Transfer Pricing Documentation Services

Businesses operating in the United Arab Emirates may need to document transactions with Related Parties and Connected Persons to demonstrate compliance with UAE Corporate Tax transfer pricing requirements. Depending on the business's circumstances, this may involve preparing a Local File, Master File, related-party transaction schedules, pricing analyses and supporting records.

Transfer pricing documentation helps explain how transactions are priced, the commercial arrangements between the parties and whether the relevant conditions are consistent with the arm’s-length principle.

Gupta Accountants provides Transfer Pricing Documentation Services in Dubai and across the UAE. We assist businesses in assessing their documentation obligations, organising relevant financial and corporate information, reviewing intercompany transactions and preparing supporting documentation in line with applicable UAE requirements.

Our services are designed to help businesses establish a structured documentation process, improve the quality of their records and support their Corporate Tax compliance responsibilities.

What Is Transfer Pricing Documentation?

Transfer pricing documentation is the information and supporting evidence used to explain and substantiate transactions between Related Parties and Connected Persons.

The documentation may describe the business activities of the parties, the nature of their relationship, the transactions undertaken, the functions performed, the assets used, the risks assumed and the method applied to determine transaction prices.

Under UAE Corporate Tax legislation, the documentation requirements may include several distinct components:

• Transfer pricing disclosures: Information about relevant Related Party and Connected Person transactions reported as required by the FTA.

• Local File: Detailed information about the local business, relevant controlled transactions and the analysis supporting their arm’s-length treatment.

• Master File: An overview of the multinational group's business operations, global transfer pricing policies and allocation of income and economic activity, where required.

• Supporting records: Agreements, invoices, financial information, calculations and other evidence used to support the tax treatment of transactions.

These requirements are not identical for every business. The applicable obligations depend on the legislation, relevant thresholds, the nature of the transactions and the taxpayer's circumstances.

Who Needs Transfer Pricing Documentation in the UAE?

Businesses should assess their transfer pricing obligations even if they do not expect to be required to prepare a formal Local File or Master File.

The arm’s-length principle applies to relevant transactions between Related Parties and Connected Persons, including domestic and cross-border arrangements. Separate rules determine which taxpayers must submit disclosures or maintain particular documentation.

Local File and Master File Requirements

Under Ministerial Decision No. 97 of 2023, a Taxable Person is generally required to maintain both a Master File and a Local File for a relevant tax period if either of the following conditions is met:

• The Taxable Person is a constituent company of a multinational enterprise group with total consolidated group revenue of AED 3.15 billion or more for the relevant tax period; or

• The Taxable Person's own revenue is AED 200 million or more for the relevant tax period.

These are the stated thresholds under the cited decision. Businesses should confirm the applicable legislation and any amendments relevant to the tax period being reviewed.

Meeting a threshold does not mean every transaction must automatically appear in the Local File. The applicable rules specify which transactions and arrangements are included and which may be excluded.

Businesses below the Local File and Master File thresholds may still have transfer pricing obligations, including the need to apply the arm’s-length principle, maintain relevant records and consider disclosure requirements.

Transfer Pricing Disclosure Requirements

Certain taxpayers may be required to submit transfer pricing information as part of their Corporate Tax return.

The relevant disclosure requirements should be assessed separately from the Local File and Master File conditions. Businesses should review their transaction categories, amounts, relationships and the applicable FTA instructions to determine what information must be reported.

Small Business Relief Considerations

The FTA states that businesses claiming Small Business Relief are not required to comply with the transfer pricing documentation rules specified in its guidance. However, they must still comply with the arm’s-length principle.

Eligibility for Small Business Relief and the related consequences should be checked for the relevant tax period. A business should not assume that a particular relief election removes every Corporate Tax record-keeping or reporting responsibility. <Cite refs={["turn902743search1","turn902743search16"]} />

Our Transfer Pricing Documentation Services

Gupta Accountants assists businesses with assessing documentation requirements and preparing records that explain their related-party transactions and transfer pricing approach.

1. Transfer Pricing Documentation Requirement Assessment

Before preparing a Local File or Master File, it is important to establish which obligations apply to the business.

