Transfer Pricing in the UAE 2026: the Disclosure Form, Local File and Master File, Thresholds and the Arm's Length Principle

Transfer pricing in the UAE is governed by Chapter Ten of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The arm's length principle in Article 34 applies to every transaction and arrangement with a Related Party, regardless of the size of the business or its turnover. The thresholds set by Ministerial Decision No. 97 of 2023 determine only the obligation to maintain a Local File and Master File — they neither displace the principle itself nor remove the duty to substantiate pricing on request from the Federal Tax Authority.

⚠ The 2026 deadline. Under Article 53 the tax return is due no later than nine months from the end of the tax period, and under Article 48 the tax falls due within the same window. For businesses whose tax period ended on 31 December 2025 that date is 30 September 2026. The transfer pricing Disclosure Form is filed with the return, and the Local File and Master File must already exist by then: Article 55(3) allows only 30 days to produce them once the FTA asks.

What transfer pricing means in the UAE, and who it applies to

Transfer pricing in the UAE is the obligation to determine taxable income on transactions with Related Parties and Connected Persons as if the parties had been independent. Article 34(1) states it directly: in determining Taxable Income, transactions and arrangements between Related Parties must meet the arm's length standard, together with any conditions prescribed in a decision issued by the Federal Tax Authority.

A transaction meets the arm's length standard if its results are consistent with the results that would have been realised had non-Related Parties engaged in a similar transaction under similar circumstances — Article 34(2).

This produces the distinction most often misread. The duty to price at arm's length is universal and has no threshold. The duty to maintain formal documentation is threshold-based. A business with AED 30 million of revenue buying management services from its parent has no Local File obligation, but must justify the price of those services if the FTA issues a request under Article 55(4).

The rules also reach inside a single legal person. Under Article 5(5), transactions between a Government Entity's licensed business activity and its other activities are treated as Related Party transactions subject to Article 34. Equivalent provisions apply to Government Controlled Entities (Article 6(5)), Extractive Business (Article 7(5)) and Non-Extractive Natural Resource Business (Article 8(5)).

Article 61 extends the principle back to the opening balance sheet: the opening balance sheet for corporate tax purposes must be prepared taking the arm's length principle in Article 34 into account. Businesses entering the regime with pre-existing intragroup assets and loans cannot treat historic pricing as beyond challenge.

The legal framework in force in 2026

The UAE transfer pricing regime rests on the federal law, two subordinate decisions and a set of FTA guides. The chain below shows which instrument amended which.

Instrument	Issued / effective	Scope
Federal Decree-Law No. 47 of 2022	Issued 3 October 2022, effective 15 days after publication; the regime applies to tax periods from 1 June 2023	Corporate tax; Articles 34–36 (transfer pricing), 55 (documentation), 56 (record keeping), 59 (clarifications and APAs)
Federal Decree-Law No. 60 of 2023	Issued 2 October 2023, effective 1 November 2023	Added the Top-up Tax and Multinational Enterprise definitions and a new clause in Article 3
Federal Decree-Law No. 40 of 2024	Issued 1 October 2024, effective from 1 June 2023	Replaced Articles 45 and 46 (withholding tax and withholding tax credit)
Federal Decree-Law No. 28 of 2025	Issued 1 October 2025, effective 15 October 2025	Replaced Article 44 and introduced Article 49 bis on unused tax credits
Ministerial Decision No. 97 of 2023	Issued 27 April 2023, published 11 May 2023, in force the day after publication (Article 4 of the Decision)	Thresholds and scope of the Local File and Master File
Cabinet Decision No. 44 of 2020	Replaced Cabinet Resolution No. 32 of 2019	Country-by-Country Reporting
Cabinet Decision No. 75 of 2023 (as amended by Cabinet Decision No. 10 of 2024)	Effective 1 August 2023; amendments effective 1 March 2024	Administrative penalties under the Corporate Tax Law
Transfer Pricing Guide (CTGTP1)	Issued by the FTA on 23 October 2023	Guidance on applying the arm\u2019s length principle
Advance Pricing Agreements Guide (CTGAPA1)	First version December 2025; submissions accepted from 30 December 2025	APA procedure
Corporate Tax Returns Guide (CTGTXR1)	Issued by the FTA in November 2024	Completing the return, including the Disclosure Form thresholds

⚠ Two different levels of authority. Federal Decree-Law No. 47 of 2022, Ministerial Decision No. 97 of 2023 and Cabinet Decision No. 44 of 2020 are binding instruments. The FTA guides, including the Transfer Pricing Guide and the APA Guide, are not legally binding: they state the administrator's position, but where they diverge from the legislation, the text of the law and the decisions prevails.

The 2025 amendments left the transfer pricing regime untouched. Federal Decree-Law No. 28 of 2025 replaced Article 44 and added Article 49 bis, both concerning the settlement of tax through credits and the recovery of unused ones — not Articles 34 to 36 or Article 55. Claims that "the transfer pricing rules changed in 2025" have no basis in the legislation.

