Transfer Pricing Documentation for Corporate Tax Registration in Dubai - UAE

In the dynamic business landscape of Dubai, where multinational enterprises (MNEs) and local firms alike thrive, corporate tax registration has become a pivotal step for compliance since the introduction of the UAE Corporate Tax regime effective from June 1, 2023. 

Transfer pricing documentation is not just a regulatory checkbox—it's the backbone of demonstrating fair profit allocation in intercompany transactions, especially crucial for corporate tax registrants in Dubai. Whether you're a mainland entity or operating in a free zone like DIFC or DMCC, proper documentation prevents penalties, streamlines audits by the Federal Tax Authority (FTA), and safeguards your 9% tax rate on income above AED 375,000. In this comprehensive guide, we'll dive deep into transfer pricing documentation, its integration with corporate tax registration in Dubai, global standards, UAE-specific rules, preparation tips, and why partnering with experts like Young & Right is essential for requirements in the UAE.

What is Transfer Pricing?

Transfer pricing refers to the transfer pricing rules and methods for pricing transactions within and between enterprises under common ownership or control, such as subsidiaries of a multinational enterprise (MNE). These transactions can include the sale of goods, provision of services, licensing of intellectual property, or financing arrangements, all governed by transfer pricing regulations.

The core principle governing transfer pricing is the "arm's length principle," which requires that the prices charged in these controlled transactions be comparable to those that would be charged between independent entities in similar circumstances. This ensures that profits are allocated fairly across jurisdictions for tax purposes, preventing tax avoidance through artificial pricing. Without proper transfer pricing, MNEs could shift profits to low-tax jurisdictions, leading to base erosion and profit shifting (BEPS). In Dubai's context, where many businesses engage in cross-border trade via Jebel Ali Port or Dubai International Airport, transfer pricing applies to both domestic (e.g., between mainland and free zone entities) and international transactions. The UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022) mandates the arm's length principle for all controlled transactions with Related Parties (e.g., >50% ownership) or Connected Persons (e.g., directors' affiliates), aligning with the taxable person's transfer pricing policies.

Transfer Pricing Documentation (TPD) in the UAE: What You Need to Know to Stay Audit-Ready

Transfer pricing documentation consists of a set of reports, records, and analyses that MNEs—and now UAE taxable persons—must prepare and maintain to demonstrate that their intercompany transactions comply with the arm's length principle. It serves as evidence during tax audits and helps tax authorities like the FTA assess whether taxes have been paid appropriately in each jurisdiction, in line with UAE’s transfer pricing standards.

High-quality transfer pricing documentation not only justifies pricing policies but also allows tax examiners to rely on the taxpayer's own analysis, potentially streamlining audits and avoiding disputes. It is typically required for entities with cross-border related-party transactions exceeding certain thresholds, and failure to maintain it can result in penalties. The concept is standardized globally through frameworks like the OECD/G20 BEPS Project (specifically BEPS Action 13), which promotes transparency and consistency while balancing compliance burdens. The UAE fully aligns with this, as outlined in the FTA's Transfer Pricing Guide (CTGTP1, October 2023), incorporating OECD Transfer Pricing Guidelines (January 2022), and supporting compliance with the arm’s length principle.

For Dubai businesses registering for corporate tax via the FTA portal, transfer pricing documentation preparation begins at registration if thresholds are anticipated. All taxable persons must apply the arm's length principle, but documentation kicks in based on revenue: AED 200 million for Local File or AED 3.15 billion group-wide for Master File, as per transfer pricing practices and UAE TP requirements.

Purpose and Importance of Transfer Pricing Documentation

The primary objectives of transfer pricing documentation UAE are threefold:

→ Ensuring Taxpayer Compliance:

It compels companies to thoughtfully evaluate their transfer pricing at the time of transactions or tax filing, promoting consistent policies and preventing retrospective adjustments, including transfer pricing documentation in UAE standards.

→ Facilitating Risk Assessment by Tax Authorities:

Provides high-level data for quick identification of potential risks, such as profit shifting, allowing the FTA to prioritize audits efficiently under UAE law.

→ Supporting Detailed Audits:

Offers in-depth transaction-specific information to enable thorough reviews without starting from scratch, while maintaining TP documentation.

