United Arab Emirates Transfer Pricing Policy

The UAE introduced a federal corporate tax with an integral transfer pricing regime, so unlike most jurisdictions in this guide its transfer pricing rules arrived at the same moment as the tax itself. There is no legacy practice to fall back on, and no body of decided cases — which means published guidance carries unusual weight.

The regime reaches further than a conventional transfer pricing rule. Alongside related parties it addresses connected persons, which brings payments to owners, directors and their relatives into the arm’s-length test. For the owner-managed groups that make up much of the UAE business population, that is frequently the more consequential half of the rule.

Free zone structures add a second dimension. Where a UAE entity relies on a preferential regime, the transfer price determines how much profit lands inside it, so the arm’s-length analysis and the qualifying-income analysis have to be built together rather than in sequence.

The statutory position

• Articles 34 to 36 of Federal Decree-Law No. 47 of 2022 (the Corporate Tax Law) govern transfer pricing. Transactions between related parties or with connected persons must satisfy the arm’s-length principle.
• Article 55 of the Corporate Tax Law contains the transfer pricing documentation requirement. A taxable person that meets the relevant conditions must maintain both a master file and a local file in accordance with clause (2) of Article 55.
• Ministerial Decision No. 97 of 2023 sets the requirements for maintaining transfer pricing documentation for the purposes of Federal Decree-Law No. 47 of 2022.
• The Federal Tax Authority has published a Transfer Pricing Guide (CTGTP1) as corporate tax guidance.

Those references were read in the primary source — tax.gov.ae and mof.gov.ae — on 2026-08-19, and they are quoted because they were read. Legislation is amended and guidance is reissued, so confirm the current text before relying on any of it for a filing position.

Article 55 requires a taxable person meeting the relevant conditions to maintain a master file and a local file, with the conditions set out in Ministerial Decision No. 97 of 2023. Establishing whether those conditions are met for the period in question is the first step on any UAE engagement, because the answer determines whether the obligation is a full documentation set or the arm’s-length rule alone.

Every taxable person is subject to the arm’s-length principle whether or not the master file and local file conditions are met. That is the distinction most often missed: not owing a documentation set is not the same as not owing an arm’s-length price, and a related-party charge with no basis is exposed either way.

The Federal Tax Authority has published a dedicated Transfer Pricing Guide as part of its corporate tax guidance, and it is the reference point a UAE file should be built against. Because the regime is new, that guidance is also revised — we work from the current version for the period rather than from a version that has been superseded.

The three-tier documentation shape

The documentation shape is close to universal because BEPS Action 13 designed it that way. A master file sets out the group — structure, intangibles, financing, how it makes its money. A local file covers this entity’s own controlled transactions and the reasoning behind each price. A country-by-country report shows administrations, jurisdiction by jurisdiction, where the revenue, the profit, the tax and the people sit. That last report is owed only above a size threshold, and the OECD’s agreed figure is EUR 750 million of consolidated group revenue, or a near equivalent amount in domestic currency as of January 2015 (OECD, Action 13 country-by-country reporting (oecd.org)). Each jurisdiction legislated its own local-currency equivalent; those are not repeated on this page, because they were not read from the source.

What we confirm before a United Arab Emirates file is signed off

• Which tiers of documentation are genuinely due for the period in front of us, checked against what FTA requires now — not against what it required when the last file was written.
• Whether every intercompany flow has been characterised — the recharge, the guarantee, the seconded employee and the loan are the ones routinely missing from the transaction list.
• That the paperwork tells one story — agreements, invoices, management accounts and the policy the file sets out, all saying the same thing about the same year.
• That the local narrative is consistent with what the group has already reported for United Arab Emirates anywhere else, because the authority sees both.

The UAE regime is built on the arm’s-length principle and the OECD method framework, with the most appropriate method to be selected for the transaction. In practice UAE files divide into two very different kinds of work: substantive analyses of cross-border related-party flows for international groups, and connected-person analyses of owner remuneration, related-party rent and shareholder funding for domestic groups. The second kind rarely needs a comparable database and frequently needs a clear written rationale that has never previously existed.

The five methods in the OECD framework

Comparable uncontrolled price (CUP)

A like-for-like price comparison against an uncontrolled deal. It carries more weight than any other method when the comparable is real, and it collapses fastest when it is not — which is why it dominates commodity and licensing analyses and is rarely available anywhere else.

Resale price

Works backwards from the onward sale: take what the related reseller got from an unrelated buyer and deduct the gross margin an independent reseller would have earned. It fits a distributor that adds no physical value, and it lives or dies on whether the comparison companies carry the same functions and risks.

Cost plus

Builds the price up from the supplier’s costs plus an arm’s-length mark-up. Used for contract manufacturing, routine assembly and intra-group services. The argument is almost never about the mark-up; it is about which costs belong in the base and whether the cost accounting is consistent year to year.