Related Parties: the connection tests in Article 35

Article 35(1) defines Related Parties through a closed list of six grounds. None of them requires a formally constituted group: the relationship arises from ownership, control or kinship as a matter of fact.

•     Two or more natural persons related within the fourth degree of kinship or affiliation, including by adoption or guardianship;

•     A natural person and a juridical person where the natural person, alone or with Related Parties, directly or indirectly owns a 50% or greater interest in, or Controls, the juridical person;

•     Two or more juridical persons where one owns 50% or more of the other, Controls the other, or where any Person owns 50% or more of, or Controls, both;

•     A Person and its Permanent Establishment or Foreign Permanent Establishment;

•     Two or more Persons that are partners in the same Unincorporated Partnership;

•     A Person who is the trustee, founder, settlor or beneficiary of a trust or foundation, and its Related Parties.

Control under Article 35(2) is the ability to influence another Person, including the ability to exercise 50% or more of the voting rights, to determine 50% or more of the board, to receive 50% or more of the profits, or to determine or exercise significant influence over the conduct of the business and affairs of another Person.

The last limb — significant influence over the conduct of business and affairs — carries no numerical test and is where the perimeter is most often understated. A nominally independent contractor operating under the customer's direction and effectively managed by it can be a Related Party without holding a single share. Family-owned structures in the UAE are captured widely by the fourth-degree test, which reaches cousins and relatives by marriage.

Connected Persons and why a different rule applies to them

Connected Persons are a separate category subject not to an income adjustment but to a deduction limit. Under Article 36(1), a payment or benefit provided by a Taxable Person to its Connected Person is deductible only to the extent it corresponds with the Market Value of the service or benefit provided and is incurred wholly and exclusively for the purposes of the Taxable Person's business.

Article 36(2) defines a Connected Person as an owner of the Taxable Person, a director or officer of the Taxable Person, or a Related Party of either.

An owner for this purpose is any natural person who directly or indirectly owns an ownership interest in, or Controls, the Taxable Person (Article 36(3)). Where the Taxable Person is a partner in an Unincorporated Partnership, every other partner and any Related Party of that partner is a Connected Person (Article 36(4)).

In practice this captures founder salaries, directors' remuneration, office rent paid to a shareholder and interest on shareholder loans: each is tested against Market Value, and any excess simply fails to reduce the tax base. Article 36(5) directs that Article 34 applies for determining that Market Value, so the same transfer pricing methods are used.

Article 36(6) removes two categories from the rule: Taxable Persons whose shares are traded on a Recognised Stock Exchange, and Taxable Persons subject to the regulatory oversight of a competent authority in the UAE.

The five transfer pricing methods and how one is chosen

Article 34(3) provides five methods, applied singly or in combination: the comparable uncontrolled price method, the resale price method, the cost-plus method, the transactional net margin method and the transactional profit split method.

Article 34(4) allows any other method where the Taxable Person can demonstrate that none of the five can reasonably be applied and that the alternative method satisfies the arm's length standard.

The choice is not free. Article 34(5) requires selection of the most reliable method having regard to five factors: the contractual terms of the transaction, its characteristics, the economic circumstances in which it is conducted, the functions performed, assets employed and risks assumed by the parties, and the business strategies they employ. That is a functional analysis, and without one the choice of method is not formally supported.

Article 34(6) works in the taxpayer's favour: the FTA's examination is based on the method the Taxable Person applied, provided that method is appropriate having regard to those factors. The authority cannot simply substitute a preferred method — it must first show that the chosen one is inappropriate.

The arm's length range and adjustments: who adjusts, when, and which way

Applying the selected method may produce a range of financial results rather than a single price. Article 34(7) recognises this expressly, subject to any conditions the FTA may specify by decision.

Where the result of a transaction falls outside the arm's length range, the FTA adjusts Taxable Income to the arm's length result that best reflects the facts and circumstances of the transaction — Article 34(8).

Article 34(9) constrains that power: in making an adjustment the FTA must rely on information that can or will be made available to the Taxable Person. Secret comparables unavailable to the business under review are out of bounds.

Article 34(10) builds in symmetry: where Taxable Income is adjusted — whether by the FTA or by the Taxable Person — the FTA makes a corresponding adjustment to the Taxable Income of the Related Party to the transaction. Article 34(11) adds the cross-border mechanism: where a foreign competent authority makes an adjustment, the UAE Taxable Person may apply to the FTA for a corresponding adjustment.

⚠ An asymmetry written into the return guidance. An upward adjustment that increases Taxable Income is made by the taxpayer itself. A downward adjustment that reduces Taxable Income requires prior FTA approval — stated expressly in the Corporate Tax Returns Guide (CTGTXR1). Filing the form with a self-applied downward adjustment is a recurring error from the first filing seasons.

