In a recent development, the Ministry of Finance has implemented Ministerial Decision No (97) of 2023, which establishes comprehensive guidelines for maintaining transfer pricing documentation. This significant step is aimed at enhancing transparency and fairness within the tax system of the United Arab Emirates (UAE).
Under the provisions of Federal Decree Law No (47) of 2023, which governs the taxation of corporations and businesses, strict transfer pricing regulations have been enforced. These regulations are designed to prevent related parties and connected persons, including entities within the same multinational enterprise (MNE) group, from exerting influence on transaction pricing through their relationships.
The introduction of transfer pricing documentation requirements is set to bolster transparency and fairness within the UAE's tax system. It will provide clear guidance and facilitate compliance, particularly for small and medium-sized businesses. This progressive move reflects the UAE's commitment to cultivating a business-friendly environment that promotes growth, economic diversification, and global competitiveness.
The Decision outlines specific circumstances where taxpayers are mandated to maintain transfer pricing documentation, which includes the preparation of a master file and a local file. These obligations apply to taxpayers who generate revenues of at least AED200 million in a relevant tax period or who are part of an MNE group with a total consolidated group revenue of at least AED3.15 billion in the relevant tax period. Additionally, the Decision specifies the types of transactions or arrangements that must be included in the local file, ensuring comprehensive compliance.
Note - You can access Law including Guidelines, Cabinet & FTA Decisions, Public Clarifications, Forms, Business Bulletins for all taxes (Vat, Excise, Customs, Corporate Tax, Transfer Pricing) for all GCC Countries in the Law Section of GCC FinTax
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