What is the threshold for transfer pricing documentation?

Article 55 – Transfer Pricing Documentation 1. The Authority may, by notice or through a decision issued by the Authority, require a Taxable Person to file together with their Tax Return a disclosure containing information regarding the Taxable Person’s transactions and arrangements with its Related Parties and Connected Persons in the form prescribed by the Authority. 2. If a Taxable Person’s transactions with its Related Parties and Connected Persons for a Tax Period meet the conditions prescribed by the Minister, the Taxable Person must maintain both a master file and a local file in the form prescribed by the Authority. 3. The documentation under Clause 2 of this Article must be submitted to the Authority within (30) thirty days following a request by the Authority, or by any such other later date as directed by the Authority. 4. Upon request by the Authority, a Taxable Person shall provide the Authority with any information to support the arm’s length nature of the Taxable Person’s transactions or arrangements with its Related Parties and Connected Persons, within (30) thirty days following the request by the Authority, or by any such other Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 57 later date as directed by the Authority.

By maintaining contemporaneous Transfer Pricing documentation, Taxable Persons can demonstrate that their Transfer Pricing policies comply with the Arm’s Length Principle. These policies and the supporting documentation should be prepared, regularly reviewed and reassessed at least annually to reflect changes in the Taxable Person’s business or structure and the regulatory and wider business environment. 6.4. Summary of the UAE Transfer Pricing documentation requirements The relevant UAE legislation has outlined five Transfer Pricing documentation requirements for certain Taxable Persons that are required to be prepared for each Tax Period:18 1. Transfer Pricing disclosure form which covers details of the Controlled Transactions during a Tax Period. 2. Master File which provides a high-level overview of the Group’s business and the allocation of income and economic activity within a Group. It only applies to large businesses as set out in the Ministerial Decision No. 97 of 2023. 3. Local File which provides detailed information on operations of the local entity and analysis and testing of the outcomes of the Controlled Transactions against the Arm’s Length Principle. It only applies to large businesses as set out in the Ministerial Decision No. 97 of 2023. 4. Country-by-Country Report which provides jurisdictional quantitative information about an MNE Group (above AED 3,150,000,000) as well as an overview of the different activities conducted by affiliates of an MNE Group, as set out in Cabinet Resolution No. 44 of 2020. 5. Additional supporting information upon request of the FTA, pursuant to Article 55(4) of the Corporate Tax Law. These distinct types of Transfer Pricing documentation are further detailed below. 6.5. Transfer Pricing disclosure form Pursuant to Article 55(1) of the Corporate Tax Law, all Taxable Persons who undertake transactions with Related Parties or Connected Persons (domestic or foreign) in the reporting Tax Period and are above a materiality threshold are required to prepare and submit a general Transfer Pricing disclosure form, alongside their Tax Return. A sample of the Transfer Pricing disclosure form to be completed annually by Taxable Persons will be available in due course on the FTA’s website. The Transfer Pricing disclosure form includes information on the broad categories of transactions and arrangements undertaken by the Taxable Person with its Related Parties or Connected Persons. Information provided in the disclosure form includes the nature 18 Corporate Tax Law and the Cabinet Resolution No.44 of 2020 Corporate Tax Guide | Transfer Pricing | CTGTP1 81

the amount is non-deductible for Corporate Tax purposes has no impact on Mr X’s eligibility for Small Business Relief. Transfer pricing documentation Transfer pricing is an internationally recognised approach used to determine the price that should be charged by a taxable person when conducting transactions with related parties or connected persons. Transfer pricing is applied on cross-border transactions to prevent base erosion and profits shifting between taxable entities and non or lowtaxed entities. The FTA can require a Business to file its transfer pricing disclosure and other supporting documentation together with its Tax Return, or within 30 days of being requested to provide it by the FTA.54 5.6.1. Transfer pricing documentation requirements for those who elect for Small Business Relief Transfer pricing documentation rules do not apply to Businesses in the Tax Period for which they elect for Small Business Relief.55 It is important to note that this provision relates to the requirement to provide a disclosure at the same time as its Tax Return, or within 30 days of it being requested by the FTA, and the requirement to maintain a master and local file. It does not prevent the FTA from enquiring into the Resident Person’s Corporate Tax affairs, or reviewing its transactions, including those with its Related Parties. The Resident Person must also ensure that they have considered and complied with the Arm’s Length Principle. Example 17: Transfer Pricing Documentation ABC LLC is a Resident Person for Corporate Tax purposes. During its Tax Period ending 31 May 2025, it had Revenue of AED 2,800,000. This was made up entirely of sales made to DEF Ltd, a foreign company that is a Related Party. ABC LLC elects for Small Business Relief. The FTA would not require ABC LLC to file a disclosure containing information regarding its transactions and arrangements with its Related Party along with its Tax Return, nor request any transfer pricing documentation. 54 Article 55(1) and Article 55(3) of the Corporate Tax Law. 55 Article 21(2)(e) of the Corporate Tax Law. Corporate Tax Guide | Small Business Relief | CTGSBR1 34