Three layers of documentation: how the Disclosure Form differs from the files

The UAE regime operates in three layers, each with its own source of obligation, threshold and deadline.

Document	Basis	When the obligation arises	Deadline
Disclosure Form (schedule to the return)	Article 55(1)	Where the value thresholds for Related Party and Connected Person transactions are exceeded	With the return — nine months from the end of the tax period
Local File	Article 55(2) and Ministerial Decision No. 97 of 2023	Revenue of AED 200,000,000 or more, or membership of an MNE group with consolidated revenue of AED 3,150,000,000 or more	Prepared in advance; produced within 30 days of an FTA request
Master File	Article 55(2) and Ministerial Decision No. 97 of 2023	Same thresholds; in substance relevant to members of multinational groups	30 days from an FTA request
Country-by-Country Report	Cabinet Decision No. 44 of 2020	MNE group whose ultimate parent is UAE tax resident with consolidated revenue of AED 3,150,000,000 or more in the preceding year	Notification by the last day of the reporting year; report within 12 months of year end

Article 55(4) operates regardless of thresholds: on request from the FTA, a Taxable Person must provide any information supporting the arm's length nature of its Related Party and Connected Person transactions within 30 days.

Disclosure Form thresholds: AED 40 million, AED 4 million and AED 500,000

The Disclosure Form is filed as part of the corporate tax return through EmaraTax and consists of two separate schedules — one for Related Parties and one for Connected Persons. Their thresholds differ and are routinely confused.

The thresholds come from the FTA's Corporate Tax Returns Guide (CTGTXR1), issued in November 2024. They appear neither in the Decree-Law nor in Ministerial Decision No. 97 of 2023: Article 55(1) empowers the FTA to prescribe the form and content of the disclosure.

The Related Party schedule is required where the aggregate value of all transactions with Related Parties, as recorded in the financial statements or at market value, exceeds AED 40,000,000.

Once that primary threshold is exceeded, transaction categories with an aggregate value above AED 4,000,000 are itemised separately. The categories are goods, services, intellectual property, interest, assets, liabilities and other.

The Connected Person schedule is required where the aggregate payment or benefit to a single Connected Person, together with its Related Parties, exceeds AED 500,000.

The inclusion of assets and liabilities as categories means the AED 40,000,000 test captures balance sheet items, not only profit and loss flows. An intragroup loan recorded on the balance sheet counts towards the threshold — one of the most common reasons a business wrongly concludes it sits below it.

Dividends paid to Related Parties are excluded when computing these thresholds.

Two further points of mechanics recorded in CTGTXR1. First, transfer pricing adjustments are reported manually and for all transactions, whether or not those transactions appear in the Related Party or Connected Person schedules. Second, a Qualifying Free Zone Person separately confirms in the return that its Related Party transactions comply with the arm's length principle.

The form captures the counterparty's name, transaction type, tax residence, corporate tax number, gross income or expense, the transfer pricing method applied, the arm's length value and any adjustment. Gross income means income before deductions; where the financial statements present a net figure, a reconciliation between the return and the accounts, with supporting workings, is expected.

⚠ The Disclosure Form is a reporting tool, not a test of compliance. Falling below the thresholds does not mean transactions can be left off-market: the Article 34 obligation applies in full, and under Article 55(4) the FTA may request substantiation from any business. The reasoning "no form, no documentation, no questions" is wrong and has already produced assessments in the first review cycles.

Local File and Master File thresholds under Ministerial Decision No. 97 of 2023

The obligation to maintain both files arises where either of two conditions is met in the relevant tax period.

First condition: at any time during the relevant tax period the Taxable Person is a constituent company of an MNE Group as defined in Cabinet Decision No. 44 of 2020 with total consolidated group revenue of AED 3,150,000,000 or more in that tax period.

Second condition: the Taxable Person's own revenue in the relevant tax period is AED 200,000,000 or more.

One technical difference between the transfer pricing threshold and the CbCR threshold is worth recording: for CbCR the consolidated revenue is measured in the financial year immediately preceding the reporting year, whereas Ministerial Decision No. 97 of 2023 measures it in the current tax period. The identical AED 3,150,000,000 figure does not mean an identical test.

These thresholds attach solely to Article 55(2), that is, to the duty to prepare the two files. They do not affect the Disclosure Form, the arm's length principle, or the duty to respond to FTA requests.

What goes into the Local File — and what stays out

Ministerial Decision No. 97 of 2023 sets not only the thresholds but the perimeter of the Local File, through two lists: mandatory inclusions and mandatory exclusions.

Transactions that must be included

•     A Non-Resident Person — a Person with a Permanent Establishment in the UAE, deriving State Sourced Income, or having a nexus in the UAE;

•     An Exempt Person — including Government Entities, Government Controlled Entities and persons engaged in an Extractive Business;

•     A Resident Person that has elected Small Business Relief, and is therefore treated as not having derived Taxable Income for the period;

•     A Resident Person whose income is subject to a different corporate tax rate from that applicable to the Taxable Person's income.

