If your UAE entity has a December year-end, the corporate tax return for the 2025 tax period is due on 30 September 2026. Inside that return sits a transfer pricing disclosure form covering transactions with Related Parties. A UAE entity that deals with a Korean parent almost always falls within it: service fees paid to head office, head office cost allocations, royalties, and interest on head office loans are all Related Party transactions.
Because the form is a section of the return rather than a separate filing, it tends to surface only at the last moment. Working out transaction values and the pricing method for the first time at that point is too late.
1. The disclosure form is part of the return
Under Article 55(1) of the UAE Corporate Tax Law, a Taxable Person that transacts with Related Parties or Connected Persons above a materiality threshold must submit a transfer pricing disclosure form together with its tax return. There is no separate deadline. The return deadline is the disclosure deadline: nine months after the end of the tax period.
The form records the type and value of each transaction, the counterparty, and the method used to determine the arm's length price. Connected Persons include shareholders, directors and their relatives, so salaries paid to a major shareholder or fees paid to a company owned by a director's family go on the same form.
The materiality threshold is set out in the FTA's return guidance. If your entity has cost allocations or service arrangements with a Korean parent, the safer assumption is that you are within scope and should prepare accordingly.
2. Local File and Master File: two thresholds
Separately from the disclosure form, larger entities must maintain a Local File and a Master File. Ministerial Decision No. 97 of 2023 sets two thresholds, and meeting either one triggers both documents.
- The Taxable Person's own revenue in the tax period is AED 200 million or more
- The Taxable Person is a constituent company of a multinational group with consolidated revenue of AED 3.15 billion or more
The group test is the one that matters for Korean groups. A UAE entity with modest revenue of its own still falls within the Local File requirement if the parent group's consolidated revenue exceeds the threshold. Some entities conclude they are out of scope by looking only at their own revenue. Check the group figure first.
The Ministerial Decision also specifies which transactions go into the Local File. Transactions with Non-Resident Persons are included, and a Korean parent is a Non-Resident Person, so dealings with head office are always in scope. Transactions with Exempt Persons, with entities that have elected Small Business Relief, and with Resident Persons taxed at a different rate are included as well. A transaction between a 0% Qualifying Free Zone Person and a 9% mainland entity is a typical example. Transactions between UAE Resident Persons taxed at the same rate are excluded.
| Document | Who | When |
|---|---|---|
| Disclosure form | Every Taxable Person with Related Party transactions above the threshold | With the return, nine months after year-end |
| Master File and Local File | Own revenue of AED 200m or more, or a constituent of a group with consolidated revenue of AED 3.15bn or more | Maintained and submitted when the FTA requests it |
| Country-by-Country Report | Multinational groups with consolidated revenue of AED 3.15bn or more | Filed by the ultimate parent. For Korean-headed groups, in Korea |
| Supporting information | Any Taxable Person the FTA asks | On request |
The Local File and Master File are not submitted with the return. They are maintained and provided when the FTA asks for them. Starting to prepare them only once a request arrives leaves very little time even for a single benchmarking study.
3. Below the thresholds, arm's length still applies
An entity with revenue below AED 200 million in a group that is also below the threshold has no Local File obligation. The arm's length principle in Article 34 of the Corporate Tax Law, however, applies regardless of size. Smaller entities simply have no prescribed format; they still need evidence that their dealings with head office are at arm's length, and the FTA may request supporting material such as a benchmarking study.
In practice the first question is how the entity is remunerated for services to head office. If there is a policy, say cost plus a fixed percentage, and the year-end results reflect it, the explanation is straightforward. If the policy says cost plus 10% but the accounts show 4%, the gap needs to be explained first. If there is no policy at all, both a policy and a benchmark have to be established.
Transfer pricing adjustments are made in the return. If the year-end results have drifted from the policy, the answer is not to rewrite the books after the fact but to adjust in the return and record the basis in the Local File or supporting documentation.
4. Branches and subsidiaries face different questions
A company that entered the UAE as a branch and one that set up a separate legal entity are asked different questions on transfer pricing.
A branch is part of head office. In the UAE, the profit attributable to the permanent establishment must be determined on an arm's length basis; in Korea, that profit is consolidated into head office income. The single issue is how the attribution was made. An agreement between head office and the branch, the basis on which the charge was calculated, and a record of which side actually performed the work: with these three in hand, the same explanation holds up before both tax authorities.
For a separate legal entity, Korean CFC rules sit on top of UAE transfer pricing. Where a Korean shareholder holds 10% or more directly or indirectly and the entity's average effective tax rate over the past three years is 17.5% or lower, undistributed retained earnings are treated as a deemed dividend. The exemption is substance: people and premises carrying on a genuine business. The evidence for that is the same functional analysis found in the transfer pricing Local File, so there is no reason to prepare two separate documents.
The more successfully a 0% Qualifying Free Zone Person preserves its rate, the further its three-year average effective tax rate falls below the Korean CFC line. Tax saved in the UAE can be collected in Korea from the shareholder as a deemed dividend. A transfer pricing policy set with only the UAE rate in view misses this.
5. If you have last year's file, review only what changed
Entities whose first corporate tax return covered the 2024 tax period are now filing for the second time. If you prepared a Local File last year, the temptation is to update the date and leave it at that. That is risky. Functions and risks usually stay the same, but four things change every year.
- Headcount. If local staff numbers rose or fell, the functional analysis changes
- Transaction values. Service fees and cost allocations with head office
- Comparables. The financial data of benchmark companies is refreshed annually
- Rules. From 2025, groups with consolidated revenue of EUR 750 million or more are subject to the UAE Domestic Minimum Top-up Tax at 15%
Check these four and the rest of last year's file can be carried forward. Skip them and the file reaches the FTA with figures that no longer match this year's accounts.
6. Aligning the numbers with the Korean parent
The Korean parent reports the same transactions to the Korean tax authority. If the transaction values and pricing method in the UAE Local File differ from what was reported in Korea, questions come from both sides. For December year-ends the Korean corporate tax return is due at the end of March and the UAE return on 30 September, so Korea fixes the numbers first and the UAE follows.
The sequence is this. Confirm the group transfer pricing policy. Check whether the UAE year-end results reflect that policy. Compare them with what head office reported in March. Where there is a mismatch, adjust in the UAE return to align. Korean filings are difficult to correct after the fact, so where a discrepancy is found, aligning on the UAE side is the practical route.
Once the September return is filed, preparation for the parent's March return in Korea follows shortly after. The policy and benchmark settled now become the starting point for both filings next year.
Closing
Completing the disclosure form takes three things: a schedule of transaction values by Related Party, the agreements behind those transactions, and the policy document that set the pricing. The schedule comes out of the year-end ledger, but the agreements and policy documents often sit at head office, and requesting and receiving them takes time. With the time left before 30 September, the first step is to ask head office for the documents.
This article is general information. Whether the disclosure applies and what documentation is required depends on group structure, transaction type and financial year, and individual cases should be confirmed separately.