Beyond these, transfer pricing documentation is crucial for avoiding penalties (e.g., AED 10,000+ per violation under Cabinet Decision No. 75/2023), demonstrating reasonable cause for positions taken, and managing global tax risks through intercompany pricing strategies. In Dubai, where corporate tax registration is mandatory for businesses with revenue over AED 1 million (or qualifying activities), robust documentation enhances transparency amid increasing FTA scrutiny post-BEPS, within the UAE CT regime and UAE tax framework.

It also supports Advance Pricing Agreements (APAs) under FTA Decision No. 4/2024, reducing future disputes and aligning with overall transfer pricing policies.

UAE Transfer Pricing Documentation: The Three-Tiered Standardized Approach

Most jurisdictions, including the UAE, follow the OECD's three-tiered structure for transfer pricing documentation: Master File, Local File, and Country-by-Country (CbC) Report. This ensures comprehensive yet efficient compliance, with requirements for maintaining such documentation.

🔹Master File

This provides a high-level overview of the MNE group's operations and transfer pricing policies. Prepared at the group level and shared across jurisdictions, it's mandatory in UAE if group revenue ≥ AED 3.15 billion (group revenue of AED 3.15 or consolidated group revenue of AED 3.15 billion). Key recommended content (per Ministerial Decision No. 97/2023):

• • Organizational Structure: A chart showing legal entities, ownership, and locations.
  • Business Description: Overview of supply chains, key products/services, geographic markets, functional analysis of value drivers, and recent restructurings.
  • Intangibles: Strategies for development and exploitation, list of key intangibles (e.g., patents, trademarks), ownership details, related agreements, and transfer pricing policies.
  • Intercompany Financial Activities: How the group is financed, central financing functions, and pricing policies for loans or guarantees.
  • Financial and Tax Positions: Consolidated financial statements and details of APAs or tax rulings. Focus on material information only, as Article 55 of the UAE Corporate Tax Law emphasizes.

🔹Local File

Jurisdiction-specific, detailing the UAE/Dubai entity's material intercompany transactions. Required if entity revenue ≥ AED 200 million. Key content:

• • Local Entity Details: Management structure, business strategy, involvement in restructurings or intangibles.
  • Controlled Transactions: For each category (goods, services, IP):
    1. Description and context.
    2. Amounts, related parties, agreements.
    3. FAR (Functions, Assets, Risks) analysis.
    4. Method selection (CUP, Resale Price, Cost-Plus, TNMM, Profit Split).
    5. Comparables, adjustments, arm's length conclusion.
  • Financial Information: Local statements, reconciliations. This aligns with transfer pricing documentation obligations and documentation obligations for a taxable person.

🔹Country-by-Country (CbC) Report

For MNEs with group revenue > AED 3.15 billion. Aggregate data in tables:

• • Table 1: Revenues, profits, taxes, employees per jurisdiction.
  • Table 2: Entities and activities.
  • Table 3: Clarifications. Filed by Ultimate Parent within 12 months; notification by fiscal year-end, as per OECD BEPS Action 13.

UAE-Specific Requirements for Dubai Businesses

Dubai firms registering for corporate tax must integrate transfer pricing documentation from day one:

→ Disclosure Form:

Mandatory with tax return if related-party transactions > AED 40 million (or > AED 4 million per category like goods/services). Details methods, values, including pricing policies and their application.

→ Thresholds:

Master/Local File if group ≥ AED 3.15B or local ≥ AED 200M, with an overview of transfer pricing.

→ Free Zones:

Apply to domestic transactions too; Qualifying Free Zone Persons need profit attribution proof, under transfer pricing requirements and taxation of corporations and businesses.

→ Timeline:

Contemporaneous—ready by tax return due date (9 months post-period). Submit to FTA within 30 days of request, per UAE MoF guidelines.

→ Penalties:

AED 10,000/violation + AED 20,000 repeat; up to AED 1M for CbCR failure. Tax adjustments possible.

All align with FTA Guide CTGTP1, supporting documentation related to transfer pricing. The documentation is to provide evidence that ensures compliance, and documentation must be prepared for transactions between related parties.

