UAE transfer pricing (TP) stopped being a policy on paper and became a filing reality in 2025. For the first time, businesses had to operationalise transfer pricing inside their Corporate Tax (CT) returns, backed by contemporaneous documentation and formal disclosures to the Federal Tax Authority (FTA). TP shifted from a technical compliance exercise to a core driver of taxable income, audit exposure and effective tax outcomes.
Key takeaways
- Transfer pricing disclosures were embedded in the corporate tax return in EmaraTax for the first full filing cycle in 2025.
- Contemporaneous, audit-ready Local File and Master File documentation became the baseline expectation, with a 30-day deadline to furnish it on request.
- TP adjustments are now expected before filing — a mismatch between TP, financial statements and the tax return is treated as an audit trigger.
- Ministerial Decisions No. 229 and 230 of 2025 tightened the Qualifying Free Zone Person framework, retroactive to 1 June 2023, requiring genuine substance to keep the 0% rate.
- The UAE Domestic Minimum Top-Up Tax (DMTT) applies for financial years starting on or after 1 January 2025, so TP outcomes now feed directly into minimum-tax calculations.
- The OECD published its Transfer Pricing Country Profile for the UAE in October 2025, confirming alignment with the 2022 OECD Transfer Pricing Guidelines.
From policy to filing reality
The defining change of 2025 was that transfer pricing "went live". Mandatory TP disclosures now sit inside the CT return itself, and the FTA expects a Local File and Master File that are contemporaneous and audit-ready rather than assembled after a query lands. Where documentation is requested, businesses have 30 days to produce it.
Two behavioural shifts follow. First, adjustments have to be made before filing, not corrected afterwards — the return should reflect arm's length outcomes on submission. Second, consistency has become a compliance test in its own right: if the transfer pricing position, the statutory financial statements and the tax return do not tell the same story, that misalignment is now viewed as an audit trigger. Getting transfer pricing and accounting to reconcile is no longer optional housekeeping. In practice, SBC advisers reconcile the TP result to the trial balance before the return is drafted, because a number that only ties out after filing is the kind of gap an FTA reviewer opens with.
The 2025 rule changes that shaped TP
Several decisions issued or applied during 2025 carried direct transfer pricing consequences: Ministerial Decision No. 88 of 2025 folded the OECD GloBE rules into UAE law, Ministerial Decisions No. 229 and 230 tightened the QFZP framework, and Cabinet Decisions No. 174 and 129 of 2025 set the Advance Pricing Agreement fee and penalty regimes. The table below maps each instrument to its TP relevance.
| Instrument | Relevance to transfer pricing |
|---|---|
| Ministerial Decision No. 88 of 2025 | Incorporates the OECD GloBE Model Rules, Commentary and Administrative Guidance into UAE law, retroactive from 1 January 2025 |
| Ministerial Decision No. 97 of 2023 | Continues to govern the TP documentation requirements applied in 2025 filings |
| Ministerial Decision No. 301 of 2024 | Updated tax-group framework for periods starting 1 January 2025, with TP implications |
| Ministerial Decisions No. 229 and 230 of 2025 | Enhanced the QFZP framework — expanded qualifying activities, market-based pricing benchmarks and tighter substance and TP requirements, retroactive from 1 June 2023 |
| Cabinet Decision No. 174 of 2025 | Formalised the Advance Pricing Agreement fee framework, effective 1 January 2026 |
| Cabinet Decision No. 129 of 2025 | Introduced a harmonised, non-compounding penalty regime, effective April 2026 |
Alongside these, the FTA issued formal Mutual Agreement Procedure (MAP) guidance in June 2025 — including access for self-initiated TP adjustments and multi-year settlements — giving taxpayers a clearer route to resolve double taxation.
Substance takes centre stage
A consistent theme across the year is that substance now outweighs paperwork. Audits are expected to probe intercompany services, risk allocation and the DEMPE functions behind intangibles — who develops, enhances, maintains, protects and exploits them — focusing on whether contracts match actual conduct. For free zone entities the message is blunt: licensing status alone no longer secures the 0% rate.
A free zone entity must now actively demonstrate genuine substance and arm's length outcomes to retain its 0% corporate tax benefit. Holding the right licence is a starting point, not a conclusion.
How a transaction is structured, in other words, matters as much as how it is priced. The MD 229 and 230 changes reinforce this by tying qualifying commodity income to market-based benchmarks and recognised price reporting agencies, and by testing whether trading, treasury and trade-finance functions genuinely sit inside the free zone entity.
Where transfer pricing meets Pillar Two
Transfer pricing now meets minimum tax directly. The UAE DMTT applies for financial years starting on or after 1 January 2025, and because it is calculated on an effective-tax-rate basis, transfer pricing outcomes flow straight into the result. A low-taxed intra-group structure can now trigger a domestic top-up tax that erases the benefit it was designed to create. Encouragingly, the UAE DMTT has been granted OECD transitional qualified status, which reduces the risk of the same profit being taxed twice.
For in-scope multinationals, this means international tax planning and transfer pricing can no longer be run in separate lanes — a pricing decision is now also a minimum-tax decision.
Why 2026 will matter more
2025 built the record; 2026 is when the FTA starts reading it. With filings, disclosures and documentation now on file, attention shifts from readiness to verification, and consistency, substance and comparability will draw closer scrutiny. Transfer pricing is becoming an ongoing governance and risk function that has to stay aligned with business operations, profitability and minimum-tax exposure throughout the year — not a task revisited only at year-end.
Frequently asked questions
Is transfer pricing documentation mandatory in the UAE?
Yes. UAE businesses that meet the thresholds must maintain contemporaneous, audit-ready Local File and Master File documentation, and complete the transfer pricing disclosures embedded in the corporate tax return. If the FTA requests the documentation, it must be furnished within 30 days, so it should be prepared before filing rather than after a query.
What changed for UAE transfer pricing in 2025?
2025 was the first full corporate tax cycle in which transfer pricing was operational: disclosures were embedded in the return, Local and Master Files became the baseline, and adjustments had to be made before filing. Ministerial Decisions 229 and 230 tightened the free zone framework, and the DMTT linked TP outcomes to minimum tax.
How does transfer pricing affect the UAE DMTT?
The Domestic Minimum Top-Up Tax is computed on an effective-tax-rate basis, so transfer pricing outcomes directly influence the ETR. Structures that leave profit lightly taxed can trigger a domestic top-up tax, neutralising the intended benefit. Because the UAE DMTT has OECD transitional qualified status, aligning TP and minimum-tax positions helps avoid double taxation.
Does the OECD guide UAE transfer pricing audits?
Yes. The OECD published its Transfer Pricing Country Profile for the UAE in October 2025, confirming alignment with the 2022 OECD Transfer Pricing Guidelines, and the OECD standards are explicitly relied upon as the interpretive benchmark in UAE TP audits. Documentation and pricing positions should therefore be consistent with OECD principles.
How SBC Tax Consulting can help
SBC helps groups turn transfer pricing into an ongoing governance function: preparing audit-ready Local and Master Files, reconciling TP with financial statements and CT disclosures before filing, and re-testing free zone positions under the MD 229 and 230 substance rules. We model the interaction between TP and DMTT, support APA and MAP processes, and prepare clients for FTA review. Explore our transfer pricing and international tax services, or contact our team to get 2026-ready.
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.