Lesson 8 — Transfer pricing: two threshold families, and one screen
More transfer-pricing errors come from conflating two families of threshold than from any question of method. They have different triggers, different figures, different instruments and different deadlines. Documentation is what you must prepare and hold. Disclosure is what you must put in the return. Neither implies the other.
| Obligation | Trigger | Threshold | Source |
|---|---|---|---|
| Master file and local file | Constituent Company of an MNE Group | Group consolidated revenue of AED 3,150,000,000 or more | MD 97/2023 Art. 2(1) |
| Master file and local file | The taxable person's own revenue | AED 200,000,000 or more | MD 97/2023 Art. 2(1) |
| Related-party schedule in the return | Aggregate transactions with all Related Parties | Above AED 40,000,000 | FTA CT Returns Guide CTGTXR1 |
| Related-party schedule, per category | A single category of transaction | Above AED 4,000,000 | FTA CT Returns Guide CTGTXR1 |
| Connected-persons schedule | Aggregate, and per connected person | Above AED 500,000 | FTA CT Returns Guide CTGTXR1 |
Two riders on that table. Dividends between related parties are excluded from both the aggregate and the per-category disclosure tests. And where the FTA requests documentation, you have 30 days to submit it (CT Law Art. 55(3)) — a deadline that only works if the file already exists.
The definitions are wider than "group companies". A Related Party is 50% or more ownership or Control (Art. 35(1)). A Connected Person is an owner of the taxable person, a director or officer of it, or a Related Party of either (Art. 36(2)). A director holding no shares at all is a Connected Person, and the connected-persons schedule starts at AED 500,000, which ordinary directors' remuneration passes without difficulty.
Worked example — no documentation, full disclosure. A UAE company has its own revenue of AED 90,000,000 and is not part of a multinational group. Its related-party transactions for the period total AED 52,000,000: goods AED 45,000,000, services AED 6,000,000 and interest AED 1,000,000. It also pays directors' remuneration of AED 1,800,000, split AED 1,200,000 and AED 600,000 between two directors.
- Documentation: none. Own revenue is below AED 200,000,000 and there is no MNE group, so neither a master file nor a local file is required.
- Related-party schedule: required. The aggregate of AED 52,000,000 is above AED 40,000,000.
- Per category: goods at AED 45,000,000 and services at AED 6,000,000 are each above AED 4,000,000 and are disclosed; interest at AED 1,000,000 is below and is not.
- Connected persons: required. The aggregate of AED 1,800,000 is above AED 500,000, and so is each director taken individually.
Read that result again. The company owes no documentation at all and a complete disclosure. "We are below AED 200,000,000, so transfer pricing does not apply to us" is the most expensive sentence in UAE Corporate Tax compliance, and this example is why it is wrong.
The screens are TP Disclosures for the schedules and Payment/Benefit Types for the categories that make them assemblable, both under Accounting → Configuration → UAE Tax Reports. The connected-persons schedule is reported by person and by type of payment or benefit, so categorising payments and benefits as they are recorded is what turns an annual archaeology project into a query. The module guide does not document either screen's fields; read them off your installation.
MISSING FACT: the CT Law rule governing the deductibility of payments and benefits made by a taxable person to a Connected Person. It was not in the verified law pack for this course, so this lesson covers the disclosure obligation and the categories it needs, and stops there.
The failure mode is the clock. Documentation is not something you write when the FTA asks; it is something you produce when the FTA asks. Thirty days is ample time to print a file and nowhere near enough to build one.