Our assessment may cover:

• The business's revenue for the relevant tax period.

• Whether it is part of a multinational enterprise group.

• The group's consolidated revenue, where relevant.

• The nature and value of Related Party and Connected Person transactions.

• Potential transfer pricing disclosure requirements.

• Whether Local File and Master File conditions are met.

• The nature of existing documentation and supporting records.

• The need for additional analysis or specialist input.

This assessment helps define the scope of the documentation required and reduces the risk of preparing an inappropriate or incomplete file.

2. Local File Preparation

A Local File provides detailed information about the UAE taxpayer and its relevant controlled transactions.

Depending on the applicable requirements and the nature of the business, our assistance may include preparing or organising:

• Business and organisational information.

• Ownership and related-party details.

• Descriptions of the local business and its activities.

• Details of material controlled transactions.

• Copies or summaries of relevant intercompany agreements.

• Functional analysis covering functions, assets and risks.

• Selection and explanation of the transfer pricing method.

• Relevant financial information and transaction calculations.

• Pricing analyses and supporting evidence.

• Reconciliation with accounting records and relevant tax information.

The purpose is to document the business's transactions and explain the basis on which their transfer pricing treatment has been assessed.

3. Master File Preparation

A Master File provides an overview of the multinational enterprise group's global business and transfer pricing arrangements.

Where required, we can assist with compiling and reviewing information such as:

• The group's organisational and ownership structure.

• A description of its business operations.

• Significant sources of business profit and value creation.

• Important intangible assets and relevant arrangements.

• Intercompany financing activities.

• The group's overall transfer pricing policies.

• Relevant financial and tax information.

• The allocation of income and economic activity across jurisdictions.

Master File preparation often requires information from group headquarters or other overseas entities. We help identify the information needed and organise the available materials into a coherent document.

The accuracy and completeness of the Master File depend on the information provided by the multinational group and the scope of the agreed engagement.

4. Related Party Transaction Schedules

An organised transaction schedule can help the business identify its relevant dealings and reconcile them with accounting records.

We can assist in preparing schedules covering:

• Purchases and sales of goods.

• Management and administrative fees.

• Intercompany services.

• Loans, interest and financing arrangements.

• Royalties and licence fees.

• Shared costs and expense allocations.

• Asset transfers.

• Other relevant Related Party or Connected Person transactions.

The schedules can help identify transaction categories, counterparties, amounts, outstanding balances and the supporting documents available for each arrangement.

5. Functional Analysis Documentation

A functional analysis explains what each party does in a transaction, which assets it uses and which economically significant risks it assumes.

This analysis helps establish the commercial context of the transaction and supports the selection of an appropriate transfer pricing method.

Depending on the arrangement, we may review:

• The responsibilities of each party.

• Decision-making and operational activities.

• Personnel and resources involved.

• Assets and intangible property used.

• Financial and commercial risks.

• Contractual terms and actual conduct.

• The relationship between the functions performed and the resulting returns.

A clear functional analysis is particularly relevant where a transaction involves group services, distribution activities, manufacturing, intellectual property or financing.

6. Transfer Pricing Method and Pricing Support

The documentation should explain how the pricing of a controlled transaction has been assessed.

Depending on the facts, relevant methods may include:

• Comparable Uncontrolled Price Method.

• Resale Price Method.

• Cost Plus Method.

• Transactional Net Margin Method.

• Transactional Profit Split Method.

The appropriate method depends on the transaction, the availability and reliability of comparable information, the functions performed and other relevant circumstances.

We assist with documenting the selected method and the information supporting its application. Where a transaction requires detailed benchmarking or specialist economic analysis, the scope and availability of that work should be agreed separately.

7. Supporting Evidence and Record Organisation

Transfer pricing documentation should be supported by records that explain the actual transaction and the basis of the pricing.

We help businesses organise and review relevant materials, which may include:

• Intercompany agreements.

• Invoices and credit notes.

• Payment confirmations.

• General ledger extracts.

• Financial statements and management accounts.

• Cost allocation calculations.

• Loan agreements and interest schedules.

• Service descriptions and evidence of services performed.

• Pricing analyses and comparable data.

