range for your controlled transactions. We search commercial databases to identify comparable independent transactions or companies, apply the appropriate TP method (TNMM, CUP, RPM, CPM, or PSM), derive an interquartile range, and produce a defensible arm's length conclusion — the foundation of any TP audit defence.

Database search Comparable screening Financial ratios analysis Interquartile range Arm's length conclusion
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Starting from
AED 9,500
Per transaction type. Bundled rate when combined with Local File engagement.
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Penalty Exposure — Don't Wait for an FTA Request
Under Cabinet Decision No. 75 of 2023, administrative penalties for TP non-compliance range from AED 10,000 to AED 100,000. Significant documentation deficiencies can attract penalties up to AED 500,000. More critically, the FTA can make upward adjustments to your Taxable Income where transactions are not at arm's length — resulting in additional Corporate Tax at 9% on the adjusted amount, plus penalties. Proactive documentation is a fraction of that cost.
Technical Framework

Five UAE Transfer Pricing Methods

Article 34(3) of Federal Decree-Law No. 47 of 2022 recognises five transfer pricing methods. The most appropriate method is selected — or a combination applied — based on the five comparability factors and the availability of reliable comparable data.

Method Type Best Used When Focuses On
Comparable Uncontrolled PriceCUP Traditional Identical or near-identical products; commodity prices; listed securities on a recognised exchange Transaction price (Revenue line)
Resale Price MethodRPM Traditional Distribution operations; reseller adds relatively little value; no valuable IP owned by tested party; somewhat similar products Gross margin (Revenue less COGS)
Cost Plus MethodCPM Traditional Semi-finished goods transferred between related parties; provision of services between related companies Gross profit markup on costs
Transactional Net Margin MethodTNMM Profit-based Same industry comparables available online; most widely used in UAE due to database availability Net operating profit / Net profit margin
Profit Split MethodPSM Profit-based High degree of integration within the MNE; unique intangibles owned by both parties; both parties make significant contributions Combined profit allocation across both parties
Five Comparability Factors — Article 34(5), UAE CT Law

The choice and application of a transfer pricing method must be made having regard to these five factors, which determine whether the controlled transaction and the uncontrolled comparables are sufficiently similar.

1
Contractual Terms of the transaction or arrangement
2
Characteristics of the transaction or arrangement
3
Economic Circumstances in which the transaction is conducted
4
Functions performed, Assets employed, and Risks assumed by the Related Parties
5
Business Strategies employed by the Related Parties entering into the transaction or arrangement
How We Work

Fastlane's Transfer Pricing Process

1
Threshold Assessment (Free)
We review your intercompany transaction volumes against all applicable thresholds — Disclosure Form (AED 40M), Local File (AED 200M / AED 3.15B), Connected Persons (AED 500K) — and confirm exactly which obligations apply. No charge for this initial assessment.
2
Transaction Identification and Delineation
We identify all controlled transactions with Related Parties and Connected Persons, map them by transaction type (goods, services, IP, financing, management fees), and review the commercial and financial substance including contractual terms, functions performed, assets employed, and risks assumed.
3
TP Method Selection
Applying all five comparability factors, we select the most appropriate TP method from the five recognised methods under Article 34(3). We document the rationale for the selected method — including why alternatives were not applied — in a manner that will withstand FTA scrutiny.
4
Benchmarking and Arm's Length Range
Using commercial databases, we identify comparable uncontrolled transactions or independent enterprises and derive an arm's length range (interquartile range). Where your controlled transaction pricing falls within this range, it is confirmed at arm's length. Where adjustments are needed, we advise on the most appropriate approach.
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Documentation Delivery and Filing Support
We deliver the complete documentation package — Disclosure Form for CT Return, Local File, Master File, and/or Connected Persons Schedule as applicable — ready for filing and for FTA submission within 30 days of any request. We also support CT Return preparation with the correct TP disclosures.
Compliance Risk

UAE Transfer Pricing Penalties

Cabinet Decision No. 75 of 2023 sets out administrative penalties for TP non-compliance. The financial exposure from a TP adjustment — additional CT at 9% on restated profits — far outweighs the cost of proactive compliance documentation.