Transactional net margin (TNMM)

Tests a net-level return — margin on sales, on total costs or on assets — against a set of independent companies with comparable functions. Robust to product mismatches and fragile to comparable selection, so the screening decisions and the adjustments matter more here than the arithmetic does.

Profit split

Divides the combined profit of the controlled transaction between the parties by reference to their relative contributions. Reached for where both sides make unique and valuable contributions, where the operations are so integrated that neither can be priced on its own, or where each shares in economically significant risk.

In practice the argument in United Arab Emirates moves to the comparable set long before it reaches the method. The search criteria, the screening decisions and the adjustments made are where a file is won or lost, so those are the parts worth writing carefully.

We build a United Arab Emirates file the way an examiner reads one: functional analysis first, method second, benchmark third. A file assembled in the other order tends to have a conclusion in search of a rationale, and it shows.

What a United Arab Emirates engagement covers

• Transaction mapping and delineation. Every related-party flow into and out of the United Arab Emirates entity, characterised and reconciled to the ledger, before any analysis begins.
• Functions, assets and risks. What the United Arab Emirates operation really does, who takes the decisions, and which risks it can actually control. Everything downstream depends on getting this right, and it is the part most files compress.
• Method selection, reasoned on the record. The method chosen for each tested transaction, with the alternatives considered and the reason each was set aside.
• Benchmarking you can audit. The search criteria, every screening decision and every comparability adjustment set out in full, so a reviewer reproduces the result rather than building their own.
• Documentation to FTA’s expected shape, consistent with the group’s master file and with what has been reported for United Arab Emirates elsewhere.
• Sourcing, stated. Each threshold, deadline and rate in the finished file is checked against the Federal Tax Authority (FTA) for the relevant period. Where we cannot confirm a figure, the file explains the mechanism and gives no number.

Advance certainty and dispute resolution

The regime is administered by the Federal Tax Authority with the domestic objection and appeal machinery of the corporate tax law, and the UAE’s treaty network provides the mutual agreement procedure where an adjustment produces double taxation. Because there is no substantial body of UAE decided cases yet, the practical protection is a file built to the published guidance.

How we work

The fee is agreed in writing before any work starts, and you review the result before anything is filed. Where your United Arab Emirates entity sits relative to our offices makes no difference to how the file gets built. If you want to talk it through first, the helpline answers 24 hours a day and there is no obligation attached to a call — contact us or read our transfer pricing service page for what a full engagement includes.

Three things have changed the shape of transfer pricing work everywhere, and they are all visible in United Arab Emirates. Tax administrations now receive structured group data before they open a file, so risk is selected on evidence rather than sampled. Intangibles and intra-group financing have displaced goods pricing as the main source of adjustment. And documentation timing has become a substantive issue in its own right, separate from whether the price was right.

Where challenges concentrate in United Arab Emirates

• Connected-person payments are the most common exposure and the least expected. Owner salaries, related-party rent and shareholder loans in a family group have often been set for reasons that had nothing to do with an arm’s-length price, and they now need a documented basis.
• Free zone qualifying income and transfer pricing interact directly. A related-party price that shifts profit into a preferential regime is precisely the arrangement the arm’s-length test is there to examine, and the two analyses have to agree.
• Because the regime is new, groups are building a first file rather than updating one, and the temptation is to import a template from another jurisdiction. A template imported without the UAE connected-person analysis is a file with a hole in it.

What it costs when the file is not there

An unprepared United Arab Emirates file converts a technical disagreement into an evidential one, and evidential arguments are the expensive kind. They run for years, they consume the finance team, and they are decided on records that either exist from the relevant year or do not.

By business size

Owner-managed group

The connected-person rules make this the group most likely to be surprised. Owner and related-party payments need a documented basis even where the master file and local file conditions are not met.

Mid-market group

Cross-border related-party flows plus a free zone entity means the transfer pricing analysis and the qualifying-income analysis have to be built as one piece of work.

Multinational group

Where the Article 55 conditions are met, master file and local file are annual, and the UAE file has to be consistent with what the group files elsewhere.

By industry

Trading and distribution

Regional buy-and-sell operations through a UAE entity need the UAE company’s functions priced, not just the affiliate’s margin benchmarked.

Real estate and family holdings

Related-party rent, management charges and shareholder funding inside a family group are connected-person transactions that now require a written arm’s-length basis.

Professional and financial services

Cross-border service delivery and intra-group funding raise both a pricing question and, for the free zone entities, a qualifying-income question.

Read these as starting points rather than categories. The transfer pricing question is set by the group structure and the intercompany agreements, not by what the business sells — so two United Arab Emirates companies of the same size in the same sector routinely need completely different files. The sector says where to look; the agreements say what is there.