UAE businesses must keep a master file and local file if their revenue is at least AED 200 million or their group's revenue is at least AED 3.15 billion. Separately, the corporate tax return includes a disclosure of related-party transactions above AED 40 million in total. Every related-party price must still be at arm's length.
Who needs a master file and local file?
Businesses with revenue of AED 200 million or more in the tax period, or that belong to a multinational group with consolidated revenue of AED 3.15 billion or more, under Ministerial Decision No. 97 of 2023 (UAE Ministry of Finance).
When is the disclosure form needed?
When related-party transactions exceed AED 40 million in total, with each category above AED 4 million listed, and transactions with connected persons above AED 500,000 (Deloitte on the return guide).
“ensure taxpayers can prove the arm's length basis for pricing their transactions”
Do smaller businesses need to do anything?
Yes. The arm's length principle applies to every business, documentation threshold or not. Keep agreements, invoices and a short note of how prices were set for loans, management fees and goods sold to related parties.
Which transactions draw attention?
Interest-free shareholder loans, management charges without evidence of services, payments to owners and their relatives, and sales between a free zone company and its mainland sister company, because they affect qualifying income too.
Worked example: a group just below the thresholds
A UAE trading company has AED 120 million revenue and buys stock from its parent abroad for AED 45 million. It does not need a master file or local file, because revenue is below AED 200 million (Ministry of Finance). But its related-party transactions exceed AED 40 million, so the disclosure form is needed with the return (Deloitte). And the purchase price must still be at arm's length.
What a short pricing note should contain
- Who the related parties are and how they are related.
- What is bought, sold, lent or charged, and the amounts.
- How the price was set: comparable prices, cost plus a mark-up, or another method.
- The contract or board approval behind it.
Two pages written at the time beat twenty pages written during an audit.
Our view
Most owner-managed businesses fail on paperwork, not pricing. The price they charge a sister company is often reasonable; what is missing is any record of why. Write the note when you set the price.
Frequently asked questions
Is a shareholder salary a related-party payment?
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Payments to owners and directors are connected-person transactions and must be at market value.
Do free zone companies need transfer pricing?
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Yes, and it matters for qualifying income.
When are the files due?
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They must be available on request, within the deadline the FTA sets.
Do salaries to owner-directors count?
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Yes. They are connected-person transactions and must reflect market value.
Sources
- Ministry of Finance issues decision on transfer pricing documentation requirements (Ministerial Decision No. 97 of 2023) — UAE Ministry of Finance, 11 May 2023. Checked 16 October 2026.
- UAE transfer pricing disclosures in the corporate tax return (summary of the FTA Corporate Tax Guide for Tax Returns) — Deloitte Middle East. Checked 16 October 2026.