As per Article 55 of the Federal Decree-Law No. 47 of 2022, Transfer Pricing Documentation is required to be maintained to
disclose information regarding transactions and arrangements between Related Parties and Connected Persons.

‘Related Parties’ as those who are related through Ownership, Control or Kinship (for natural persons) whereas ‘Connected
Persons’ refers to owner, director, officer, partners (in the same Unincorporated Partnership) or related party of them.

This Ministerial Decision No. 97 of 2023 has been issued for prescribing the conditions for maintaining the Transfer Pricing
Documentation in the form of Master File and Local File as well as transaction and arrangement with certain specific Related
Parties and Connected Persons which shall be included in / excluded from the Local File.

Conditions for Maintaining Master File and Local File:

The following Taxable Persons are required to maintain both a Master File and Local File:

1. A Constituent Company1 of a Multinational Enterprises Group2 as defined in the Cabinet Decision No. 44 of 2020 that has a
total consolidated group Revenue of AED 3,150,000,000 or more in the relevant Tax Period.

2. A Taxable Person having Revenue of AED 200,000,000 or more in the relevant Tax Period.
Transactions and arrangements with following Related Parties and Connected Persons needs to be included in the Local File:

a. A Non-Resident Person.

b. An Exempt Person.

c. A Resident Person who has elected to apply for Small Business Relief (having Revenue less than AED 3,000,000) and meets the conditions for such election.

d. A Resident Person who is subject to a different Corporate Tax rate than the Taxable Person.

Transactions and arrangements with following Related Parties and Connected Persons shall be excluded in the Local File:

a. Resident Persons other than those specified in Para (b), (c) and (d) above.

b. A Natural Person, provided that both the parties are acting as if they were independent of each other

c. A juridical person considered to be a Related Party or a Connected Person solely by virtue of being a partner in an
Unincorporated Partnership, provided that both the parties are acting as if they were independent of each other

d. A Permanent Establishment of a Non-Resident Person whose income is subject to the same Corporate Tax rate as that of
the Taxable Person.

This is a welcome move by the Ministry in respect of Transfer Pricing provisions given that this is the first Ministerial Decision
providing clarity on certain important aspects for maintenance of Transfer Pricing Documentation. However, further guidelines
in respect of maintaining Transfer Pricing Documentation are awaited.