The 30 September corporate tax deadline has passed, and plenty of UAE businesses are treating the filing as the end of the job. If your revenue reached AED 200 million in that tax period, the Federal Tax Authority can write and ask for your Master File and Local File, and you get 30 days to hand them over. That is 30 days to produce documents which were supposed to exist already, not 30 days to write them.
TL;DR: You must keep a Master File and a Local File if your revenue hits AED 200 million in a tax period, or your group's consolidated revenue hits AED 3.15 billion. Both must be prepared contemporaneously and given to the FTA within 30 days of a request. Failing to keep them costs AED 10,000 per violation.
Who Has to Keep a Master File and a Local File?
Two tests, and you only need to fail one. You must keep both files if your own revenue in the tax period is AED 200,000,000 or more, or if you were at any point a constituent company of a multinational group with consolidated revenue of AED 3,150,000,000 or more (Federal Tax Authority Transfer Pricing Guide CTGTP1, 2023).
The AED 3.15 billion figure is the dirham equivalent of the EUR 750 million country-by-country reporting threshold under Cabinet Resolution No. 44 of 2020, so a mid-sized UAE subsidiary of a large foreign group is caught by the group test even if its own revenue is modest.
There's a carve-out worth knowing. A taxable person inside a UAE-headquartered group with no business establishments outside the UAE doesn't need a Master File at all, though the Local File obligation still applies. In our experience this catches out domestic groups who assume the two documents travel together.
What Goes in the Master File?
A blueprint of the whole group, not of your UAE entity. The FTA breaks the content into five categories: the group's organisational structure, a description of its businesses, its intangibles, its intercompany financial activities, and its financial and tax positions (FTA CTGTP1, 2023).
Some of the detail is more prescriptive than people expect. The business description has to cover the supply chain for the group's five largest products or services by turnover, plus anything else above 5% of group turnover. You also need a chart showing legal and ownership structure and the location of operating entities, and a functional analysis setting out which entities actually create the value.
The format follows Annex I to Chapter V of the OECD Transfer Pricing Guidelines and must be presented in consolidated form. A fresh Master File is required for each tax period.
What Goes in the Local File?
Your UAE entity, in detail. The Local File follows Annex II to Chapter V of the OECD guidelines and runs to three blocks: the local entity, each material category of controlled transactions, and financial information (FTA CTGTP1, 2023).
The transactions block carries the real work. For each material category you need intra-group payments and receipts broken down by the tax jurisdiction of the foreign payer or recipient, copies of all material intercompany agreements, a comparability and functional analysis, the transfer pricing method chosen and why, which party is the tested party, and the comparables you relied on.
The financial block needs your annual financial statements, audited if audited statements exist, plus schedules tying the figures used in your pricing analysis back to those statements. You can cross-reference the Master File rather than repeat it.
Which Transactions Must Go in the Local File?
Four scenarios, set out in Ministerial Decision No. 97 of 2023. Controlled transactions belong in the Local File where the counterparty is a non-resident person, an exempt person, a resident person benefiting from small business relief, or a resident person on a different corporate tax rate from yours (Ministry of Finance, 2023).
That last category surprises UAE groups. A transaction between your mainland company and a sister company holding qualifying free zone person status is a domestic transaction between two Dubai entities, but because one is taxed at 0% on its qualifying income and the other at the standard 9%, it has to be documented.
The logic is consistent: the rules target transactions where profit can shift to a lower-taxed pocket. One question clients always ask is whether a purely domestic group can skip the Local File. If every entity sits at the same rate, largely yes. Introduce one free zone company or one exempt entity, and the picture changes.
Three Transactions You Can Leave Out
Each has a condition attached. You can exclude transactions with natural persons, transactions with a juridical person who is a related party solely because they are a partner in an unincorporated partnership, and transactions with a permanent establishment of a non-resident person taxed at the same rate as you (FTA CTGTP1, 2023).
The first two only hold where the parties acted as if they were independent of each other. That is a behavioural test, not a structural one, so a director loan on terms no third party would accept doesn't qualify just because a natural person sits on the other side.
Leaving a transaction out of the Local File is not the same as leaving it unpriced. Excluded transactions still have to be conducted at arm's length, and you still need to show the FTA why the price was reasonable when asked.
What Happens If You Cannot Produce Them in 30 Days?
AED 10,000 for each violation of the record-keeping requirement, rising to AED 20,000 for a repeated violation within 24 months of the last (Cabinet Decision No. 75 of 2023, Ministry of Finance). The April 2026 reductions under Cabinet Decision No. 129 of 2025 replaced the VAT and excise penalty table and brought it into line with the corporate tax regime, which continues unchanged, so these figures still stand.
The bigger exposure is evidential rather than financial. Both files must be prepared contemporaneously, meaning alongside the tax period they cover. A study written after the FTA's letter arrives is a reconstruction, and it carries far less weight if the authority challenges your pricing and proposes an adjustment.
The clock runs from the date of the FTA's request, and 30 days is the outer limit unless the authority agrees a longer period. A comparables search alone can take several weeks, so a group discovering on day one that nothing exists is already behind.
Below the Threshold, You Still Need Records
Falling under AED 200 million removes the Master File and Local File obligation. It does not remove the arm's length principle. A taxable person who meets neither test must still keep reasonable records supporting its related party dealings, and the FTA can require those within 30 days under Article 55(4) of the Corporate Tax Law.
Most UAE SMEs sit in the gap between the AED 40 million related party disclosure form threshold and the AED 200 million documentation threshold. The form is their obligation; the two files are not. What we see most often is a company that files the disclosure schedule accurately, then has nothing behind it when a question comes back.
If you expect to cross the threshold this period, start the benchmarking now rather than at filing. That is also when an advance pricing agreement becomes worth considering, and it is the documentation you will lean on for any downward transfer pricing adjustment. For the rates, the AED 375,000 threshold and the filing deadlines underneath all of this, start with our UAE corporate tax guide.
Frequently Asked Questions
Do I need a Master File if my group is entirely based in the UAE?
No. A taxable person in a UAE-headquartered group with no business establishments outside the UAE is exempt from the Master File. The Local File still applies if your revenue reaches AED 200 million or group consolidated revenue reaches AED 3.15 billion.
Does filing the disclosure form mean I need the two files as well?
No. The disclosure form starts at AED 40 million of aggregate related party transactions, with categories above AED 4 million disclosed separately (PwC, 2026). The files are a separate, heavier obligation starting at AED 200 million of revenue. Many businesses need the form and not the files.
Do transactions between two UAE companies need documenting?
Only where the tax treatment differs. If both companies pay the same rate, the transaction sits outside the Local File. If one is a qualifying free zone person taxed at 0%, an exempt person, or a company claiming small business relief, it must be documented.
Is last year's Local File enough for this year?
No. Both files are prepared per tax period on that year's facts, and the Local File requires a functional analysis noting changes against prior years. Rolling forward an old study without refreshing the comparables and intercompany agreements leaves you exposed on the point the FTA is most likely to test.
If your revenue is approaching AED 200 million, or your UAE entity sits inside a large international group, we can review where you stand and what documentation needs building before the FTA asks. Get in touch for a transfer pricing readiness review, and we'll tell you plainly whether you're in scope and what the gap looks like.