Definition

Transfer Pricing Documentation refers to the detailed records UAE businesses must maintain to demonstrate that transactions between related parties and connected persons are conducted at arm’s length — meaning prices reflect market value as if the parties were independent. This requirement is central to the UAE Corporate Tax Law and ensures transparency in cross‑border and intra‑group dealings.

Key Points

• Required under Federal Decree‑Law No. 47 of 2022 and aligned with OECD Transfer Pricing Guidelines.
• Applies to businesses engaging in related‑party transactions, including goods, services, financing, or intellectual property transfers.
• Companies must maintain Master File and Local File if they exceed specific revenue or transaction thresholds defined by the Federal Tax Authority (FTA).
• Documentation must support that pricing aligns with the arm’s length principle (ALP).
• The FTA may request documentation within a 30‑day period, and non‑compliance can lead to penalties.

Practical Example

A UAE‑based holding company provides management services to its foreign subsidiary. The service fee charged must be consistent with what would have been agreed upon between unrelated parties. Proper transfer pricing documentation evidences this alignment and safeguards against FTA disputes.

Why It Matters

Compliant transfer pricing documentation reduces tax risk, ensures corporate transparency, and prevents double taxation — a key compliance area for multinational businesses operating under UAE Corporate Tax.