The entity-level record examined first on enquiry

The Local File is the detailed, entity-level account of a UAE company's related party transactions — its functional and risk profile, and the analysis demonstrating that each material transaction is priced at arm's length. It draws the entity's controlled transactions, functional analysis and supporting benchmarking into a single evidenced record. It is the document the FTA examines first on enquiry, and the point at which a position is either substantiated or exposed.

Under Article 55, read with Ministerial Decision No. 97 of 2023, a Local File is required where a taxable person's revenue in the relevant period reaches AED 200 million, or where it belongs to a multinational group with consolidated revenue of AED 3.15 billion or more. A purely domestic group can meet the AED 200 million threshold and owe a Local File without a Master File, since the Master File obligation is triggered by multinational group membership.

A Local File includes a description of the entity's management structure, business and strategy; details of its material controlled transactions and the context in which they take place; a functional analysis setting out the functions performed, assets used and risks assumed; the selection and application of the transfer pricing method for each transaction; and the benchmarking evidencing the arm's length range. It should be consistent with the Master File and the positions disclosed to the FTA.

The Local File is not submitted with the return; it must be produced within thirty days of an FTA request — a period that assumes the document already exists, and is not enough to prepare one from the outset. Preparing it contemporaneously turns an FTA request from an urgent exercise into a routine one, and keeps the evidence aligned with the transactions as they actually occurred.

Our approach

  • We document the entity's structure, its business, and its controlled transactions.
  • We set out the functional analysis for each material category of transaction.
  • We incorporate the benchmarking analysis that evidences the arm's length position.
  • We reconcile the file with the Master File and the positions already disclosed.

The UAE position

  • Obligation — Article 55 and Ministerial Decision No. 97 of 2023 — AED 200 million entity revenue, or AED 3.15 billion MNE group
  • Timing — Produced within 30 days of an FTA request
  • Related documents — Master File; Benchmarking Study; Disclosure Form