Transfer Pricing Disclosure Form

Related businesses may sell goods, provide services or lend money to one another, and transfer pricing examines whether those dealings reflect arm's-length terms under applicable tax law. Disclosure gives the authority information about the transactions.

The UAE Federal Tax Authority's Transfer Pricing Guide describes a general disclosure form for taxable persons with related-party or connected-person transactions above a materiality threshold, covering transaction categories, counterparties, values and pricing methods, which is not the same as the taxpayer's entire supporting analysis. The FTA's Tax Returns Guide describes related-party and connected-person schedules in the return, and says the related-party schedule applies when aggregate related-party transactions exceed AED 40 million, with categories above AED 4 million disclosed after that test.

That guide separately describes a connected-person schedule when aggregate transactions with connected persons, including their related parties, exceed AED 500,000, and it then specifies reportable payments or benefits per person. These are guide rules to confirm for the current period, and since the cited guide uses 'exceeds' rather than 'equals', confirm the official instructions and calculation basis before filing at a boundary; do not merge these tests into a single threshold.

A related party can be domestic or foreign, so do not assume local transactions are exempt from transfer-pricing analysis, and the legal definition of relationship needs checking for each counterparty. A connected person is a distinct category under UAE Corporate Tax law, so payments and benefits to a director or owner may raise questions that finance should map before completing the schedule.

Dividends declared between related parties are excluded from the cited guide's related-party disclosure threshold calculation, which is a specific rule for that schedule and not a general exemption from all tax analysis. An arm's-length result asks what independent parties would agree in comparable circumstances, and a price that seems commercially reasonable is not automatically documented, so keep contracts, invoices and method support.

Methods can include comparable uncontrolled price, resale price, cost plus and other accepted approaches, and the schedule may ask which method was used, but the right choice depends on transaction facts, not a preferred tax outcome. A fictional group invoicing management services across two entities should keep the service agreement, cost allocation and evidence of the actual work, because a label on an invoice alone may not support the charge.

A disclosed transaction is not automatically non-compliant, because the form provides information for review, and an amount below a disclosure threshold may still need arm's-length treatment under the underlying law. The FTA guide distinguishes the disclosure from a Master File, Local File and country-by-country reporting, which have separate conditions and purposes, so filing a schedule does not replace other documentation.

A fictional UAE business with related-party transactions above the aggregate test must then examine categories and counterparties according to the current return instructions, and this example does not decide its filing obligation without complete facts. Record gross income and expenditure separately where the current schedule requires it, because netting two directions can hide the amounts the authority asks for, and gather transactions for the same reporting period since a cross-year contract total is not necessarily the period's reportable amount.

A taxpayer should reconcile disclosed totals to ledgers and the Corporate Tax return, documenting differences and watching for missing counterparties or duplicate entries. The return and guide can change, so a tax adviser should review material or complex cross-border arrangements and current FTA forms, and an older threshold summary should not be treated as permanent law; the disclosure form is a reporting layer built on accurate transaction records and pricing support, so begin with the relationships, classify transactions, test current thresholds and complete the required fields.