TRANSFER

PRICING
DOCUMENTATION
 Article 55 of the Corporate Tax Law and Ministerial
Decision No. 97 of 2023, Requirements for Maintaining
Transfer Pricing Documentation for the Purposes of
Federal Decree-Law No. 47 of 2022 on the Taxation of
Corporations and Businesses, outlines the obligations

LOCAL FILE
for Transfer Pricing documentation, which applies to
Taxable Persons engaging in transactions with Related
Parties or Connected Persons. Transfer Pricing

AND MASTER
documentation comprises records demonstrating
compliance with the Arm’s Length Principle, aiming to
offer the Federal Tax Authority a comprehensive insight
into the Taxable Person's Transfer Pricing policies and
FILE practices.

The Master File provides a broad, global view of the

MNE Group whereas, the Local File provides a detailed,
local view of specific transactions. Both are essential for
comprehensive Transfer Pricing Documentation.
 UNDERSTANDING TRANSFER PRICING DOCUMENTATION: LOCAL AND MASTER FILE
Taxable entities meeting either condition below must
maintain both master and local files as per Article 55(2) of
the Corporate Tax Law in the relevant tax period:

If a Taxable Person is a If the revenue of a Taxable

Constituent Company of a Person is AED 200
Multinational Enterprises million or more during
Group, as defined in the relevant Tax Period
Cabinet Decision No. 44 of
2020, and the total
consolidated group
revenue is AED 3.15
billion or more during
the relevant Tax Period.

Taxable person that is part of UAE headquartered group that does not qualify as a multinational enterprise (MNE Group),
meaning it operates exclusively within the UAE without any business establishments outside UAE, is exempt from the
requirement to maintain a Master File. However, they must still maintain a Local File according to the specified thresholds.
 TRANSACTIONS COVERED BY THE LOCAL FILE
INCLUSIONS AND EXCLUSIONS
The Taxable Person must include transactions or The Taxable Person shall not include transactions or
agreements involving the following Related Parties and arrangements with the following Related Parties and
Connected Persons into the local file: Connected Persons in the local file:
▪ A Non-Resident Person ▪ Resident Persons other than exempt persons, persons
▪ An Exempt Person
who have opted for small business relief, and those with
different corporate tax rates from that applicable to the
▪ A Resident Person who has opted for small business income of the Taxable Person.
relief and fulfills the corresponding requirements.
▪ A natural person, provided that the parties to the
▪ A Resident Person whose income is subject to a transaction or arrangement are acting as if they were
different Corporate Tax rate from that applicable to independent of each other.
the income of the Taxable Person.
▪ A juridical person that is a Related Party or a Connected
Person solely due to its partnership in an
Unincorporated Partnership, assuming transactions or
arrangements are independent
▪ A Non-Resident Person's Permanent Establishment in the
State, with income taxed at the same Corporate Tax rate
as that of the Taxable Person.

The parties involved in the transaction or arrangement are treated as independent of each other if these conditions are fulfilled:
▪ The transaction or arrangement occurs as part of their regular business activities.
▪ They do not primarily conduct transactions solely with each other, but also engage with various other parties.
 CABINET RESOLUTION NO. 44 OF 2020
Annual requirement for multinational companies to submit country-by-country reports (CbCR)

The resolution, requires multinational corporations to annually provide a Country-by-Country Report (CbCR). It is applicable to
MNE Groups headquartered in the UAE with consolidated Group revenue equal to or above AED 3.15 billion during the
Financial Year immediately preceding the reporting Financial Year.

Multinational enterprises (MNE) Group is any group that includes:

• Two or more companies, each having its tax residence in different jurisdictions, or includes a single company with tax
residence in one country and subject to taxation through a permanent entity in another country.
• The group's total consolidated revenue amounts to AED 3,150,000,000 or more during the immediately preceding
fiscal year, as reflected in its consolidated financial statements for that fiscal year.

The following table provides a clear outline of the deadlines for submission of the CbCR as mandated by the resolution.

Description Deadline
Ultimate Parent Entity notifies Competent Authority, that it is No later than Last day of Group’s Reporting Fiscal Year
the reporting entity
Reporting Entity submits CbCR to Competent Authority Within twelve (12) months after the last day of Reporting Fiscal
Year
 CABINET RESOLUTION NO. 44 OF 2020
Annual requirement for multinational companies to submit country-by-country reports (CbCR)
Administrative Offences and Penalties.

Type of Non-compliance Penalty Amount

Failure to submit the report within the deadline AED 1,000,000 + AED 10,000 per day up to AED 250,000
maximum
Failure to maintain required documents and information for a AED 100,000
minimum of five years
Failure to provide any information required in accordance with the AED 100,000
Resolution
Failure to provide information in a complete and accurate manner AED 50,000 to AED 500,000

The Ultimate Parent entity’s failure to provide notification that it is AED 1,000,000 fixed penalty.
the reporting entity within the stipulated timeline. Continuation of failure beyond the initial timeline, AED
10,000 per day, up to AED 250,000 maximum.

The total penalties imposed on the Reporting Entity, or the Ultimate Parent Entity in any Reporting Fiscal Year shall not exceed
AED 1,000,000.
 Contact Us:

CA Pawan Kumar Tushar Gupta Riddhesh Shah

Managing Director Director Head- Corporate Tax
+971 55 220 1715 +971 52 569 5428 +971 56 650 3128

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