Requirements for Transfer Pricing Documentation under Corporate Tax

The United Arab Emirates government has introduced Ministerial Decision No. 97 of 2023, which outlines the requirements for maintaining transfer pricing documentation in accordance with Federal Decree-Law No. 47 of 2022 on the taxation of corporations and businesses. Here are the main points covered by this decision:

1. For each tax period during which a taxable person meets either of the following conditions, they are required to keep a master file and a local file as prescribed in Clause (2) of Article (55) of the Corporate Tax Law:

•  If the Taxable Person is a Constituent Company of a Multinational Enterprises Group that has a total consolidated group Revenue of AED 3,150,000,000 or more in the relevant tax period.
•  If the Taxable Person's Revenue in the relevant tax period is AED 200,000,000 or more.

2. Transactions or arrangements with Related Parties and Connected Persons must be included in the local file if they fall under any of the following categories:

• A Non-Resident Person.

• An Exempt Person.

• A Resident Person that has made an election under Article (21) of the Corporate Tax Law and meets the conditions of such election.

• A Resident Person whose income is subject to a different Corporate Tax rate from that applicable to the income of the Taxable Person.

3. Transactions or arrangements with the following Related Parties and Connected Persons should not be included in the local file:

1. Resident Persons other than those specified in point (2).  

2. A natural person provided that the parties to the transaction or arrangement act as if they were independent.

3. A juridical person is considered a Related Party or a Connected Person solely by virtue of being a partner in an Unincorporated Partnership, provided that the parties to the transaction or arrangement act as if they were independent of each other.

4. A Permanent Establishment of a Non-Resident Person in the State whose income is subject to the same Corporate Tax rate as that applicable to the income of the Taxable Person. 

The Authority will issue guidelines for applying the provisions of this Decision and maintaining transfer pricing documentation.  

This decision will be published and become effective the day after it is officially published.