That last category captures the Qualifying Free Zone Person directly: transactions between a free zone company applying 0% to Qualifying Income and a taxpayer on the 9% rate must be included in the Local File. For UAE structures this is the decisive point — a domestic free zone to mainland transaction is documented on the same footing as a cross-border one. The practical trade-offs between the two regimes are covered in Mainland vs Free Zone in 2026.

Transactions that are excluded

•     Transactions with a Resident Person that does not fall into any of the categories above — meaning transactions between two residents taxed at the same rate stay out of the Local File, even where they are not in the same Tax Group;

•     Transactions with a natural person, provided the parties act as if they were independent of each other;

•     Transactions with a juridical person that is a Related Party or Connected Person solely by virtue of being a partner in an Unincorporated Partnership, on the same independence condition;

•     Transactions with a Permanent Establishment of a Non-Resident Person in the UAE whose income is subject to the same corporate tax rate as the Taxable Person's income.

The independence test is met only where both conditions hold: the transaction is undertaken in the ordinary course of business, and the parties are not exclusively or almost exclusively transacting with each other.

A further limitation applies: where one party's activities are subject to detailed instruction or comprehensive control by the other, the independence requirement is not met and the transaction is not excluded. The FTA weighs all relevant facts and circumstances, so an exclusion is defended through functional analysis rather than contractual wording.

Defending an exclusion is a matter of contracts and conduct rather than form-filling: the review of intercompany agreements and of how the parties actually behave is covered by UPPERSETUP legal services.

Note the asymmetry for Exempt Persons: an Exempt Person maintains no Local File of its own, but its transactions with Related Parties may need to appear in the counterparty's Local File. For groups with government participation this means the transfer pricing policy has to be agreed on both sides.

The three deadlines: nine months, 30 days and seven years

Three periods define the entire transfer pricing calendar, and all three come from the Decree-Law itself.

The tax return is due no later than nine months from the end of the relevant tax period (Article 53(1)), and the tax is payable within the same period (Article 48). For a period ended 31 December 2025 the date is 30 September 2026.

The Local File and Master File must be submitted within 30 days of an FTA request, or by any later date the FTA directs (Article 55(3)). Any information supporting the arm's length nature of transactions is subject to the same 30-day period (Article 55(4)).

Records and documents must be retained for seven years following the end of the tax period to which they relate (Article 56).

The 30-day window is the pinch point of the whole design. A full Local File with functional analysis and benchmarking cannot be built in 30 days: identifying comparable companies in commercial databases, screening them and making comparability adjustments takes longer. The practical conclusion is that documentation must exist at the filing date rather than be created in response to a request.

An adjacent requirement is the audit. Ministerial Decision No. 84 of 2025 applies to tax periods beginning on or after 1 January 2025 and replaces Ministerial Decision No. 82 of 2023, which continues to govern earlier periods.

Under Ministerial Decision No. 84 of 2025, audited financial statements are required from: a taxable person outside a Tax Group with revenue above AED 50,000,000; every Qualifying Free Zone Person regardless of revenue; and every Tax Group, in the form of audited special purpose (aggregated) financial statements regardless of the group's revenue.

For a non-resident, the AED 50,000,000 threshold counts only revenue derived through permanent establishments and/or a nexus in the UAE. The statements feed the Disclosure Form, so the audit and the disclosure have to be sequenced together. The computational side and the reconciliation between the return and the accounts are covered by UPPERSETUP accounting services.

Special regimes: free zones, Small Business Relief and Tax Groups

For a Qualifying Free Zone Person, transfer pricing compliance is a condition of the 0% rate. Article 18(1) lists the conditions for QFZP status, and paragraph (d) expressly requires compliance with Articles 34 and 55.

A Qualifying Free Zone Person that fails any Article 18(1) condition — including compliance with Articles 34 and 55 — ceases to be a Qualifying Free Zone Person from the beginning of that tax period (Article 18(2)).

The consequence is out of all proportion to a penalty: losing the status means 9% applies to all Taxable Income for the period. For free zone companies, transfer pricing is not a reporting formality but part of holding the rate. The mechanics of the status are covered in ADGM 2026 and How to Set Up a Company in the UAE in 2026.

Small Business Relief works the other way round. Article 21(2) lists the provisions that do not apply to an electing Taxable Person, and Article 55 appears on that list — so the documentation and disclosure obligations fall away. Chapter Ten is not on the list, and Ministerial Decision No. 97 of 2023 expressly requires the counterparty to include transactions with Small Business Relief electors in its own Local File. The relief runs one way only: the electing company has no obligation, its Related Party does.

