Two Thresholds, and One Exception for UAE-Only Groups

Transfer pricing documentation gets discussed as though every business with a related party owes a full file. It does not. Ministerial Decision No. 97 of 2023 sets two alternative thresholds, and most UAE businesses sit below both — while the ones that qualify usually do so on the second, which has nothing to do with being part of a multinational.

The two conditions, and why either is enough

The guide states that a Taxable Person is required to maintain both a Master File and a Local File if it meets either of the following conditions in the relevant Tax Period.

1. It is, for any time during the relevant Tax Period, a Constituent Company of a Multinational Enterprises Group as defined in Cabinet Resolution No. 44 of 2020, where that group has total consolidated group revenue of AED 3,150,000,000 or more in the relevant Tax Period.
2. Its own revenue in the relevant Tax Period is AED 200,000,000 or more.

Note also the wording of the first condition. It applies where the Taxable Person is a Constituent Company at any time during the Tax Period — not only at the year end. A company acquired into, or sold out of, a large group part-way through the year is still caught by it.

The exception for groups that never leave the UAE

There is a carve-out that matters to a lot of Emirati and GCC-owned structures, and it is easy to read past.

The logic follows the purpose of each document. A Master File describes a global group: its worldwide operations, its value drivers, where income and economic activity sit across jurisdictions. For a group that operates only in the UAE there is no global picture to describe. The Local File, which examines the local entity's own controlled transactions, still has work to do.

So a large domestic group above AED 200 million owes one document, not two. That is a meaningful saving, and it is a common over-preparation.

Below both thresholds is not the same as nothing to do

A Taxable Person not meeting either condition is not required to maintain a Master File or a Local File. The obligation that remains is the one people forget, because it has no annual deadline attached to it.

That is the practical argument for keeping a light file even when nothing is formally required: not to satisfy a rule, but to make a thirty-day window survivable.

Where these sit among the five requirements

The guide lists five transfer pricing documentation requirements in total, which is worth holding in view because the two files are only part of it: the transfer pricing disclosure form covering controlled transactions in the period; the Master File; the Local File; the Country-by-Country Report for groups above AED 3,150,000,000 under Cabinet Resolution No. 44 of 2020; and additional supporting information on request under Article 55(4).

The disclosure form has its own trigger. Under Article 55(1), all Taxable Persons undertaking transactions with Related Parties or Connected Persons — domestic or foreign — who are above a materiality threshold must prepare and submit it alongside the Tax Return, within 9 months of the end of the Tax Period. Being below the Master and Local File thresholds does not remove that.

The Country-by-Country Report runs on different rules again, with its own threshold, its own filer and two separate deadlines.

Whatever the documentation position, the burden of proof sits with the taxable person, and the FTA's examination starts from the method actually used in the return.

What to check

1. Test your own revenue against AED 200,000,000 before assuming the group threshold is the relevant one.
2. Test group consolidated revenue against AED 3,150,000,000 where you are part of an MNE Group.
3. Check whether you were a Constituent Company at any point in the period, not just at year end.
4. Where the group has no business establishments outside the UAE, prepare the Local File and not the Master File.
5. Do not treat being below both thresholds as the end of the matter — Article 55(4) still applies.
6. Keep enough of a file to answer a request inside 30 days.
7. Check the disclosure form separately; its trigger under Article 55(1) is a materiality threshold, not these.
8. Remember the disclosure form goes in with the Tax Return, within 9 months of the period end.

The FTA Transfer Pricing Guide (CTGTP1) is guidance rather than legislation; the thresholds sit in Ministerial Decision No. 97 of 2023 and the obligations in Article 55 of the Corporate Tax Law. Confirm the position for your own facts before relying on it.