Small Business Relief in the UAE Corporate Tax Regime

Small Business Relief in the UAE Corporate Tax Regime

Transfer Pricing is a globally implemented and accepted concept in taxation regulating inter-company pricing agreements between members of multinational enterprises (MNEs), including transfers of tangible goods; services; intellectual property; and loans as well as other financial transactions. Ministerial Decision No. 97 of 2023 outlines specific requirements for maintaining

Transfer Pricing Documentation under the new Corporate Tax Regime in the UAE. This decision, effective from the day following its publication in the Official Gazette, addresses crucial aspects of Transfer Pricing Documentation.

Conditions for Maintaining Master File and Local File

Taxable Persons under the CIT Regime will have to maintain a master file and a local file for transfer pricing documentation if they:

-are a Constituent Company of a Multinational Enterprises Group with a total consolidated group Revenue of AED 3,150,000,000 or more in the relevant Tax Period;

-or their Revenue in the relevant Tax Period is AED 200,000,000 or more.

Moreover, Related Parties and Connected Persons must be included in the local file. These include Non-Resident Persons, Exempt Persons, Resident Persons who opt for Small Business Relief, and Resident Persons with varying Corporate Tax rates.

Conversely, the Taxable Person should not include in the local file transactions with other Resident Persons (as the aforementioned), natural persons when acting independently, juridical persons in Unincorporated Partnerships, and Permanent Establishments of Non-Resident Persons subject to the same Corporate Tax rate.

The decision further explains that the natural person, and a Non-Resident Person’s PE can be considered acting independently, if the ordinary course of business is undertaken and they are not exclusively or almost exclusively transacting with the Taxable Person.

Transfer Pricing Documentation Guidelines

The FTA will furthermore issue guidelines for the application of the provisions of this decision.

How TME Legal Consultants Can Support Your Business   

In summary, Ministerial Decision No. 97 of 2023 establishes comprehensive criteria for maintaining transfer pricing documentation in the UAE. It outlines which Related Parties and Connected Persons should be included in the local file and those that should not, providing businesses with clear guidance on compliance with the Corporate Tax Regime.

TME Legal Consultants is a team of 45 professionals in the field of legal-, tax-, accounting and compliance with over 18 years of experience. We advised a significant number of SMEs in the context of the implementation of the tax framework in the UAE and KSA over the last decade to make sure that our clients are well oriented in the new and fast evolving tax landscape and to reduce the legal liability of managers which may arise in connection with non-compliance.


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