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Transfer Pricing Documentation (Corporate Tax in UAE)

Transfer Pricing Documentation (Corporate Tax in UAE)

Blog / By Master Consultant

Summary of the Ministerial Decision No. 97 of 2023 on the requirement for maintaining on Transfer Pricing Documentation.

Threshold

Taxpayers meeting the following criteria need to maintain a Master File and a Local File annually: 1) Revenue in a relevant tax period more than or equal to AED 200 mn; or 2) The taxpayer is part of a multinational group that has a consolidated turnover of more than or equal to AED 3.15bn in the relevant tax period Further, as per the Transfer Pricing Guide issued by FTA in October 2023, any Taxable Person that is part of a UAE headquartered group that is not an MNE Group (i.e. a group that does not have business establishments outside the UAE) is not required to maintain a Master File. However, they should maintain a Local File as per the above thresholds.

Inclusions

1) Non- Resident Person 2) Exempt Person 3) A Resident Person electing for Small Business Relief 4)A resident Person whose income is subject to a different corporate tax rate from that applicable to the income of the Taxable Person

Exclusions

1) Transaction with Resident Person not specifically included in adjoining column 2) A natural person, provided that the parties to the transaction or arrangement are acting as if they were independent of each other. 3) A juridical person that is considered to be 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 are acting 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.

This Ministerial Decision also specifies that further guidelines on Transfer Pricing Documentation will be issued by the FTA.

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