• Relevant board approvals and internal policies.

• Reconciliations between transaction schedules and accounting records.

Where evidence is missing or inconsistent, we identify the issue so that the business can determine the appropriate corrective action.

8. Existing Documentation Review and Update

Businesses should review transfer pricing documentation periodically, particularly when their operations, ownership structure, transaction volumes or pricing arrangements change.

We can review existing Local Files, Master Files and supporting schedules to identify:

• Outdated business descriptions.

• Changes in related-party relationships.

• Transactions that are not adequately documented.

• Differences between agreements and actual conduct.

• Inconsistencies in financial information.

• Changes in transfer pricing methods or assumptions.

• Missing supporting records.

• Potential gaps in relevant disclosures.

Where required, we help update the documentation to reflect the business's current arrangements and relevant tax period.

Understanding the Local File and Master File

Although the two documents form part of the wider transfer pricing documentation framework, they serve different purposes.

AreaLocal FileMaster FileMain purposeExplains the local taxpayer and relevant controlled transactionsProvides an overview of the multinational group's global business and transfer pricing arrangementsMain focusLocal operations, transaction details and pricing analysisGroup structure, business operations, global policies and income allocationTypical informationLocal entity details, functional analysis, transaction schedules and financial informationGroup organisation, global business, intangibles, financing and consolidated financial informationMain source of informationLocal finance team and relevant related-party recordsGroup headquarters and multinational group informationApplicabilityRequired when the applicable conditions are metRequired alongside the Local File when the applicable conditions are met

The specific content and transaction coverage should follow the current UAE requirements rather than a generic template alone.

How We Prepare Transfer Pricing Documentation

Our approach is designed to establish a clear process from the initial assessment through document preparation and review.

Step 1: Initial Requirement Assessment

We gather information about the business, relevant tax period, revenue, group structure and related-party transactions to determine the likely documentation scope.

Step 2: Information Request and Document Collection

We identify the information needed from the UAE business and, where relevant, its overseas group entities.

Step 3: Transaction Mapping and Reconciliation

We organise the relevant transaction data and compare it with accounting records, agreements and supporting schedules.

Step 4: Functional and Economic Analysis

We review the commercial circumstances of the transactions and document the functions performed, assets used and risks assumed, as appropriate.

Step 5: Draft Documentation Preparation

We prepare or organise the relevant Local File, Master File and supporting schedules within the agreed scope.

Step 6: Review and Clarification

We discuss missing information, inconsistencies and areas requiring further evidence with the business's finance team or other relevant personnel.

Step 7: Finalisation and Record Retention

We finalise the agreed documents and help the business understand the applicable retention and response requirements if the FTA requests the documentation.

Deadlines and Record-Keeping Requirements

Transfer pricing documentation should be prepared and maintained in accordance with the applicable rules and the business's reporting cycle.

Under Article 55 of the UAE Corporate Tax Law, a Taxable Person required to maintain a Master File and Local File must provide the documentation to the FTA within 30 days of a request, or within another period directed by the Authority. The FTA may also request information supporting the arm’s-length nature of transactions within the applicable timeframe. <Cite refs={["turn902743search24"]} />

Businesses should not wait until an FTA request is received to begin organising their transaction records. Preparing documentation in a timely manner can help the business respond more effectively and identify gaps while the relevant information is accessible.

The general Corporate Tax record-retention requirements should also be considered. The applicable retention period may be affected by specific circumstances, including relevant tax procedure rules. Businesses should confirm the current rules for their tax periods and any ongoing review or refund matters.

Common Transfer Pricing Documentation Issues

Incomplete Related-Party Transaction Information

If the transaction schedules do not reconcile with the general ledger, relevant dealings may be overlooked or inaccurately reported.

Missing or Outdated Agreements

Agreements should reflect the relevant commercial arrangements and should be reviewed when the scope, pricing or terms of a transaction change.

Insufficient Evidence of Intra-Group Services

A service invoice alone may not fully explain what was provided or how the fee was calculated. Businesses should retain appropriate supporting information about the services and the pricing basis.

Unsupported Pricing Methods

A transfer pricing method should be selected and applied based on the transaction and available evidence. Using a standard markup without considering the relevant facts may not adequately support the result.