Inside a Tax Group, Article 42(1) requires the parent to consolidate the financial results, assets and liabilities of each subsidiary while eliminating transactions between group members, so intragroup dealings drop out of disclosure. But group formation is tightly conditioned by Article 40 — at least 95% of share capital, voting rights and entitlement to profits, the same financial year and accounting standards, and no Exempt Persons or Qualifying Free Zone Persons in the group. A QFZP cannot be a Tax Group member, so elimination is unavailable to it.

Country-by-Country Reporting: a separate track for large groups

CbCR is governed by Cabinet Decision No. 44 of 2020, which replaced Cabinet Resolution No. 32 of 2019, and applies to financial reporting years beginning on or after 1 January 2019. The competent authority is the Ministry of Finance rather than the FTA — a separate track from corporate tax.

The obligation arises for groups with consolidated revenue of AED 3,150,000,000 or more in the financial year preceding the reporting year, where the group's ultimate parent entity is UAE tax resident.

The notification is due no later than the last day of the group's financial reporting year. The report itself is filed within 12 months of the end of that reporting year.

⚠ A conflict in the sources on the notification deadline. Some publications state "within four months of the financial year end". The Ministry of Finance's own CbCR compliance guidance says otherwise: the notification is due on or before the last day of the fiscal year. The Ministry document governs, not the secondary summaries.

CbCR sanctions sit in Cabinet Decision No. 44 of 2020 itself and do not overlap with corporate tax penalties. Failure to keep the documents and information required for the reporting obligation for at least five years from the date the report is filed attracts AED 100,000. Failure to file the report or the notification attracts AED 1,000,000 plus AED 10,000 for each day of default, capped at AED 250,000 for that element; incomplete or inaccurate information attracts between AED 50,000 and AED 500,000. Total fines within a single reporting year are capped at AED 1,000,000, and a 14-business-day grace period is given before sanctions apply.

Advance Pricing Agreements: what changed in December 2025

Article 59 allows a Person to apply to the FTA for a clarification on the application of the law or for the conclusion of an advance pricing agreement in respect of a proposed or completed transaction. The provision existed from the outset; the procedure arrived only at the end of 2025.

The first version of the Advance Pricing Agreements Corporate Tax Guide (CTGAPA1) was issued in December 2025; pre-filing requests, applications and supporting information have been accepted since 30 December 2025 by email to APA@tax.gov.ae, with EmaraTax submission to be announced.

The programme is phased. Unilateral APAs covering domestic controlled transactions have been accepted since December 2025. The start date for cross-border unilateral APAs is to be announced during 2026. Bilateral and multilateral APAs, resting on the mutual agreement procedure in the UAE's tax treaties, come at a later stage.

A domestic controlled transaction qualifies for a unilateral APA only where the taxpayer and its domestic Related Party are subject to different corporate tax rates or are eligible for a tax incentive under the Corporate Tax Law.

The guide names the typical domestic cases: transactions by a Qualifying Free Zone Person with a mainland person or vice versa; the business activity of a Government Entity; the non-mandated business activity of a Government Controlled Entity; transactions between an Extractive Business and another business of the same person; and transactions between a Non-Extractive Natural Resource Business and another business of the same person.

The materiality threshold is a total or expected value of all controlled transactions proposed for coverage of at least AED 100,000,000 per tax period. For a Tax Group the threshold applies at group level, and transactions between group members are left out of the calculation.

The threshold is not decisive on its own: the FTA may reject an application that meets it and accept one that does not, weighing the complexity of the transactions, the tax risk and the value of the agreement. Transactions within safe harbour regimes, including low value-adding intragroup services, are excluded both from the APA and from the threshold calculation.

Parameter	Position under CTGAPA1
Term of the agreement	Minimum three and maximum five tax periods; prospective periods only at this stage, with no roll-back
Application fee	AED 30,000, non-refundable, covering subsequent revisions to the application
Renewal fee	AED 15,000, non-refundable; no pre-filing consultation is required on renewal
Pre-filing consultation	Mandatory; the FTA aims to conclude it within six to nine months of the request
Filing deadline	Two months from the notification approving the pre-filing consultation, or at least twelve months before the start of the first covered tax period, whichever is earlier
Responses to FTA requests	40 business days per request
Change to critical assumptions	Notify the FTA within 20 business days of the event
APA Annual Declaration	Within 90 business days of the signed APA or by the due date of the relevant tax return, whichever is later
Renewal request	At least three months before the existing APA expires

Exchange of information deserves separate attention: unilateral APAs covering cross-border transactions are subject to spontaneous exchange with the tax administrations of the ultimate parent, immediate parent and counterparty jurisdictions, in line with BEPS Action 5. A taxpayer that obtains an APA from a foreign administration on the same transactions must notify the FTA.