Non-Compliance ScenarioPenalty / Consequence
Failure to maintain adequate TP documentation (Local File / Master File) AED 10,000 – AED 100,000
Significant documentation deficiencies Up to AED 500,000
FTA upward adjustment where transactions are not at arm's length 9% CT on adjusted taxable income + interest
Failure to submit documentation within 30 days of FTA request Administrative penalties + increased audit risk
Incorrect or incomplete Disclosure Form in CT Return Increased FTA scrutiny — potential full TP audit trigger
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Frequently Asked Questions

Transfer Pricing FAQs

Who needs to complete the UAE Transfer Pricing Disclosure Form? +
Any UAE Taxable Person whose aggregate related party transactions (excluding dividends) recorded in the Financial Statements or at Market Value exceed AED 40 million in the Tax Period must complete the Related Party Transaction Schedule alongside their Corporate Tax Return. Once this threshold is crossed, individual transaction categories exceeding AED 4 million per category (across all related parties combined) must be separately disclosed with the applicable TP method identified. Source: CT Return Guide, Page 117.
What are the thresholds for maintaining a Local File and Master File? +
Under Ministerial Decision No. 97 of 2023, a UAE Taxable Person must maintain both documents if: (1) they are a constituent entity of an MNE Group with total consolidated group revenue of AED 3,150,000,000 or more in the relevant Tax Period, OR (2) the UAE entity's own revenue exceeds AED 200,000,000 in the Tax Period. Both documents must be submitted to the FTA within 30 days of request. Where the MNE Group is UAE-headquartered, only a Local File is required — no Master File.
Do Free Zone companies (QFZPs) need to comply with Transfer Pricing? +
Yes. All Free Zone Persons — including Qualifying Free Zone Persons (QFZPs) benefiting from the 0% Corporate Tax rate — must comply with the arm's length principle for all transactions with Related Parties. Maintaining robust TP documentation is one of the conditions for retaining QFZP status. The FTA's Corporate Tax Guide for Free Zone Persons (CTGFZP1, May 2024) confirms this requirement explicitly.
Are dividends included in the AED 40M Disclosure Form threshold? +
No. Dividends declared between Related Parties are specifically excluded from both the AED 40 million aggregate threshold and the AED 4 million per-category threshold. They do not need to be disclosed in the Related Party Transaction Schedule and should not be counted when assessing whether either threshold has been exceeded. This is confirmed in the FTA's CT Return Guide, Page 117.
What is the difference between the Disclosure Form, Local File, and Master File? +
These are three separate and independent obligations with different thresholds, content, and timelines. The Disclosure Form is filed with the CT Return (AED 40M threshold) and identifies transaction categories and TP methods. The Local File is a detailed transaction-by-transaction analysis (AED 200M or AED 3.15B threshold) prepared and held ready for FTA submission. The Master File is a group-level document (AED 3.15B group threshold, non-UAE HQ only) covering global TP policies. Exceeding one threshold does not automatically trigger another.
Does the UAE require Country-by-Country Reporting (CbCR)? +
Yes. UAE MNE Groups headquartered in the UAE with total consolidated group revenue of AED 3.15 billion or more in the preceding fiscal year must file a CbCR under Cabinet Resolution No. 44 of 2020. The CbCR must be filed within 12 months of the end of the Reporting Fiscal Year and must detail profit allocation, taxes paid, and key economic activity indicators (revenue, profit, employees, assets) for each jurisdiction where the group operates.
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Expert Review — Fastlane Corporate Tax & Transfer Pricing Team
FTA-Registered Tax Advisers · Dubai, UAE · TRN: 104218042400003
This page reflects our understanding of UAE Transfer Pricing obligations under Federal Decree-Law No. 47 of 2022, Ministerial Decision No. 97 of 2023, the FTA Transfer Pricing Guide (CTGTP1, October 2023), the Corporate Tax Return Guide (November 2024), and the UAE CT Diploma curriculum (Chapter 17). Transfer Pricing rules continue to evolve — including the APA framework (available from Q4 2025 per FTA Decision No.2 of 2025) and Pillar Two DMTT implications for large MNEs (effective 1 January 2025). We recommend an annual TP health check for all entities with significant intercompany transactions. For personalised advice on your specific situation, contact our team directly.