UAE: New transfer pricing documentation requirements

Requirements for maintaining transfer pricing documentation under UAE corporate tax law

Requirements for maintaining transfer pricing documentation under UAE corporate tax law

The UAE Ministry of Finance on 11 May 2023 published Ministerial Decision No. 97 of 2023 on the requirements for maintaining transfer pricing documentation under the UAE corporate tax law.

The guidance provides that a taxable person must maintain a Local file and a Master file if during the relevant tax period:

  • The taxable person is a constituent entity (i.e., mainland or freezone subsidiary, branch or permanent establishment of a multinational enterprise group, as defined under Cabinet Decision No. 44 of 2020, with annual consolidated group revenues exceeding AED 3.15 billion)
  • The taxable person’s revenues exceed AED 200 million

A. To be included in the Local file 

B. To be excluded in the Local file

Transactions/arrangements with:

  • Nonresident persons
  • Exempt persons
  • UAE resident persons that have elected to avail of small business relief
  • UAE resident persons subject to a different corporate tax rate

Transactions/arrangements with:

  • UAE taxable persons not included in “A”
  • Natural persons acting independently of each other (i.e., on an arm’s length basis)
  • Juridical persons considered a related party or connected person by virtue of being a partner in an unincorporated partnership, acting independently of each other
  • Permanent establishments of a non-UAE entity subject to corporate tax at 9%

In order to be considered as “acting independently,” a transaction must be undertaken in the ordinary course of business and the parties to the transaction may not exclusively or almost exclusively transact with each other. In addition, the activities of one of the parties may not be subject to detailed instruction or control of the other party. The tax authority will consider all relevant facts and circumstances when considering if parties are independent.

KPMG observation

No guidance has been provided on the transfer pricing disclosure form, which will be part of the annual corporate tax return, but it is expected that transactions and arrangements with related parties and connected persons will likely be included in the form.

Further guidance is expected on both the transfer pricing disclosure form and transfer pricing documentation in general.

Read a May 2023 report prepared by the KPMG member firm in the United Arab Emirates


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