TP Documentation Requirements 2025

Most companies don’t focus enough on transfer pricing documentation until they receive a notice from the Federal Tax Authority (FTA). By then, it’s too late.

With the FTA tightening its grip, especially from June 2023 onwards, companies operating in the UAE face stricter documentation rules for 2025. But there’s a way out. Knowing what’s expected, organising early, and documenting everything right can save money, time, and serious headaches.

Tax Gian can help you stay out of trouble with the assistance and expertise of qualified transfer pricing agents in the UAE.

Understanding the Three Layers of Documentation

UAE follows a structure set by the OECD. There are three key documents:

•       Master File: Overview of the global business.
•       Local File: Details specific to the UAE entity.
•       CbCR (Country-by-Country Report): Summary of income, tax, and operations in all countries.

Each has a threshold. The CbCR is required to be filed when the group revenue is above AED 3.15 billion. The Master File and Local File applies when a local entity crosses AED 200 million in revenue or when the group revenue is above AED 3.15 billion . On top of these, every business with related party dealings must file a Disclosure Form with its tax return subject to fulfillment of threshold. 

What Goes Into a Master File

The Master File gives a full picture of the global group. You’ll need to include:

•       Group structure (legal and operational)
•       Key business activities and strategy
•       Details about intercompany transactions
•       Consolidated financials and applied pricing methods

Even though it’s only submitted on request, it should be updated every year. This helps avoid issues later if the FTA asks for it. Transfer pricing agents in Dubai can assist you in preparing for this.

Local File: What to Include

The Local File is more detailed. It focuses on transactions between the UAE entity and related parties. The file must show:

•       The entity’s management structure and competitors
•       Full description of each related transaction
•       Contracts or agreements between parties
•       Financial details with proof of the pricing method used

Country-by-Country Report (CbCR): For Large Groups Only

This report is only for businesses with global revenue over AED 3.15 billion. It must be submitted yearly and includes:

• Revenue, profits, taxes, assets, and employees per country
• List of all group companies and their activities

The report must be submitted within 12 months of the group’s fiscal year-end. Make sure your systems can pull this data in a clean and organised way, or take help from transfer pricing agents in the UAE.

Pricing Methods: Choose Wisely

The UAE allows five pricing methods. Each has its own purpose and challenges:

1. CUP Method – Good for comparing commodity prices, but hard to find close matches.
2. Resale Price Method – Often used by distributors, but margins must reflect the local market.
3. Cost Plus Method – Suits manufacturing but needs exact cost breakdowns.
4. TNMM (Transactional Net Margin Method) – Most used method; needs strong benchmarking.
5. Profit Split Method – Works for integrated operations but is complex and data-heavy.

The method chosen must match the actual business. The FTA expects detailed records to support it. It is recommended to seek help from transfer pricing agents in the UAE for a deeper understanding of the matter.

Benchmarking: The Make-or-Break Part

A solid benchmarking study can defend your pricing in front of auditors. In the UAE, businesses should:

• Use local data when possible, or regional data with adjustments
• Choose reliable databases (no preferred source by FTA)
• Use Interquartile Range (IQR) and explain any extreme values removed

Mistakes happen when old data is used or companies skip proper rejection analysis.

Penalties: Don’t Take Chances

Penalties for missing or incorrect documentation are steep:

• AED 10,000 to AED 20,000 for not keeping records
• Daily fines for late submission
• Extra tax on adjusted prices (20% or more)
• Criminal charges in serious cases

Regular internal reviews and early preparation can prevent these risks.

Free Zones: Not Off the Hook

Even businesses in free zones like DIFC, DMCC, and JAFZA must comply. If they want to keep their 0% tax rate, they must prove they meet arm’s length standards.

Common situations:

• Financial services in DIFC need to document financing arrangements.
• Manufacturers in JAFZA must explain the transfer of goods and margin structures.
• Traders in DMCC must prove their pricing aligns with market levels.

If you operate in a free zone, talk to a transfer pricing agent in the UAE for a detailed understanding of your liabilities. 

APAs Are Coming Soon

From late 2025, the FTA is expected to allow businesses to apply for unilateral Advance Pricing Agreements (APAs). These are pre-approvals on pricing methods, offering long-term tax certainty. Companies may now have a requirement to prepare files with full economic and functional analysis for applying. 

Let Tax Gian Assist You!

Preparing early and using the right tools and methods can turn a compliance headache into a business advantage. Tax Gian is here to let you prepare in advance. Learn and prepare for your TP documentation with the assistance of our qualified TP agents all across the UAE. Don’t wait for the FTA to knock; get started now.