Requirements for Maintaining Transfer Pricing Documentation: UAE Ministerial Decision No. 97 of 2023

The UAE Ministry of Finance has issued a Ministerial Decision No. 97 of 2023 on the requirements for maintaining transfer pricing documentation for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. 

Subsequently, it stipulates: 

• A taxable person that satisfies either of the following conditions shall maintain both a master file and a local file in accordance with Clause (2) of Article 55 of Corporate Tax Law in the relevant Tax Period: 
  • Where the taxable person, at any time during the relevant tax period is a constituent entity of a Multinational Enterprise Group and has a total consolidated group revenue of AED 3,150,000,000 (three billion one hundred and fifty million UAE dirhams) or more in the relevant tax period
  • Where the taxable persons’ revenue in the relevant tax period is AED 200,000,000 (two hundred million UAE dirhams) or more
• Transactions or arrangements undertaken with all the following Related parties or connected persons shall be included in the local file: 

• • A non-resident person 
  • An exempt person 
  • A resident person who has opted for small business relief 
  • A resident person whose income is subject to a different corporate tax rate than the taxable person’s. 
•  Transactions or arrangements undertaken with all the following Related parties or connected persons shall not be included in the local file: 
  • A resident person other than the exempt person, or who has opted for small business relief, or whose income is subject to a different corporate tax rate than the taxable person’s. 
  • A natural person, being party to the transaction and acting independently* 
  • A juridical person being related by virtue of a partner in an Unincorporated Partnership and are acting independently* 
  • A permanent establishment of a non-resident person in the UAE and is subject to the same corporate tax rate as applicable to the taxable person 

* The parties to the transactions or arrangements are considered independent if they are undertaken in the ordinary course of business and the parties are not solely transacting with each other. 

However, the onus is on the authority to consider the relevant facts and circumstances of transactions to determine the independence of the transacting parties 

Further, the authorities will issue the guidelines in due course regarding maintaining the transfer pricing documentations.