Insights · UAE Compliance
UAE Transfer Pricing Disclosure Form, Master File and Local File: Thresholds Explained
The UAE transfer pricing thresholds for the disclosure form, master file and local file, which transactions count, and the India-UAE flows the authorities look at.
Every UAE taxable person must price transactions with related parties and connected persons at arm’s length, but how much it must document depends on size. A transfer pricing disclosure form is filed with the corporate tax return once related-party transactions exceed AED 40 million in the period. A master file and a local file must be kept once the company’s revenue reaches AED 200 million, or if it belongs to a multinational group with consolidated revenue of AED 3.15 billion or more. Below those lines there is less paperwork, not a lower standard.
Thresholds at a glance
- Disclosure form: aggregate related-party transactions above AED 40 million, with each category above AED 4 million itemised
- Connected persons: a separate schedule where payments or benefits to a single connected person exceed AED 500,000
- Master file and local file: entity revenue of AED 200 million or more, or group revenue of AED 3.15 billion or more (Ministerial Decision No. 97 of 2023)
- Files are produced to the Federal Tax Authority within 30 days of a request
- Country-by-country reporting: UAE-headquartered groups with revenue of AED 3.15 billion or more
Related parties and connected persons
Related parties include entities under common ownership or control of 50% or more, and individuals related by blood or marriage to the fourth degree. Connected persons are the owners, directors and officers of the business and their related parties. Payments to a connected person, such as a salary or fee to an owner-director, are deductible only to the extent they are at market value and incurred for the business. For an Indian promoter who owns and manages a Dubai company, both categories usually apply at once.
The transfer pricing disclosure form
The disclosure form is a schedule within the corporate tax return on EmaraTax. It lists each category of controlled transaction (goods, services, financing, intangibles, cost recharges), the value, the counterparty and the transfer pricing method used. Values must reconcile with the financial statements. The AED 40 million trigger counts transactions with related parties in the period; the AED 500,000 connected person schedule is separate.
Master file and local file
| Document | Who must keep it | What it covers |
|---|---|---|
| Master file | Entity revenue of AED 200 million or more, or member of a group with AED 3.15 billion or more | The group’s structure, business, intangibles, financing and transfer pricing policies |
| Local file | Same thresholds | The UAE entity’s functions, assets and risks, and each controlled transaction with a comparability analysis |
| Country-by-country report | UAE-parented groups with AED 3.15 billion or more | Allocation of income, tax and activity by country |
Ministerial Decision No. 97 of 2023 also decides which transactions go into the local file. Included are transactions with non-residents, exempt persons, resident persons that have elected Small Business Relief, and resident persons taxed at a different rate, such as Qualifying Free Zone Persons. Excluded are ordinary transactions with other resident taxable persons, and transactions with natural persons or partners acting independently. For an Indian group, the UAE entity’s dealings with the Indian parent are always in the local file, because the parent is a non-resident.
Why a free-zone company cannot ignore this
Complying with the transfer pricing rules and documentation is one of the conditions for being a Qualifying Free Zone Person. A free-zone company that prices intra-group services loosely risks more than an adjustment: it can lose the 0% rate for the period and the four that follow. See Qualifying Free Zone Person conditions.
India-UAE flows that attract attention
| Flow | UAE question | Indian question |
|---|---|---|
| UAE company provides marketing or management services to the Indian parent | Is the mark-up on cost at arm’s length? | Is the service real, needed and not duplicated? Is the payment deductible and has tax been withheld? |
| Indian parent seconds staff to Dubai and recharges salary | Is a recharge at cost acceptable, or is a mark-up needed? | Does the secondment create a service permanent establishment question in reverse? |
| UAE company lends to the Indian parent | Is the interest rate market-based? | Does interest limitation under section 177 restrict the deduction? |
| UAE company holds brand or software used in India | Does the UAE entity perform and control the functions behind the intangible? | Is the royalty at arm’s length, and who really owns the intangible? |
The Indian side is documented under sections 161 to 173 of the Income-tax Act, 2025, with the accountant’s report in Form 48 (formerly Form 3CEB). One benchmarking exercise, planned for both countries, is cheaper and more defensible than two. We work through an example in India-UAE transfer pricing for related parties.
Practical steps for this year’s return
- List every related party and connected person, including family members of owners.
- Total the transactions by category and test them against the AED 40 million, AED 4 million and AED 500,000 lines.
- Test revenue and group revenue against the AED 200 million and AED 3.15 billion lines.
- Put intra-group agreements in writing, dated before the transactions where possible.
- Benchmark the material flows, and align the method with the Indian documentation.
- Reconcile the disclosure form to the audited financial statements before filing.
Our UAE transfer pricing team prepares disclosure forms, local and master files, and coordinated India-UAE benchmarking. The filing calendar is in UAE corporate tax return deadlines and penalties.