A UAE Local File is not filed with the Corporate Tax Return — it has to be ready. Under Ministerial Decision No. 97 of 2023, qualifying Taxable Persons must maintain a Local File and Master File contemporaneously and produce them to the Federal Tax Authority within 30 days of a request.
Unlike the Transfer Pricing Disclosure Form, which is completed inside the annual return, the Local File sits behind the return. This guide covers who must prepare one, what it should contain, how it differs from the Master File and disclosure schedules, and how to keep it audit-ready.
What is a Local File?
The Local File is entity-specific transfer pricing documentation. It describes the material controlled transactions of a particular Taxable Person — the transactions themselves, the parties involved, and the analysis that supports arm's length pricing.
It is the UAE's implementation of the local-file tier of the OECD three-tier documentation framework under BEPS Action 13, alongside the Master File and Country-by-Country Report. The arm's length principle itself sits in Article 34 of the Corporate Tax Law.
What is the legal basis for the UAE Local File requirement?
Article 55 of Federal Decree-Law No. 47 of 2022 requires certain Taxable Persons to maintain a Master File and a Local File in the form and manner prescribed by the FTA. Ministerial Decision No. 97 of 2023, issued on 11 May 2023, sets the conditions, thresholds and content.
The requirement applies from Tax Periods beginning on or after 1 June 2023, in line with the general effective date of UAE Corporate Tax. The FTA Transfer Pricing Guide (CTGTP1) explains how the FTA expects the files to be used in practice.
Which businesses must maintain a Local File?
A Taxable Person must maintain both a Local File and a Master File for a Tax Period if either condition is met:
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The Taxable Person is a Constituent Entity of a Multinational Enterprise Group with total consolidated group revenue of AED 3.15 billion or more in the relevant Tax Period.
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The Taxable Person's own revenue in the relevant Tax Period is AED 200 million or more.
Where the entity sits in an MNE Group at or above the AED 3.15 billion consolidated threshold — which aligns with the UAE Country-by-Country Reporting threshold under Cabinet Decision No. 44 of 2020 — the Local File and Master File requirement applies regardless of that individual entity's own UAE revenue.
The AED 200 million standalone threshold is deliberately high compared with many other jurisdictions. It is intended to limit the formal documentation burden on smaller UAE businesses. It is not an exemption from Article 34: every Taxable Person that transacts with a Related Party or Connected Person still needs to price those dealings at arm's length.
Does a wholly UAE-domestic group still need a Master File?
The Master File is designed to give the FTA a picture of the group's global operations. Where every entity in the group is resident in the UAE, with no foreign Constituent Entities, that group-wide file is generally understood not to apply in the same way as for a genuinely multinational structure.
The Local File can still apply to an individual UAE Taxable Person that meets the AED 200 million revenue threshold, because it is assessed at entity level based on that entity's Related Party and Connected Person transactions. Businesses in this position should confirm their specific treatment against Ministerial Decision No. 97 of 2023 and current FTA guidance. Domestic related-party dealings remain in scope of Article 34 even where a documentation carve-out applies.
What should a UAE Local File contain?
Ministerial Decision No. 97 of 2023 and FTA guidance broadly follow Chapter V of the OECD Transfer Pricing Guidelines. A well-prepared Local File typically covers three blocks.
Local entity information
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A description of the Taxable Person's management structure, local organisation chart and reporting lines.
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A description of the business and business strategy, including any recent restructuring or intangible transfers affecting the entity.
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Key competitors.
Controlled transactions
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A description of each material controlled transaction with Related Parties and Connected Persons, including the commercial context.
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The amount of intra-group payments and receipts for each category of controlled transaction, by tax jurisdiction of the foreign counterparty.
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Identification of the Related Parties and Connected Persons involved, and the nature of their relationship.
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Copies of material intercompany agreements.
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A detailed comparability and functional analysis covering functions performed, assets used and risks assumed by the Taxable Person and its counterparties.
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The most appropriate transfer pricing method and the reasons for selecting it.
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The tested party and the rationale for that selection, where relevant.
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Important assumptions made in applying the method.
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The comparability and benchmarking analysis, including search methodology and comparable data.
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Any comparability adjustments, and whether they were made to the results, the tested party or the comparables.
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The rationale for concluding that the transaction was priced at arm's length.
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A summary of financial information used in applying the method.
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A copy of existing unilateral or bilateral/multilateral Advance Pricing Agreements and other tax rulings to which the UAE is not a party but which relate to the controlled transactions described.
Financial information
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Annual local financial statements of the Taxable Person for the relevant Tax Period.
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Information and allocation schedules showing how the financial data used in the method ties to those financial statements.
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Summary schedules of relevant financial data for comparables, and the sources from which that data was obtained.
Which transactions can be excluded from the Local File?
Ministerial Decision No. 97 of 2023 specifies certain transactions or arrangements that do not need to be included. In broad terms, transactions or arrangements with a Resident Person do not need to be included unless that Resident Person falls within categories identified in the Decision — for example where that person has a Permanent Establishment in the UAE, derives State Sourced Income, or otherwise has a nexus that brings the transaction within scope.
