Reviewed 12 September 2026. General guidance; confirm the requirements for your business with the relevant authority.
Transfer pricing concerns the terms used in transactions between related parties. For a business owner, the practical question is whether a charge, loan or other arrangement can be explained by what each party actually does and the terms independent parties would accept.
Identify the transactions before choosing a method
Start with an ownership and control chart, then reconcile the related-party list to the general ledger. Common items include management services, intercompany sales, loans, guarantees, rent, royalties and cost allocations. Domestic transactions also deserve review; a transaction is not automatically outside the rules because both companies are in the UAE.
Payments to connected persons require their own assessment under the Corporate Tax rules. Do not assume that a shareholder’s approval or an invoice establishes deductibility. Record who provided the service, what was received and how the amount was determined.
Distinguish the pricing obligation from the file threshold
Ministerial Decision 97 of 2023 sets thresholds for maintaining a master file and local file. They include revenue of at least AED 200 million in the relevant tax period, or membership of an MNE group with consolidated revenue of at least AED 3.15 billion in that period. The decision also sets conditions for transactions included in the local file.
Being below a documentation threshold does not mean that related-party prices can be arbitrary. The arm’s-length requirement, return disclosures and evidence supporting the accounts need to be considered separately. Check the current FTA guide and return instructions for the relevant period, including any applicable exclusions or reliefs.
Make the evidence match the business
A useful file tells a consistent story. The contract, invoice, payment, accounting entry and explanation of the service should agree. If a parent company provides regional management support, keep evidence of the work delivered and why the UAE entity benefits. An allocation based on headcount or revenue should have a reason linked to the service rather than being selected merely because it produces a preferred tax result.
For financing, document the amount, currency, term, security, repayment arrangements and the parties’ circumstances. A rate quoted for a different currency or maturity may not provide a meaningful comparison. Obtain specialist analysis where the arrangement needs benchmarking or a more complex method.
A practical annual review
- Update the ownership, control and related-party register.
- Extract transactions and balances by counterparty from the ledger.
- Match material items to signed agreements and evidence of performance.
- Review pricing methods, allocation keys and any changes in commercial circumstances.
- Check whether documentation and disclosure thresholds apply for the period.
- Reconcile the final disclosure and supporting schedules to the return and financial statements.
Assign an owner to collect records during the year. Reconstructing services and decisions after year-end is harder than maintaining a short, regular evidence trail.
Common points of confusion
Is a group policy enough?
A policy is a starting point. Its application should reflect the actual transaction and the UAE entity’s functions, assets and risks. Retain the calculations and evidence showing how the policy was used.
Does a free zone licence remove the issue?
No. Transfer pricing can also matter when assessing Qualifying Free Zone Person conditions. Review the pricing and the free zone tax position together.
Does documentation guarantee that the FTA will agree?
No. Good records explain the position and support a review; they do not guarantee an authority’s conclusion. MNK can help organise the records and coordinate the appropriate tax support.
Official sources and further reading
Explore MNK’s related business service or request a consultation with your activity, jurisdiction and the support you need.