Key takeaways
- Article 34 of the corporate tax law requires transactions between related parties to meet the arm's length standard, whether the other party is onshore, in a free zone or abroad.
- Payments to connected persons, such as owners and directors, are deductible only up to market value (Article 36), with exceptions for listed and regulated companies.
- With related-party transactions, Ministerial Decision No. 97 of 2023 requires a local file, and usually a master file, from AED 200 million of revenue or AED 3.15 billion of multinational group revenue in the tax period.
- Unless you claim small business relief, you must hand over transfer pricing documents within 30 days of an FTA request, or by a later date it sets (Article 55).
- Qualifying free zone persons must comply with Articles 34 and 55; small business relief claimants skip Article 55 but, says the FTA, still price at arm's length.
What transfer pricing means under UAE corporate tax
Transfer pricing is the price one business charges a related business, such as a sister company, for goods, services, loans or assets. Under Article 34 of Federal Decree-Law No. 47 of 2022, that deal meets the arm's length standard if its results match what unrelated persons would have agreed in similar circumstances. If not, the FTA adjusts your taxable income and makes a matching adjustment for the related party.
The UAE's transfer pricing regulations are Articles 34 to 36 and 55 of that law and Ministerial Decision No. 97 of 2023 on documentation, for tax periods starting on or after 1 June 2023 (Article 69). The FTA's Transfer Pricing Guide (CTGTP1, October 2023) sets out the UAE's transfer pricing guidelines. The FTA says the rules cover dealings onshore, in free zones and abroad, including intra-group loans. Later amendments, up to Federal Decree-Law No. 28 of 2025, left Articles 34, 35, 36 and 55 unchanged.
Related parties and connected persons
| Group | Who it includes | Rule |
|---|---|---|
| Related parties (Article 35) | Relatives to the fourth degree; a person and a company they own 50% or more of, or control; companies under common ownership or control; a business and its permanent establishment; partners in one unincorporated partnership; trust and foundation parties | Transactions must be at arm's length (Article 34) |
| Connected persons (Article 36) | Your owners, directors and officers, and their related parties | Payments are deductible only up to market value, and only if incurred wholly and exclusively for your business |
Control means 50% or more of the votes, board or profits, or significant influence over the business. The connected person rule doesn't apply to companies listed on a recognised stock exchange or under a UAE regulator's oversight. Running a holding company? Its fees and loans to group companies fall under these rules.
The five transfer pricing methods
Article 34(3) lists five methods, which the FTA's guide calls internationally accepted:
- Comparable uncontrolled price. Compares your price with one agreed between independent parties.
- Resale price. Works back from the price at which goods are resold to an independent buyer.
- Cost plus. Adds an arm's length mark-up to the supplier's costs.
- Transactional net margin. Compares your net profit with that of comparable independent transactions.
- Transactional profit split. Splits combined profits as independent parties would.
Pick the most reliable method, considering contract terms, the transaction's features, economic circumstances, functions, assets and risks, and business strategies. Another method is allowed only if none of the five can reasonably apply. The FTA's guide draws on the January 2022 OECD guidelines; it isn't legally binding and may change, so check the current version.
Thresholds and documents
| Requirement | Who it applies to | Source |
|---|---|---|
| Arm's length pricing | Every taxable person dealing with related parties or connected persons | Articles 34 and 36 |
| Disclosure filed with the tax return | Taxable persons the FTA requires, in the form it sets | Article 55(1) |
| Master file and local file | Taxable persons with related-party or connected-person transactions and revenue of AED 200 million or more in the tax period, or in a multinational group with consolidated revenue of AED 3.15 billion or more | Article 55(2) and Ministerial Decision No. 97 of 2023 |
| Documents on request | Any taxable person the FTA asks, except small business relief claimants: within 30 days, or a later date it sets | Article 55(3) and (4); Article 21(2) |
| Record keeping | Seven years after the end of the tax period | Article 56 |
The FTA's guide says companies in a UAE-only group need only the local file. The local file covers transactions with non-residents, exempt persons, residents claiming small business relief and residents taxed at a different rate, such as a qualifying free zone person. It leaves out other residents taxed at your rate and natural persons acting independently. Below the thresholds, the FTA's guide still expects reasonable records.
The FTA decides when the return's transfer pricing disclosure is needed; ask your tax agent to confirm whether yours needs one before you file.
Free zone companies and small business relief
A qualifying free zone person must comply with Articles 34 and 55 to keep its status (Article 18(1)(d)); the FTA lists "comply with transfer pricing rules and maintain the relevant transfer pricing documentation" among the conditions.
Small business relief is different. Article 21(2) switches off Article 55, so claimants skip the documentation rules, but the FTA's Transfer Pricing Guide says they still need arm's length pricing. On 7 August 2026 the Ministry of Finance extended the relief to tax periods ending on or before 31 December 2029, for revenue not exceeding AED 3 million. See common tax mistakes new companies make.
Transfer pricing compliance checklist
- 1. Map your related parties and connected persons using Articles 35 and 36.
- 2. List every transaction with them: sales, services, loans, fees and payments to owners or directors.
- 3. Check the Ministerial Decision No. 97 thresholds for each tax period.
- 4. Price at arm's length and keep records supporting the method; a registered tax agent can prepare the analysis.
- 5. Complete any disclosure the FTA requires with your corporate tax return.
- 6. Keep records for seven years and be ready to produce them within 30 days.
Global Sky PRO isn't a tax agent or auditor and doesn't prepare transfer pricing studies or give tax advice. Use a registered tax agent for studies and filings; see how to choose a tax agent. We handle corporate tax registration paperwork and document preparation; read how to register for corporate tax.
Sources
- Ministry of Finance: Federal Decree-Law No. 47 of 2022 and its amendments
- Ministry of Finance: Federal Decree-Law No. 47 of 2022 and its amendments (Arabic, January 2026)
- Ministry of Finance: Ministerial Decision No. 97 of 2023 on transfer pricing documentation
- FTA: Transfer Pricing Guide (CTGTP1, October 2023)
- FTA: Corporate tax FAQ on transfer pricing
- Ministry of Finance: Small business relief extended to 31 December 2029
Official sources checked on 13 November 2026. This guide explains published rules in plain English and is not legal or tax advice. Rules change; we check the current position for your case before you act.