Insights · UAE Tax
UAE Transfer Pricing Rules 2026: Related Parties, Disclosure Forms and Master File Thresholds
Under Articles 34 to 36 of Federal Decree-Law No. 47 of 2022, UAE transactions with related parties must be at arm’s length, and payments to connected persons are deductible only at market value. A disclosure form goes with the corporate tax return if related-party transactions exceed AED 40 million or payments to any one connected person exceed AED 500,000. A master file and local file are needed at AED 200 million revenue or AED 3.15 billion group revenue. The files must be produced within 30 days of an FTA request.
This guide is for owners and finance leads of UAE businesses that charge management fees, lend money or trade with group companies, shareholders or directors. It explains who counts as a related party, what the disclosure and documentation rules require and what smaller groups should do.
| Rule | Position at 30 September 2026 |
|---|---|
| Arm’s length principle | Article 34: related-party terms must match what independent parties would agree |
| Related parties | Article 35: includes 50% ownership or control links and relatives to the fourth degree |
| Connected persons | Article 36: owners, directors and officers and their related parties; payments deductible only at market value |
| Disclosure form: related parties | Filed with the return if related-party transactions exceed AED 40 million; categories above AED 4 million reported |
| Disclosure form: connected persons | Filed if payments or benefits to one connected person exceed AED 500,000 |
| Master file and local file | Revenue of AED 200 million or more, or an MNE group with consolidated revenue of AED 3.15 billion or more |
| Submission | Master file and local file within 30 days of an FTA request |
| Small Business Relief | No disclosure form or files needed; the arm’s length principle still applies |
Related Parties, Connected Persons and the Arm’s Length Test
Article 34 of the Corporate Tax Law requires transactions between related parties, domestic or cross-border, to produce the result that independent parties would reach in similar circumstances. The law names five methods: comparable uncontrolled price, resale price, cost plus, transactional net margin and transactional profit split. Another method may be used if none of these can reasonably be applied. The Federal Tax Authority can adjust taxable income where a result falls outside the arm’s length range. Its Transfer Pricing Guide, issued on 23 October 2023, broadly follows the OECD Transfer Pricing Guidelines.
Article 35 defines related parties widely. They include individuals related to the fourth degree of kinship, and an individual and a company where that individual holds 50% or more of the ownership or controls it. Two companies are related if one controls the other or a common person controls both. So are a business and its permanent establishment, and partners in an unincorporated partnership. Control means holding 50% or more of the voting rights, appointing half or more of the board, receiving 50% or more of the profits, or exercising significant influence.
Article 36 adds connected persons: an individual who owns or controls the taxable person, its directors and officers, and their related parties. A payment or benefit to a connected person is deductible only to the extent it matches market value and is incurred wholly and exclusively for the business. This catches founder salaries, bonuses, rent paid to a director’s property company and consultancy fees to shareholders. The rule does not apply to listed companies or to businesses under the regulatory oversight of a UAE competent authority.
Disclosure Form, Master File and Local File
Article 55 requires a transfer pricing disclosure in the form the FTA prescribes, filed with the corporate tax return within nine months of the period end. Under the FTA’s return guidance, the related-party schedule applies once transactions with all related parties exceed AED 40 million in the period. Only categories above AED 4 million then need reporting. Those categories are goods, services, intellectual property, interest, assets, liabilities and other. The connected-persons schedule applies when payments or benefits to any one connected person, together with its related parties, exceed AED 500,000.
Ministerial Decision No. 97 of 2023 requires a master file and a local file where revenue in the period is AED 200 million or more, or where the business belongs to a multinational group with consolidated revenue of AED 3.15 billion or more. The files are not filed with the return, but they must be produced within 30 days of an FTA request. The local file must cover transactions with non-residents, exempt persons, residents that have elected Small Business Relief and residents taxed at a different rate. Dealings with residents taxed at the same rate can be left out.
A business that elects Small Business Relief is outside Article 55, so it needs no disclosure form, master file or local file. The FTA still expects its related-party prices to be at arm’s length. Its larger counterparties must document those dealings in their own local files. Failures are penalised under the general corporate tax schedule in Cabinet Decision No. 75 of 2023: failing to keep required records costs AED 10,000, and a tax difference found in an audit attracts 15% plus 1% a month.
Practical Steps for SMEs With Intercompany Charges
- Map every related party and connected person under Articles 35 and 36, including relatives and companies you control.
- List all intercompany flows: management fees, cost recharges, loans, rent, guarantees and use of brands or software.
- Put written agreements in place and set prices on a documented basis, such as cost plus a benchmarked mark-up.
- Before each return, total your related-party transactions against the AED 40 million and AED 4 million tests, and each connected person against AED 500,000.
- Check owners’ and directors’ salaries, rent and benefits against market rates, and record how you reached them.
- Pay particular attention to free zone and mainland dealings and to affiliates electing Small Business Relief, as these fall within local file scope.
- Keep agreements, invoices and pricing workings for seven years, ready to produce within 30 days.
Frequently asked questions
What is the transfer pricing disclosure form threshold in the UAE?
Under the Federal Tax Authority’s return guidance, the related-party schedule is required once the total value of transactions with all related parties exceeds AED 40 million in a tax period. Only transaction categories above AED 4 million then need reporting. The connected-persons schedule is required when payments or benefits to any one connected person exceed AED 500,000. The form is filed with the corporate tax return.
Who must prepare a master file and local file in the UAE?
Under Ministerial Decision No. 97 of 2023, a taxable person must keep a master file and local file if its revenue in the tax period is AED 200 million or more. The same applies if it belongs to a multinational group with consolidated revenue of AED 3.15 billion or more. The files are not filed with the return, but the FTA can ask for them, and they must be submitted within 30 days.
Are payments to directors and shareholders covered by UAE transfer pricing rules?
Yes. Article 36 of the Corporate Tax Law treats owners, directors and officers, and their related parties, as connected persons. Salaries, bonuses, rent and fees paid to them are deductible only to the extent they match market value and are incurred wholly and exclusively for the business. Payments above AED 500,000 to any one connected person must also be reported on the transfer pricing disclosure form.
Do businesses claiming Small Business Relief need transfer pricing documentation?
No. A business that elects Small Business Relief is outside Article 55 of the Corporate Tax Law, so it files no disclosure form and keeps no master file or local file. The Federal Tax Authority still expects its related-party dealings to be at arm’s length. Larger group companies that deal with it must include those transactions in their own local files.