Transfer pricing sounds like a problem for large multinationals shifting profits between countries. Under UAE corporate tax law, it isn’t just that. If your company pays a management fee to its owner, rents property from a director, or takes a loan from a shareholder, you’re already inside the transfer pricing rules — regardless of your size. The paperwork obligation scales with revenue, but the underlying rule doesn’t.

The rule that applies to everyone, no threshold

Under Article 34 of the UAE Corporate Tax Law, every transaction between related parties or connected persons has to be priced at arm’s length — meaning at the value that would apply between unrelated parties negotiating normally. There’s no revenue floor for this baseline requirement. A small owner-managed company paying its director a salary, or one that leases office space from a company its founder also owns, has to be able to show that price reflects market value, not a number chosen because it’s convenient for tax purposes.

“Connected persons” specifically covers the owners, directors, and officers of the business, along with their related parties — which is exactly why owner salaries, management fees, and shareholder loans sit squarely inside the regime for even the smallest company. Get one of these non-arm’s-length, and the deduction for that payment can simply be denied by the FTA, on top of whatever else the payment might trigger for the connected person receiving it.

Where the paperwork actually kicks in

The formal documentation obligations layer on top of the baseline arm’s-length rule, and they scale in three tiers based on transaction size and company revenue.

A Transfer Pricing Disclosure Form has to be filed alongside your corporate tax return once you cross specific thresholds: broadly, where related-party transactions aggregate above AED 40 million (with individual category thresholds around AED 4 million), or where payments to a single connected person and their related parties exceed AED 500,000 in aggregate. This form goes in with the return itself, due within nine months of your tax period ending.

A Master File and Local File — the more substantial, OECD-style documentation — only become mandatory if your own revenue reaches AED 200 million in the tax period, or if you’re part of a multinational group with consolidated global revenue of AED 3.15 billion or more. Below those two thresholds, you don’t have to maintain the formal Master File and Local File structure. Free zone companies get no exemption from any of this based on their 0% status — a Qualifying Free Zone Person still has to apply the arm’s length principle and maintain appropriate documentation exactly like a mainland taxpayer.

Below the threshold doesn’t mean off the hook

This is the part smaller companies tend to misread. Falling under the AED 200 million or AED 3.15 billion thresholds removes the obligation to maintain the full formal Master File and Local File — it does not remove the underlying requirement to price transactions at arm’s length, and it doesn’t stop the FTA from asking questions. Article 55(4) specifically allows the FTA to request information about related-party and connected-person transactions from taxpayers who aren’t required to maintain a Local File and Master File at all. Being small changes how much formal documentation you’re expected to produce, not whether you need any support behind your numbers.

What happens when the FTA asks

Transfer pricing moved from a mostly theoretical compliance item to active enforcement territory in 2026 — the FTA is now requesting documentation as part of risk-based corporate tax audits. When it asks, taxpayers subject to the Master File and Local File requirement generally have around 30 days to produce them. Thirty days is not enough time to reconstruct two years of related-party pricing rationale and benchmarking from scratch, which is exactly why documentation is meant to be maintained contemporaneously — built as transactions happen, not assembled retroactively under deadline pressure.

What to actually do

Regardless of your revenue, map every related party and connected person your business transacts with — owners, directors, officers, and any entities they control — and be able to explain, in writing, why each significant payment to them reflects market value. If you’re anywhere near the AED 200 million revenue line or part of a larger group approaching AED 3.15 billion consolidated, start building formal Master File and Local File documentation well before the tax period that first requires it; this is genuinely a multi-month project, not something assembled in the weeks before a filing deadline.