On 11 May 2023, the United Arab Emirates (‘UAE’) Ministry of Finance (‘MoF’) published the Ministerial Decision No. 97 of 2023 (‘the Decision’) on the requirements for maintaining Transfer Pricing (‘TP’) documentation under the UAE Corporate tax (‘CT’) regime, as defined under Article 55(2) of the Federal Decree-Law No. 47 of 2022 (‘the CT Law’).


The Decision states that a Taxable Person should maintain a Local File and a Master File if the Taxable Person satisfies either of the following conditions during the Tax Period:

  1. The Taxable Person is a Constituent Entity (i.e. mainland or freezone subsidiary, branch or permanent establishment) of a Multinational Enterprise Group, defined under Cabinet Decision No. 44 of 2020, with annual consolidated group revenues exceeding AED 3.15 billion); or
  2. The Taxable Person’s revenues exceed AED 200 million.

The Decision provides guidance on transactions with Related Parties and Connected Persons that should be included in the Local File: 

A. To be included in the Local File 

B. To be excluded in the Local File

Transactions/arrangements with:

  • A Non-resident Person;
  • An Exempt Person;
  • A UAE Resident Person that has elected to avail of Small Business Relief (Article 21 of the CT Law); and
  • A UAE Resident Person who is subject to a different CT rate (this requires that related party transactions between UAE mainland and free zone entities, if the free zone entity is subject to 0% CT rate, need to be document


Transactions/arrangements with:
  • UAE Taxable Persons not included in “A” (this would mean certain UAE domestic transactions where both parties are subject to CT at 9% do not need to be included);
  • A Natural Person where the parties are acting as if they were independent of each other (i.e. on an arm’s length basis);
  • A Juridical Person (that is considered a Related Party or Connected Person by virtue of being a partner in an Unincorporated Partnership) where the parties are acting as if they were independent of each other; and
  • A permanent establishment of a non-UAE entity who is subject to CT at 9%. 

The Decision notes that transactions with a Natural/Juridical Person (considered a Related Party or Connected Person by virtue of being a partner in an Unincorporated Partnership) can be excluded from the Local File provided the parties are acting as they are independent of each other. The Decision lays out the conditions in order to be considered as ‘acting independently’:

  • The transaction is undertaken in the ordinary course of business; and
  • The parties to the transaction are not exclusively or almost exclusively transactions with each other.

In addition, should the activities of one of the parties be subject to detailed instruction or control of the other party, the parties cannot be considered as though they are acting independently.  

The Decision further states that the Federal Tax Authority (‘FTA’) will consider all relevant facts and circumstances when considering if parties are independent.

Key takeaways

UAE businesses now have additional information to ascertain whether they would be required to prepare and maintain Local File(s) and Master File in the UAE and also have information on the transactions with Related Parties and Connected Persons that are required to be covered in the Local File.

It is important to note that the Decision covers the maintenance of the TP Local File and Master File only. This Decision does not provide guidance on the TP Disclosure Form, which would form part of the annual CT return. It is expected that transactions and arrangements with Related Party and Connected Persons would likely form part of the TP Disclosure Form.

UAE businesses are all still within the scope of the arm’s length principle and will need to review transactions/arrangements with Related Parties or Connected Persons considering the nature of transaction and counterparties involved on a case-by-case basis.

Further guidelines will be issued on TP documentation. These further guidelines are expected to note that the Local File and Master File formats will be aligned to Chapter V of the OECD’s TP Guidelines and provide a template for the TP Disclosure Form.

How can KPMG help?

Our teams comprise qualified professionals with strong backgrounds and deep knowledge of Transfer Pricing and Corporate Tax, as well as familiarity with local and regional legal frameworks. They can help you understand the Transfer Pricing requirements set out in the UAE CT Law.

We are happy to discuss your specific circumstances and determine the way forward. Should you have any questions, please get in touch with your usual KPMG contact or any of the tax professionals below. 

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