The legal effect is bounded: where the taxpayer complies with all terms, the FTA will not contest the arm's length price or the method applied to the covered transactions for the covered periods, but the agreement sets no precedent for other periods or other persons. Revocation for material misrepresentation takes effect from the first covered tax period; cancellation for breach applies prospectively from the period in which the breach occurred. Fees are not refunded on withdrawal or where negotiations fail.

Assessing whether an APA is worth pursuing, and assembling the file, sits naturally with UPPERSETUP legal services: the application calls for functional analysis, benchmarking, intercompany agreements and a set of critical assumptions.

The programme is aimed at situations of significant uncertainty in establishing the arm's length price — complex operations, complex business models, or transactions that have historically been subject to audit.

⚠ An internal inconsistency in the guide itself. The section on timelines (3.10) states that the application is filed within two months of the notification approving the pre-filing consultation, while the section on the pre-filing procedure (4.1.2) states 40 business days from that notification. Both appear in the same document; plan against the shorter period and confirm it with the FTA.

On authority: CTGAPA1 states in its own status section that it is not a legally binding document and does not modify the requirements of any legislation. FTA service fees sit in Cabinet Decision No. 65 of 2020 and its amendments, most recently Cabinet Decision No. 174 of 2025, in force from 1 January 2026. Fee amounts should be checked against the current version of that decision before applying.

Penalties: what a transfer pricing failure actually costs

There is no standalone "transfer pricing penalty" in the UAE. Article 60 refers to the Tax Procedures Law and the decisions issued under it, and the amounts sit in Cabinet Decision No. 75 of 2023 as amended by Cabinet Decision No. 10 of 2024.

Breach	Penalty
Failure to maintain the required records and information	AED 10,000 per violation; AED 20,000 for a repeat within 24 months
Failure to submit data, records and documents in Arabic when requested by the FTA	AED 5,000
Late filing of the tax return	AED 500 for each month or part month during the first 12 months; AED 1,000 per month from the 13th
Failure to settle the tax due	14% per annum, applied monthly to the unpaid amount
Failure to facilitate a tax audit	AED 20,000

Economically, the adjustment matters more than the fine. Where the FTA restates a price under Article 34(8), Taxable Income rises, the additional tax carries 14% per annum, and the point is rarely confined to a single period. For a free zone company the loss of QFZP status under Article 18 sits on top — 9% instead of 0% on the whole of the period's income.

The Arabic-language requirement deserves its own line: documentation prepared in English is acceptable, but a translation must be produced when the FTA asks, and failing to do so is a separate offence carrying AED 5,000.

A nine-step plan for the 30 September 2026 deadline

•     Step 1. Map the relationships. Test all six limbs of Article 35, and separately the "significant influence" criterion. Include fourth-degree kinship and trust and foundation structures.

•     Step 2. Identify Connected Persons under Article 36 separately. Owners, directors, officers and their Related Parties form a different list with a different disclosure threshold.

•     Step 3. Build a register of controlled transactions for the period, including balance sheet positions — loans, guarantees, receivables and payables.

•     Step 4. Test the disclosure thresholds: AED 40,000,000 in aggregate for Related Parties, AED 4,000,000 per category, AED 500,000 per Connected Person.

•     Step 5. Test the documentation thresholds: revenue of AED 200,000,000 or more, or membership of an MNE group with consolidated revenue of AED 3,150,000,000 or more.

•     Step 6. Fix the Local File perimeter using the inclusion and exclusion lists in Ministerial Decision No. 97 of 2023, supporting every exclusion with the independence test.

•     Step 7. Run the functional analysis and select the method against the Article 34(5) factors, prepare the benchmarking study and document the range.

•     Step 8. Book adjustments before the accounts close. Apply downward adjustments only where the FTA has approved them.

•     Step 9. Sequence with the audit under Ministerial Decision No. 84 of 2025 and file the Disclosure Form with the return through EmaraTax.

Where that capability does not exist in-house, it is cheaper to bring it in before the return is filed than afterwards: UPPERSETUP accounting services handle the computational side and the disclosure, and legal services the analysis of the relationship perimeter and the intragroup agreements behind it.

Common mistakes and what they cost

•     Assuming the rules do not apply below AED 200,000,000. The threshold governs only the Local File and Master File. Article 34 applies without a threshold, and under Article 55(4) the FTA can demand substantiation from any business — with 30 days to answer.

•     Ignoring balance sheet items when testing AED 40,000,000. The disclosure categories include assets and liabilities, so an intragroup loan counts. A business testing the threshold against its income statement alone files no form and breaches its reporting duty.

•     Treating free zone to mainland dealings as domestic and therefore irrelevant. A Resident Person taxed at a different rate is expressly on the inclusion list. For a QFZP the cost is not a fine but the loss of the 0% rate under Article 18 for the whole period.

•     Applying a downward adjustment unilaterally. Reducing Taxable Income through transfer pricing requires FTA approval. A form filed with a self-applied downward adjustment invites review.