Inconsistent Financial Information

Transaction values, financial information and pricing calculations should be checked for consistency with accounting records and the relevant tax reporting information.

Applying the Wrong Documentation Threshold

The requirements for a Local File, Master File and transfer pricing disclosures are distinct. Businesses should assess each obligation separately rather than assuming that one threshold or exemption determines every requirement.

Failure to Update Documentation

Changes in business operations, ownership, functions or risks may affect the analysis. Documentation should be reviewed when material changes occur and as part of the appropriate periodic review process.

Why Choose Gupta Accountants?

Focused Documentation Support

We help businesses understand the documentation requirements relevant to their transactions and prepare organised supporting records.

Practical Financial Record Review

Our work considers the relationship between transaction schedules, accounting records, agreements and tax reporting information.

Structured Approach

We follow a defined process for assessing requirements, collecting information, reviewing transactions and preparing documentation.

Support for UAE and International Group Structures

Our services can support UAE businesses dealing with domestic related parties or overseas group entities, subject to the scope of the engagement and availability of group information.

Ongoing Compliance Assistance

We can help businesses review existing documentation and identify areas that may need updating as their activities or arrangements change.

Frequently Asked Questions - Transfer Pricing Documentation

1. Is transfer pricing documentation mandatory for every UAE business?

Not every business is required to maintain a Local File and Master File. However, relevant transfer pricing rules may still apply to transactions with Related Parties and Connected Persons. Businesses should separately assess their disclosure, documentation and record-keeping obligations.

2. What are the UAE Local File and Master File thresholds?

Under Ministerial Decision No. 97 of 2023, the stated thresholds are revenue of at least AED 200 million for the Taxable Person or membership in a multinational enterprise group with consolidated group revenue of at least AED 3.15 billion for the relevant tax period. The applicable conditions should be verified for the tax period concerned.

3. What is included in a Local File?

A Local File generally contains information about the local business, its relevant controlled transactions and the analysis supporting their arm’s-length treatment. Its precise content depends on the applicable requirements and the transactions involved.

4. What is included in a Master File?

A Master File provides an overview of the multinational group's global business operations, organisational structure, transfer pricing policies and allocation of income and economic activity.

5. Does a business below the Local File threshold still need transfer pricing records?

It may still need to comply with the arm’s-length principle, consider relevant disclosure requirements and retain records supporting its tax position. The absence of a Local File or Master File obligation does not automatically remove other transfer pricing responsibilities.

6. How quickly must documentation be provided if the FTA requests it?

Article 55 generally provides a 30-day period following an FTA request for the required Local File and Master File, or another later date directed by the Authority. Businesses should check the precise request and applicable requirements when a notice is received.

7. Can Gupta Accountants prepare both the Local File and Master File?

Gupta Accountants can assist with assessing the requirements and preparing or organising the relevant documentation within the agreed scope. A Master File may require information from group headquarters or overseas entities, so timely cooperation from the wider group is important.

8. Does transfer pricing documentation require benchmarking?

The analysis required depends on the transaction and the circumstances. Comparable data or benchmarking may be relevant to support an arm’s-length outcome, but the appropriate method and level of analysis should be determined for the specific arrangement.

9. How often should transfer pricing documentation be reviewed?

Businesses should review their documentation periodically and when material changes occur in their operations, ownership, functions, risks or transaction arrangements. The review should reflect the relevant tax period and current requirements.

10. Can documentation be prepared after the tax return is filed?

A business may need to prepare or update supporting documentation after filing, but it should not assume that this removes an existing compliance gap. Applicable obligations and deadlines should be assessed promptly, particularly if the FTA has requested information.

Contact Gupta Accountants for Transfer Pricing Documentation Services UAE

If your business has transactions with related companies, shareholders or other Connected Persons, assessing your documentation requirements can help clarify what needs to be prepared and maintained.

Gupta Accountants assists businesses in Dubai and across the UAE with transfer pricing documentation assessments, Local File and Master File preparation support, transaction schedules and supporting Corporate Tax records.

Contact us to discuss your transfer pricing documentation requirements.

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