UAE Unveils Major Tax Reform for Multinational Companies
New regulations require MNCs to maintain transfer pricing documentation, promoting transparency and fairness in the UAE tax system
UAE Implements New Corporate Tax Rules for Multinational Companies
The UAE has introduced new rules for companies that have to pay corporate tax in the country.
The Finance Ministry decision explains the need for transparency for MNCs in the pricing of related party transactions. Records and documentation must be maintained for institutions:
Revenue of more than 200 million dirhams ($54 million).
It is part of a group with revenues of AED3.15bn ($858m).
UAE Corporate Tax:The Ministry of Finance issued Ministerial Decision 2023 (97) on requirements for maintaining transfer pricing documentation aimed at promoting transparency and fairness in the UAE’s tax system.
Federal Decree Law No. (47) of 2023 on Taxation of Corporations and Businesses implements transfer pricing rules and documentation requirements to ensure the pricing of transactions between related parties and connected persons, such as companies that are part of the same multinational enterprise (MNE). ) group, is not influenced by their relationships.
Ministry of Finance Undersecretary Younis Haji Al Khoori said the transfer pricing documentation requirements aim to ensure that taxpayers are able to price transactions with related parties and connected persons using standardized files.
“Furthermore, this decision defines limits on the preparation of master and local files and exemptions from disclosure of certain transactions to reduce the compliance burden on taxpayers.”
Al Khoori added that transfer pricing documentation requirements will promote transparency and fairness in the UAE’s tax system.
The decision reinforces the UAE’s commitment to fostering a business-friendly environment that promotes growth, supports economic diversification and enhances the country’s competitiveness globally, he noted.
The decision clarifies the circumstances in which taxpayers must maintain transfer pricing documentation, specifically a master file and a local file, including if they have revenues of at least AED200m ($54m) in the relevant tax period or if they are part of an aggregate MNE group. Consolidated group revenue of at least AED3.15bn ($858m) in the relevant tax period.
Also, the decision describes the transactions or arrangements involved in the local file.