•     Preparing documentation after the FTA asks. Article 55(3) allows 30 days. A benchmarking study cannot be built from scratch in that time, and the absence of the file is itself a breach carrying AED 10,000, or AED 20,000 on a repeat within 24 months.

•     Overlooking Connected Persons who are individuals. The AED 500,000 threshold per Connected Person is low: directors' fees, rent paid to an owner and interest on a shareholder loan clear it easily, and any excess over Market Value is simply not deductible under Article 36(1).

•     Treating FTA guides as law. The Transfer Pricing Guide and the APA Guide are not binding. A position resting only on a guide example and inconsistent with the Decree-Law or Ministerial Decision No. 97 of 2023 is exposed in a dispute.

Who needs specialist review, and when

Formal compliance is comparatively simple for a business in one jurisdiction, on one tax rate, with a handful of intragroup dealings: a relationship map, a threshold test and a correctly completed disclosure will cover it.

Review is genuinely warranted in five situations: where a free zone and mainland structure combines different rates; where revenue approaches AED 200,000,000, or the group is near AED 3,150,000,000 of consolidated revenue; where intragroup financing is material, since balance sheet positions drive both the thresholds and the interest deduction limitation rules; where payments to owners and directors exceed an obviously commercial level; and in cross-border dealings, where a foreign adjustment will require a corresponding adjustment application under Article 34(11).

Where a structure is still on the drawing board, transfer pricing is cheaper to design in than to remediate after the first return: UPPERSETUP company registration services cover the corporate side, and the options for moving an existing structure are set out in Redomiciliation to the UAE in 2026.

Frequently asked questions

At what turnover do UAE transfer pricing rules start to apply?

From the first dirham: the arm's length principle in Article 34 of Federal Decree-Law No. 47 of 2022 has no threshold. The AED 200,000,000 entity revenue and AED 3,150,000,000 group revenue thresholds govern only the Local File and Master File obligation under Ministerial Decision No. 97 of 2023.

When is the Transfer Pricing Disclosure Form due?

With the corporate tax return, that is, no later than nine months from the end of the tax period. For a period ended 31 December 2025 the deadline is 30 September 2026.

What are the Disclosure Form thresholds?

The Related Party schedule applies where aggregate transactions exceed AED 40,000,000, with categories above AED 4,000,000 itemised separately. The Connected Person schedule applies where the aggregate payment or benefit to a single Connected Person exceeds AED 500,000.

Do transactions between two UAE companies need to be documented?

It depends on the rate. Transactions between two residents taxed at the same rate are excluded from the Local File. Transactions with a resident taxed at a different rate — above all a Qualifying Free Zone Person — as well as with Exempt Persons and Small Business Relief electors, must be included.

How long is there to produce the Local File after an FTA request?

Thirty days from the request, or any later date the FTA directs, under Article 55(3). The same period applies to any other information supporting the arm's length nature of the transactions under Article 55(4).

Which transfer pricing methods are accepted in the UAE?

The five methods in Article 34(3): comparable uncontrolled price, resale price, cost plus, transactional net margin and transactional profit split. Another method is permitted where the taxpayer demonstrates that none of the five can reasonably be applied.

What does a transfer pricing failure cost a free zone company?

Beyond penalties and assessments, it risks the loss of Qualifying Free Zone Person status. Article 18(1)(d) requires compliance with Articles 34 and 55, and Article 18(2) removes the status from the beginning of the tax period in which the condition was breached.

Can a business agree pricing with the FTA in advance?

Yes, under Article 59, with the procedure set out in the FTA guide CTGAPA1 of December 2025. Applications for domestic controlled transactions have been accepted since 30 December 2025 where the covered transactions total at least AED 100,000,000 per tax period; an agreement runs for three to five tax periods and the application fee is AED 30,000.

Key takeaways

•     The arm's length principle in Article 34 of Federal Decree-Law No. 47 of 2022 applies without a threshold; thresholds govern documentation only.

•     The Disclosure Form is filed with the return where Related Party transactions exceed AED 40,000,000 in aggregate (categories above AED 4,000,000) and where payments to a single Connected Person exceed AED 500,000.

•     The Local File and Master File are required at AED 200,000,000 of entity revenue or AED 3,150,000,000 of consolidated group revenue under Ministerial Decision No. 97 of 2023.

•     Documentation is produced within 30 days of an FTA request; records are kept for seven years; the return and payment are due within nine months.

•     Transactions with Qualifying Free Zone Persons, Exempt Persons and Small Business Relief electors must be in the Local File; transactions between residents on the same rate must not.

•     For a QFZP, compliance with Articles 34 and 55 is a condition of the 0% rate under Article 18.

•     Downward adjustments to Taxable Income require FTA approval; a corresponding adjustment for the Related Party is provided for in Article 34(10).