Overview of Transfer Pricing Documentation Requirements

Transfer pricing documentation is essential for multinational enterprises (MNEs) to demonstrate compliance with the arm's length principle, ensuring that intercompany transactions are priced as if they were between unrelated parties. This helps prevent tax base erosion and profit shifting (BEPS) while mitigating risks of audits and penalties. In the UAE, post-BEPS 2.0 implementation in 2025 remains stable, with a particular focus on the digital economy. Entities with consolidated group revenue meeting AED thresholds must prepare comprehensive documentation, including a master file, local file, transfer pricing (TP) documentation, and country-by-country report (CbCR) for the reporting fiscal year.

Step-by-Step Guide to Preparing Transfer Pricing Documentation

To create robust TP documentation, follow this structured approach:

1. Gather Data:

Collect relevant information on intercompany transactions, including financial statements, agreements, and external databases such as Bloomberg. This forms the foundation for accurate analysis.

2. Economic Analysis:

Conduct benchmarking studies and functional, asset, and risk (FAR) analysis to evaluate the economic substance of transactions.

3. Select Methods:

Prioritize transactional methods, with the Comparable Uncontrolled Price (CUP) method preferred where applicable. Consider other TP methods like resale price, cost-plus, transactional net margin, or profit split, ensuring the selection aligns with regulatory guidelines.

4. Document:

Adhere to the "C-F-R" framework—Completeness (covering all required elements), Factual Accuracy (supported by evidence), and Readiness (prepared for submission or audit). This ensures the documentation supports compliance effectively.

5. Tools:

Leverage specialized software for automation, streamlining data analysis, benchmarking, and report generation.

6. Update:

Review and update documentation annually, with comparables refreshed every three years to reflect current market conditions.

Best Practices

• Contemporaneous Preparation: Prepare documentation at the time of transactions or tax return filing to ensure timeliness and reduce audit risks.
• Quality Over Quantity: Focus on concise, relevant content rather than voluminous reports, emphasizing key analyses and justifications.
• For Dubai SMEs: If below revenue thresholds, opt for simplified documentation, but always maintain basic records to meet UAE standards and avoid compliance gaps.

Global Requirements and Variations

While the arm's length principle is universal, requirements vary by jurisdiction:

• United States: Governed by IRC §482, with penalties up to 40% for non-compliance.
• European Union (e.g., Germany): Applies a €6 million threshold for documentation, with stringent BEPS-aligned rules.
• China and India: Enforce strict thresholds and detailed reporting to curb profit shifting.
• UAE (2025): Emphasizes stability post-BEPS 2.0, with requirements tailored to the digital economy and global standards.

These variations underscore the need for MNEs to adapt documentation to local regulations while maintaining consistency across borders.

Penalties and Implementation Aspects

Non-compliance can lead to significant repercussions:

• UAE Penalties: Fines starting at AED 10,000, with the burden of proof shifting to the taxpayer in disputes.
• Timing: Submit TP disclosure forms with the corporate tax return; full documentation must be available upon request.
• Retention: Keep records for 5-7 years to support audits.
• Confidentiality: Documentation is protected under UAE laws, ensuring sensitive business information remains secure.

By adhering to these guidelines, MNEs can achieve compliance, minimize risks, and support sustainable cross-border operations.

What is the difference between Master File and Local File in Transfer Pricing Documentation

In the United Arab Emirates, every multinational group whose consolidated revenue crosses the AED threshold is required to prepare two separate layers of documentation that supports arm’s-length pricing for every related party transaction in the relevant tax period. The requirements apply automatically once the threshold is met. Below, the two files are explained side-by-side under their exact names.

Master File

The Master File is the group’s global passport. It gives the Federal Tax Authority (and every other tax authority worldwide) a single, high-level blueprint of the entire multinational group.

• Purpose: Shows how value is created and priced across the planet.
• Key contents: – Worldwide organisational structure and business description – Global value chain and supply chain map – Ownership and licensing of all intangibles – Group financing and treasury policies – Consolidated list of pricing methods used by the group in every country
• Language: English is sufficient.
• Update rule: Refresh annually; global comparables may be reused for three years.
• Submission: Never attached to the tax return—kept ready for FTA request within 30 days.

Local File

The Local File is the UAE visa stamped with receipts. It proves that every dirham moving in or out of the UAE entity during the tax period was charged at arm’s length.

