Transfer pricing is not only a concern for multinationals. Under UAE Corporate Tax, any transaction with a related party or connected person, such as a shareholder, a sister company or a director, must be priced as if the two sides were independent. That is the arm's length principle.
What changes with size is how much paperwork you need to prove it.
Who counts as a related party
Related parties include, among others:
- Companies in the same group, where one controls the other or both are under common control
- Individuals and companies they control, and their relatives up to the fourth degree
- A business and its partners in an unincorporated partnership
- A business and its permanent establishment or foreign branch
Connected persons are owners, directors and officers of the business, and people related to them. Payments to them are deductible only to the extent they are at market value.
Level 1: the disclosure form with your return
With your Corporate Tax return, you may need to complete the transfer pricing disclosure form:
- Related parties: required if the total value of all transactions with related parties in the period is more than AED 40 million. Once that is met, each transaction category above AED 4 million must be disclosed.
- Connected persons: required if payments or benefits to connected persons exceed AED 500,000, and then each connected person above AED 500,000 must be reported.
Level 2: master file and local file
Under Ministerial Decision No. 97 of 2023, you must maintain a master file and a local file if, in the tax period:
- your revenue is at least AED 200 million, or
- you are part of a multinational group with consolidated revenue of at least AED 3.15 billion.
The master file describes the group as a whole: structure, business, intangibles, financing and transfer pricing policies. The local file covers the UAE entity's own related-party transactions in detail, with a functional analysis and the benchmarking that supports each price.
These files are not filed with the return, but you must provide them to the FTA within 30 days of a request.
Everyone: keep evidence
Even below all of these thresholds, you must be able to show that related-party prices are at arm's length if the FTA asks. A simple file with agreements, invoices and the basis for each price goes a long way.
What to do now
- List your related parties and connected persons, including directors and family members with business ties.
- Total your transactions with them for the year to see which thresholds apply.
- Put written agreements in place for management fees, loans, cost recharges and shared services.
- Benchmark the main transactions, or have an adviser do it, if you need a local file.
- Check payments to owners and directors against market rates.
How Dreambooks helps
Dreambooks lets you tag customers, suppliers and people as related parties or connected persons, then totals transactions with them by category, so you can see the AED 40 million, AED 4 million and AED 500,000 thresholds as the year goes on and complete the disclosure form from your books.
Official sources
- Ministry of Finance: decision on transfer pricing documentation requirements
- FTA: Corporate Tax Returns guide
- FTA: Corporate Tax legislation
This article is general information as of June 2026, not tax advice. Check Ministerial Decision No. 97 of 2023, the FTA's transfer pricing guidance and the latest return guide, or speak to your tax adviser, before acting.