Unveiling the New Transfer Pricing Documentation Requirements in the UAE


As a leading accounting and tax advisory firm in the UAE, HSBM Global is committed to keeping you updated on recent legislative changes that impact your business.

Today, we're focusing on the recently announced Ministerial Decision No. 97 of 2023, which sets out the requirements for maintaining Transfer Pricing Documentation ("Ministerial Decision on Transfer Pricing" or the "Decision") under the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses ("CT Law").

What is the Ministerial Decision on Transfer Pricing?

This decision outlines the conditions for maintaining a master file and a local file in accordance with Clause (2) of Article (55) of the CT Law. It specifies when these files must be maintained and which transactions or arrangements should be included in the local file.

Who Does it Apply to?

The Decision is applicable to any taxable person that meets one of two conditions during the relevant tax period:

  1. Is a constituent company of a multinational enterprise group with a total consolidated group revenue of AED 3.15 billion or more.
  2. The taxable person's revenue in the relevant tax period is AED 200 million or more.

A taxable person who meets either of the conditions above must maintain a master file and a local file under the Decision.

What Should be Included in the Local File?

The local file should include transactions or arrangements with all related parties and connected persons who are:

  1. Non-resident persons.
  2. Exempt persons.
  3. Resident persons that have made an election to calim the small busiensses relief available under Article (21) of the CT Law and meet the conditions of such election.
  4. Resident persons whose income is subject to a different corporate tax rate from that applicable to the income of the taxable person.

Exclusions From the Local File

Certain transactions or arrangements with specific related parties and connected persons are excluded from the local file. These include transactions with:

  1. resident persons not specified in the conditions above;
  2. transactions with natural or juridical persons in an unincorporated partnership, provided the parties act independently; and
  3. permanent establishments of a taxable person who is subject to the same corporate tax rate.

The parties above engaged in a transaction or arrangement will be considered acting as if they were independent of each other if the relevant transaction or arrangement is undertaken in the ordinary course of business, and the parties should not be exclusively or almost exclusively transacting with each other.

Authority Guidelines

The Federal Tax Authority is expected to issue guidelines for the application of the provisions of this Decision and maintaining transfer pricing documentation.

What Do Businesses Need To Do?

The new Transfer Pricing Documentation requirements outlined in Ministerial Decision on Transfer Pricing will have significant implications for many businesses operating in the UAE. It's crucial for businesses to understand the new requirements and take proactive steps to prepare for them. Here are some actions businesses can take:

Understand the Transfer Pricing Requirements: The first step is to understand the new requirements and how they apply to your business. This involves thoroughly reading and interpreting the Decision, and if necessary, seeking expert advice to clarify any ambiguities or uncertainties.

Identify Applicable Transactions: Businesses should identify which transactions or arrangements with related parties and connected persons need to be included in the local file, based on the conditions specified in the Decision.

Review Existing Documentation: Businesses should review their existing Transfer Pricing documentation to assess if it meets the new requirements. If not, changes may need to be made.

Update Transfer Pricing Policies: Based on the new requirements, businesses may need to update their Transfer Pricing policies. This could involve changes to the methodologies used, the approach to determining arm's length pricing, or the way documentation is maintained.

Prepare Master and Local Files: If the business meets the conditions specified (i.e. has revenue in excess of AED 200 million or is a member of a multinational enterprise with consolidated revenues in excess of AED 3.1 billion), it will need to prepare a master file and a local file. These files should include comprehensive documentation of all relevant transactions or arrangements in accordance with requiremnts of OECD's Guidelines on Transfer Pricing.

Plan for Compliance: Businesses should devise a plan to ensure ongoing compliance with the new requirements. This could involve regular reviews of Transfer Pricing policies and documentation, internal training to ensure all relevant staff understand the requirements, and the development of procedures to ensure all necessary documentation is maintained and easily accessible.

Seek Professional Advice: Given the complexity of Transfer Pricing rules and the potential consequences of non-compliance, businesses may wish to seek professional advice. A tax advisor or consultant with expertise in Transfer Pricing can provide valuable guidance and help businesses navigate the new requirements.


At HSBM Global, we offer expert advice and support on all aspects of corporate taxation, including Transfer Pricing. With the recent changes in regulations, we stand ready to assist businesses in understanding these new requirements, evaluating their current practices, and devising an effective plan for compliance. To receive our professional advice or to learn more about how our services can benefit your business, feel free to email us today at tax@hsbmglobal.com.

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