Dubai Corporate Tax: In ‘transfer pricing’ update, companies with at least Dh200m must main documents. Group entities with at least AED 200M must maintain documentation

UAE Ministry of Finance updates the transfer pricing rules under which businesses must maintain documentation under a tax file.

The Ministerial Decision No (97) of 2023 relate to the requirements for maintaining transfer pricing documentation.

The decision specifies instances where taxpayers must maintain transfer pricing documentation, specifically a master file and a local file, if they have revenues in a relevant tax period of at least Dh200 million or they are part of a multinational group with a total consolidated group revenue of at least Dh3.15 billion in the relevant tax period.

The decision outlines the transactions or arrangements that will be included in the local file.

The Federal Decree Law No (47) of 2023 enforces transfer pricing rules and documentation requirements to ensure the pricing of transactions between related parties and connected persons – such as companies that are part of the same multinational enterprise – are not influenced by their relationships.

“The transfer pricing documentation requirements aim to ensure taxpayers can prove the arm’s length basis for pricing their transactions with related parties and connected persons using standardized files,” said Younis Haji Al Khouri, Undersecretary of the Ministry of Finance.

“Additionally, to reduce the compliance burden on taxpayers, the Decision defines the threshold for preparing master files and local files and the exclusions for disclosing certain transactions.”

The transfer pricing documentation requirements will help ease ‘compliance burdens for SMEs’. 

Copy of Press Release

May 11, 2023

TAXATION

The decision reinforces the UAE’s commitment to fostering a business-friendly environment that encourages growth, supports economic diversification, and enhances the nation’s competitiveness on the global stage.

Abu Dhabi, UAE: The Ministry of Finance has issued the Ministerial Decision No (97) of 2023 on the Requirements for Maintaining Transfer Pricing Documentation which aims to promote transparency and fairness in the UAE’s tax system.

Federal Decree Law No (47) of 2023 on the Taxation of Corporations and Businesses enforces transfer pricing rules and documentation requirements to ensure that the pricing of transactions between related parties and connected persons, such as companies that are part of the same multinational enterprise (MNE) group, are not influenced by their relationships.

His Excellency Younis Haji Al Khouri, Undersecretary of the Ministry of Finance, said: “The transfer pricing documentation requirements aim to ensure taxpayers can prove the arm’s length basis for pricing their transactions with related parties and connected persons using standardized files. Additionally, to reduce the compliance burden on taxpayers, the Decision defines the threshold for preparing master files and local files and the exclusions for disclosing certain transactions.”

His Excellency added that the transfer pricing documentation requirements will promote transparency and fairness in the UAE’s tax system by providing clear guidance and easing compliance burdens for small and medium-sized businesses to their benefit. The decision reinforces the UAE’s commitment to fostering a business-friendly environment that encourages growth, supports economic diversification, and enhances the nation’s competitiveness on the global stage.

The Decision specifies instances where taxpayers must maintain transfer pricing documentation, specifically a master file and a local file, including if they have revenues in a relevant tax period of at least AED200 million, or they are part of a MNE group with a total consolidated group revenue of at least AED 3.15 billion in the relevant tax period. Additionally, the Decision outlines the transactions or arrangements that will be included in the local file.

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