If your UAE entity trades with a related party — a parent, a sister company, a shareholder-owned entity offshore — transfer pricing documentation isn’t optional past a certain size. The rules mirror the OECD framework, and the FTA’s expectations on what “contemporaneous” documentation looks like have gotten sharper with every filing cycle.
What Counts as a Related-Party Transaction
Management fees charged between group entities, intercompany loans (interest-bearing or not), cost-sharing arrangements for shared services, and IP or brand licensing between a UAE operating company and an offshore holding structure all fall inside scope. The common mistake is treating only the obviously commercial arrangements — like inventory sales — as reportable, while informal management recharges go undocumented.
Local File, Master File and the Threshold That Triggers Them
Once related-party transaction value crosses the prescribed threshold, a Local File becomes mandatory; groups above the consolidated revenue threshold also need a Master File describing the group’s global value chain. Below the threshold, you still need to apply — and be able to demonstrate — the arm’s length principle, even without the full documentation package.
Where Businesses Get Caught Out
Three patterns come up repeatedly: a benchmarking study run once at entity setup and never refreshed as comparables data ages; intercompany loans with no written terms, so there is nothing to test against an arm’s length interest rate; and disclosure form entries that don’t reconcile with the actual related-party balances in the filed financial statements — an easy, avoidable audit trigger.
Our Transfer Pricing & Valuations (opens in a new tab) team builds and refreshes this documentation as a standing part of the compliance calendar, not a once-off project.