UAE Trends and Developments Contributed by: Marios Palesis, Theodora Charalambous and Giorgos Kinanis, Kinanis Tax Consultancy Middle East Limited
Conclusion The introduction of Federal Decree-Law No 47 of 2022 marks a structural transformation of the UAE’s fiscal landscape. With the enactment of a federal corporate tax regime and the explicit codification of the arm’s length principle, transfer pricing has become an inte - gral component of tax compliance in the UAE. The legislative framework, as supplemented by Minis - terial Decision No 97 of 2023 and the relevant Corpo - rate Tax Guides, establishes a multi-layered compli - ance architecture. This architecture comprises: • the substantive obligation to price related-party transactions in accordance with the arm’s length principle; • contemporaneous disclosure through the related parties and connected persons schedules of the corporate tax return; • documentation requirements in the form of the master file and local file for entities meeting speci - fied thresholds; and • country-by-country reporting obligations for large MNE groups. Collectively, these measures align the UAE with inter - nationally accepted transfer pricing standards and reflect the jurisdiction’s integration into the post-BEPS global tax environment. The UAE has thereby tran - sitioned from a jurisdiction in which transfer pricing considerations were largely external to the domestic tax system to one in which intra-group transactions directly affect the computation of taxable income and are subject to structured documentation and reporting obligations. For businesses operating in or through the UAE, trans - fer pricing is no longer a peripheral consideration but a central element of tax governance, risk management and compliance strategy under the new corporate tax regime.
to inform the FTA that the UPE is the reporting entity responsible for filing the CbCR. The CbCR itself must be filed within 12 months from the last day of the rel - evant reporting fiscal year. The second additional requirement identified in the Transfer Pricing Guide relates to taxable persons that do not meet the thresholds for preparing a master file and local file. While such entities are not required to maintain full transfer pricing documentation, they may nonetheless be required to maintain a sufficient supporting information demonstrating that their relat - ed-party transactions comply with the arm’s length principle. Moreover, pursuant to Article 55 (4) of the Corporate Tax Law, the FTA retains the power to request addi - tional supporting information from a taxable person in order to verify compliance with the arm’s length stand - ard. Accordingly, even where formal documentation thresholds are not met, taxable persons must ensure that sufficient contemporaneous evidence exists to substantiate the pricing of their related party transac - tions. The structure of the UAE transfer pricing framework demonstrates substantive alignment with the OECD Transfer Pricing Guidelines and the documenta - tion standards established under BEPS Action 13. Although the UAE is not an OECD member, its legisla - tive design reflects the internationally accepted model governing intra-group pricing and transparency. Taken together, these requirements establish a multi-tiered transfer pricing compliance framework in the UAE, structured broadly in line with international standards while incorporating jurisdiction-specific thresholds and reporting obligations.
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