Transactions with a Government Entity, a Government Controlled Entity, or certain other specified categories of persons may also be excluded, subject to the precise conditions in the Decision.
The exclusions are narrowly defined and depend on the counterparty's specific status. Businesses should not assume a transaction is excluded without checking it against Ministerial Decision No. 97 of 2023. Where there is uncertainty, the more conservative approach is generally to include it.
How is the Local File different from the Master File and the Disclosure Form?
| Document | What it is | When it is produced |
|---|---|---|
| Disclosure Form | Related Party and Connected Person schedules inside the Corporate Tax Return | Filed with the return on EmaraTax |
| Local File | Entity-level analysis of material controlled transactions | Maintained contemporaneously; produced within 30 days of an FTA request |
| Master File | Group-level picture of the business, IP, financing and TP policies | Maintained contemporaneously where the MNE / revenue tests are met; produced on request |
At filing stage, a Taxable Person is generally not required to submit the Local File, Master File or a detailed benchmarking report — only the disclosure schedules within the return. The files exist to be produced when the FTA asks for them, which means they need to already exist in a complete, defensible form. What has to be reported on the return is covered in what businesses need to report for Related Party transactions.
What are the retention and production requirements?
The Local File and Master File should be prepared contemporaneously — by the time the Corporate Tax Return for the relevant Tax Period is due — rather than reconstructed after an FTA request.
Once requested, the FTA generally expects the documentation within 30 days, subject to any extension the FTA may agree in a specific case.
Records and documents relevant to Corporate Tax, including transfer pricing documentation, should generally be retained for a minimum of seven years, consistent with UAE tax record-keeping requirements.
How should a UAE business prepare a Local File?
Step 1 — Confirm whether the thresholds apply. Assess the entity's own revenue against AED 200 million, and separately confirm whether it is a Constituent Entity of an MNE Group with consolidated revenue of AED 3.15 billion or more. Revisit this each Tax Period.
Step 2 — Map controlled transactions at entity level. Build a complete inventory of Related Party and Connected Person transactions for the Tax Period, organised by category (goods, services, financing, intangibles and so on), and identify which transactions are material enough to require detailed Local File coverage.
Step 3 — Perform the functional and comparability analysis. For each material category, document functions, assets and risks, select the most appropriate method, and identify or update the benchmarking that supports the arm's length outcome.
Step 4 — Assemble supporting evidence. Gather intercompany agreements, financial statements, allocation schedules linking financial data to the analysis, and any relevant Advance Pricing Agreements or rulings.
Step 5 — Align with the Master File and the Disclosure Form. Cross-check the Local File against the Master File (where applicable) and against the figures reported in the Related Party Transaction Schedule and Connected Persons Schedule, so the three documents tell a consistent story.
Step 6 — Review and refresh annually. Update the file each Tax Period for current transactions, updated benchmarking data and business changes, rather than rolling forward a prior-year file without substantive review.
A documented transfer pricing policy and the Local File serve different jobs. The policy tells the group how to price; the Local File shows why those prices were arm's length. Businesses that meet the thresholds need both.
What are common Local File preparation pitfalls?
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Waiting for an FTA request before starting the file, rather than maintaining it contemporaneously.
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Excluding transactions with Resident Persons without checking the specific exclusion conditions in Ministerial Decision No. 97 of 2023.
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Using a benchmarking study that has not been refreshed for the relevant Tax Period.
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Failing to reconcile the Local File to the financial statements used to complete the Corporate Tax Return.
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Treating the Local File as a copy-paste of a global transfer pricing report without a UAE-specific functional and comparability analysis.
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Overlooking Connected Person transactions because they are typically discussed in the context of the Disclosure Form only.
Frequently asked questions
Does every UAE business need to maintain a Local File?
No. Only Taxable Persons that meet the AED 200 million own-revenue threshold, or that are Constituent Entities of an MNE Group with consolidated revenue of AED 3.15 billion or more, are required to maintain a Local File and Master File. Smaller businesses still need to support arm's length pricing on request.
Is the Local File submitted with the Corporate Tax Return?
No. It is maintained contemporaneously and produced to the FTA only upon request, generally within 30 days.
Do Free Zone Persons need a Local File?
Yes, if they meet the applicable revenue or MNE Group thresholds. The requirement applies regardless of whether the entity operates on the mainland or in a Free Zone.
Can transactions with UAE resident related parties be left out of the Local File?
Only where the specific exclusion conditions in Ministerial Decision No. 97 of 2023 are met. Otherwise these transactions should generally be included. Exclusion from the Local File is not an exemption from Article 34.
How long should Local File documentation be kept?
Generally for a minimum of seven years, consistent with UAE Corporate Tax record-keeping requirements.
Primary sources and further reading
How SBC Tax Consulting can help
SBC's transfer pricing team prepares contemporaneous Local Files that reconcile to the financial statements, the Disclosure Form and — where applicable — the Master File, including FAR analysis and current benchmarking. Corporate tax specialists then align the same facts with the return. Contact SBC before the next filing or FTA information request.
This publication is for general information only and does not constitute professional advice. Please consult your SBC advisor before acting on any matter covered here.