•     Penalties sit in Cabinet Decision No. 75 of 2023 as amended by Cabinet Decision No. 10 of 2024: AED 10,000 for a records breach, AED 20,000 on a repeat within 24 months, AED 5,000 for failing to produce documents in Arabic.

•     Unilateral APAs for domestic transactions have been open since 30 December 2025: an AED 100,000,000 threshold per period, a three to five year term, a AED 30,000 fee, and eligibility only where the domestic parties are on different rates or hold an incentive.

Summary

Transfer pricing in the UAE is governed by Chapter Ten of Federal Decree-Law No. 47 of 2022, as amended by Federal Decree-Law No. 60 of 2023, No. 40 of 2024 and No. 28 of 2025. The arm's length principle in Article 34 applies to all Related Party transactions regardless of turnover and provides five methods: comparable uncontrolled price, resale price, cost plus, transactional net margin and transactional profit split, with another method permitted where none of the five can reasonably be applied. Related Parties are defined in Article 35 (fourth-degree kinship, 50% ownership or control, permanent establishments, partners in an unincorporated partnership, participants in trusts and foundations) and Connected Persons in Article 36 (owners, directors, officers and their Related Parties), with payments to a Connected Person deductible only up to Market Value. The Transfer Pricing Disclosure Form is filed with the return where aggregate Related Party transactions exceed AED 40,000,000, with categories above AED 4,000,000 itemised, and where payments to a single Connected Person exceed AED 500,000; those thresholds come from the FTA's Corporate Tax Returns Guide (CTGTXR1) of November 2024, dividends paid to Related Parties are excluded from the calculation, and a downward adjustment to Taxable Income requires prior FTA approval. The Local File and Master File are required under Ministerial Decision No. 97 of 2023 where entity revenue is AED 200,000,000 or more or the entity belongs to a multinational group with consolidated revenue of AED 3,150,000,000 or more; they must be produced within 30 days of an FTA request under Article 55(3), and records kept for seven years under Article 56. The return is filed and the tax paid within nine months of the end of the tax period — 30 September 2026 for a period ended 31 December 2025. For a Qualifying Free Zone Person, compliance with Articles 34 and 55 is a condition of the 0% rate under Article 18. Penalties under Cabinet Decision No. 75 of 2023, as amended by Cabinet Decision No. 10 of 2024, are AED 10,000 for failing to maintain required records, AED 20,000 on a repeat within 24 months, and AED 5,000 for failing to produce documents in Arabic.

Sources

•     Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments (Federal Decree-Law No. 60 of 2023, No. 40 of 2024, No. 28 of 2025) — consolidated text published by the UAE Ministry of Finance (mof.gov.ae), Articles 5–8, 18, 21, 34, 35, 36, 40, 42, 48, 53, 55, 56, 59, 60, 61

•     Ministerial Decision No. 97 of 2023 on Requirements for Maintaining Transfer Pricing Documentation, published 11 May 2023

•     Cabinet Decision No. 44 of 2020 on Organising Reports Submitted by Multinational Companies (mof.gov.ae)

•     Guidance for compliance with CbCR regulations, UAE Ministry of Finance (mof.gov.ae)

•     Cabinet Decision No. 75 of 2023 on the Administrative Penalties for Violations Related to the Application of the Corporate Tax Law (mof.gov.ae), as amended by Cabinet Decision No. 10 of 2024

•     Federal Tax Authority — Transfer Pricing Corporate Tax Guide (CTGTP1), 23 October 2023

•     Federal Tax Authority — Corporate Tax Returns Guide (CTGTXR1), November 2024

•     Federal Tax Authority — Advance Pricing Agreements Corporate Tax Guide (CTGAPA1), December 2025 (tax.gov.ae)

•     Ministerial Decision No. 82 of 2023 (replaced by Ministerial Decision No. 84 of 2025 for tax periods from 1 January 2025)

•     Baker McKenzie, Grant Thornton, Alvarez & Marsal — commentary on the FTA advance pricing agreement guide

•     Ministerial Decision No. 84 of 2025 on audited financial statement requirements

•     PwC Middle East — Ministerial Decision No. 97 of 2023: Requirements for Maintaining Transfer Pricing Documentation

•     Deloitte Middle East — UAE transfer pricing disclosures in the tax return; Transfer pricing regime in the United Arab Emirates

•     PwC Worldwide Tax Summaries — United Arab Emirates: Group taxation

•     Grant Thornton — United Arab Emirates transfer pricing; UAE FTA introduces Advance Pricing Agreement Programme

•     KPMG — UAE issues Federal Decree-Law No. 28 of 2025 amending the Corporate Tax Law; Highlights of the UAE Advance Pricing Agreement Guide

Disclaimer

This material is for informational purposes only and does not constitute legal, tax, financial, investment or consulting advice. Before making decisions, obtain individual professional advice taking account of your specific circumstances, jurisdiction, company status and current regulatory requirements. Information is accurate as of August 2026.