• Purpose: Defends related party transactions that touch the United Arab Emirates.
• Key contents: – UAE entity’s own functions, assets and risks (FAR analysis) – Complete list of every related party transaction in the tax period – UAE-specific controlled transaction descriptions and contracts – Fresh UAE benchmarking study – Step-by-step justification of the chosen transfer pricing method (CUP preferred) – Documentation that supports why the selected transfer pricing method delivers an arm’s-length result in the UAE market
• Language: English or Arabic.
• Update rule: Brand-new file every year, with new UAE comparables.
• Submission: Same 30-day rule—ready on demand, never filed upfront.

One-Line Memory Aid

Master File = the group’s worldwide story. Local File = the UAE chapter with every receipt.

UAE Golden Rule

Even if the multinational group applies the same pricing methods globally, the Local File must contain documentation that supports an arm’s-length outcome for every related party transaction inside the United Arab Emirates during the relevant tax period.

Prepare both files contemporaneously, store them for seven years, and the FTA will have no reason to shift the burden of proof—or to levy penalties starting at AED 10,000.

Why Choose Young & Right for Your Dubai Corporate Tax Registration?

At Young & Right, Dubai’s premier accounting and tax consultancy firm located in the heart of Sheikh Zayed Road, we don’t just register you for corporate tax — we build your entire UAE tax fortress. With 12+ years of expertise, a team of 50+ certified professionals, and a proven track record of 200+ happy clients across hospitality, real estate, retail, and beyond, we deliver end-to-end transfer pricing services tailored for Dubai while eliminating every ounce of transfer pricing risk.

This is how Young & Right makes UAE Corporate Tax registration, penalty-proof, and makes it profit-maximizing:

1. One-Click Corporate Tax Registration & TRN

We handle your EmaraTax submission in under 48 hours, whether you’re a mainland LLC, DIFC SPV, or DMCC free-zone trader, providing an instant eligibility check for criteria such as AED 1M turnover, permanent establishment in the UAE, or natural person status, ensuring zero-delay TRN issuance and full alignment with FTA & Abu Dhabi tax authority rules, while helping you beat the March 31, 2025 last date for natural persons by filing for you today.

2. 100 % Penalty Waiver Guarantee

Tap the FTA’s one-time penalty waiver (launched 14 April 2025) with zero stress by filing your first return by 31 July 2025 for December-2024 periods to have all late-registration fines erased, and we will reclaim every Dirham you’ve already paid in penalties through real-time deadline tracking so you never miss 30 Sep 2025 filings again.

3. Full Transfer Pricing Documentation Suite

We prepare your Master File ready in 10 days for groups exceeding AED 3.15 billion, create a Local File benchmarked with Bloomberg & KtMINE for entities over AED 200 million, auto-populate and file your Disclosure Form with your tax return, lodge APA applications before your next coffee break, and ensure your Country-by-Country Report is filed 12 months ahead of deadline, with all documents audit-ready, FTA-compliant, and arm’s-length certified.

4. Strategic Tax Planning = 15 % Lower Effective Rate

We help lock in 0 % tax up to AED 375,000 profit and slash your bill to below 9 % using deductions, free-zone exemptions, and group relief, while future-proofing for OECD Pillar Two 15 % top-up tax through an integrated Corporate Tax + VAT roadmap in one dashboard.

5. Cloud-Powered Filing & Audit Shield

Our services include zero-error tax returns pushed directly to EmaraTax, achieving 30 % faster month-end close via IFRS cloud books, maintaining a live audit trail that makes FTA examiners smile, and providing a 24/7 dashboard on phone or laptop to see your TRN, filings, and refunds in real time.

6. End-to-End Service

Our comprehensive offerings include corporate tax registration & TRN, full Master File / Local File preparation, transfer pricing Disclosure Forms & Audits, APA & Mutual Agreement Procedure filings, penalty waiver & refund claims, and cloud accounting + monthly compliance pack.

Conclusion

Transfer pricing documentation is your non-negotiable shield against FTA penalties and profit erosion. A compliant Master File, Local File, and Disclosure Form lock in your 9% rate, silence every audit question, and keep every dirham where it belongs—in your Dubai business. Young & Right builds the full suite in days, files it flawlessly, and hands you a live dashboard so compliance becomes automatic. One decision today ends every transfer pricing risk tomorrow.