Local File and Master File File For Transfer Pricing in UAE


Enhancing Fairness and Transparency in UAE’s Tax System: New Transfer Pricing Documentation Requirements

In a significant move towards promoting fairness and transparency in the United Arab Emirates’ (UAE) tax system, the Ministry of Finance has issued a pivotal Ministerial Decision, numbered 97 of 2023. This decision outlines comprehensive requirements for maintaining transfer pricing documentation, ensuring that transactions between related parties and connected persons are conducted on an arm’s length basis. It required businesses that meet the qualification clauses, to maintain Transfer Pricing Documentations (Local File and Master File), in addition to a Related Party Disclosure form along with the Corporate Tax Return. The decision is aligned with Federal Decree Law No. 47 of 2023 on the Taxation of Corporations and Businesses, which enforces transfer pricing rules and documentation standards.

The Aim: Promoting Transparency and Fairness

The core objective of Ministerial Decision No. 97 is to instill transparency and fairness in the UAE’s tax framework. By emphasizing the arm’s length principle, wherein transactions between related parties should be priced as if they were independent entities, the decision seeks to prevent undue influence on pricing due to inter-company relationships.

Key Provisions of the Decision

The decision, guided by the expertise of His Excellency Younis Haji Al Khouri, Undersecretary of the Ministry of Finance, introduces several crucial provisions to achieve its goals.

  1. Standardized Documentation: Taxpayers are required to maintain transfer pricing documentation that proves the arm’s length basis for transactions with related parties and connected persons. The use of standardized files streamlines the process and ensures consistency in documentation.
  2. Thresholds for Documentation: The decision provides clarity on the threshold criteria for preparing master files and local files. Taxpayers falling under certain revenue brackets must adhere to specific documentation requirements. Businesses with revenues of at least AED 200 million in a relevant tax period, or those part of a Multinational Enterprise (MNE) group with consolidated revenues of AED 3.15 billion or more, are mandated to maintain transfer pricing documentation.
  3. Reduced Compliance Burden: Recognizing the importance of facilitating compliance, the decision includes exclusions for disclosing certain transactions. This alleviates the compliance burden on taxpayers while ensuring that critical information is still captured.
  4. Support for Small and Medium-Sized Businesses: His Excellency Younis Haji Al Khouri emphasizes that the decision’s ultimate goal is to ease compliance burdens for small and medium-sized businesses, thereby fostering a business-friendly environment that encourages growth and economic diversification. This move not only supports local enterprises but also enhances the UAE’s competitiveness on the global stage.
  5. Reinforcing the UAE’s Commitment: The decision underscores the UAE’s dedication to fostering an equitable tax ecosystem that aligns with international standards. By introducing robust transfer pricing documentation requirements, the UAE solidifies its commitment to transparent and fair business practices.
Implications and Benefits

The implementation of Ministerial Decision No. 97 holds several significant implications and benefits for both businesses and the UAE’s economic landscape.

  1. Enhanced Fairness: The decision eliminates potential biases in pricing due to affiliations, ensuring that transactions are based on market conditions, thereby fostering a level playing field.
  2. Transparency: Standardized documentation ensures that relevant information is readily available for regulatory scrutiny, bolstering the UAE’s reputation as a transparent and compliant tax jurisdiction.
  3. Global Competitiveness: By promoting a business-friendly environment and adhering to international standards, the UAE strengthens its position as a global business hub, attracting foreign investment and facilitating economic growth.

In today’s global business landscape, fair transfer pricing is paramount. Introducing the Transfer Pricing Master File and Local File—a dynamic duo crafted to ensure transparency and compliance in intercompany transactions.

UAE CT Law, under Article 55, it required businesses that meet the qualification clauses, to maintain Transfer Pricing Documentations (Local File and Master File), in addition to a Related Party Disclosure form along with the CT Return.

What is the difference between Local File and Master File?

Let us see the difference between Local File and Master File for a better understanding of the Decision. The Transfer Pricing Master File unveils an enterprise’s global operations and pricing strategy. From organizational structure to financial insights, it paints the full picture. Developed by OECD, it encourages transparency while allowing presentation flexibility.

In each jurisdiction, the Local File delves into the details—uncovering intracompany transactions, methodologies, and more. While many nations align with OECD’s model, variations exist. Consistency with the Master File is your shield against audit risks.


Ministerial Decision No. 97 of 2023 marks a significant step forward in the UAE’s pursuit of fairness, transparency, and competitiveness in its tax system. By enforcing transfer pricing documentation requirements, the UAE ensures that transactions between related parties are conducted on an arm’s length basis. This move not only aligns with international standards but also reinforces the UAE’s commitment to fostering a conducive business environment that drives growth, supports economic diversification, and enhances its standing on the global stage.

For more information on the Ministerial Decision and related legislative updates, interested parties can visit the Ministry of Finance’s official website: www.mof.gov.ae.

Navigating Success Together

Embrace transparency and compliance for global triumph. Mastering Transfer Pricing Documentation “TPD” empowers businesses worldwide. Connect with our TP professionals for tailored insights—unlock international success on a solid foundation.

It’s important to note that these thresholds are linked to the Master File and Local File preparation, focusing on Article 55 Clause 2 of the CT Law. But here’s the kicker—even if these thresholds aren’t met, the arm’s length principle still reigns supreme. Taxable Persons, when requested by the Authority, must substantiate the arm’s length nature of transactions with Related and Connected Parties, armed with insights like benchmarking studies.

As the landscape of transfer pricing evolves, compliance remains non-negotiable. The Ministerial Decision paves the way, shedding light on intricacies and expectations. For Taxable Persons navigating this terrain, transparency and meticulous documentation are the keys to a successful journey.

Why is Alliance Prime the best Tax Consultancy in Dubai?

Alliance Prime is a leading provider of auditing, accounting, taxation, and advisory services in the UAE. Our expert team will guide you through the complex laws and regulations of UAE, including Corporate Tax, VAT, Excise Tax, Accounting and Bookkeeping, ESR, Financial Advisory, ERP, etc. We stay up-to-date with the latest changes in laws and regulations in the UAE. If you’re looking for reliable and professional auditing, accounting, taxation, and advisory services in the UAE, look no further than Alliance Prime. 

To find out if your business is eligible for Small Business Relief under the new CT regime or to Book a Free Consultation, contact us on: at- +971 58 825 7795 or Email us at:- contact@alliance-acc.com

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