Master File & Local File Preparation

The Master File presents the group-wide picture — organisational structure, business description, intangible ownership, intercompany financing, and consolidated financial position — and is common across every entity in the group. The Local File is entity-specific, covering the UAE taxable person's own material related-party transactions, its FAR analysis, the method applied to each transaction category, and the benchmarking evidence supporting the pricing used. Ministerial Decision No. 97 of 2023 requires both where the applicable thresholds are met, and they serve different, complementary purposes for an FTA reviewer.

No. Neither document is submitted automatically alongside the Corporate Tax return. The obligation is to maintain both, keep them current, and produce them to the FTA within the stipulated period, generally 30 days, if the FTA requests them. What is filed with the return is the separate Related Party Transactions disclosure form, which is a shorter schedule, not the full Local File or Master File.

The Local File is required where the taxable person individually exceeds the prescribed standalone revenue threshold, or is part of an MNE Group meeting the prescribed consolidated group revenue threshold, under Ministerial Decision No. 97 of 2023. Both conditions are tested independently — an entity below the standalone threshold can still be caught through its group's consolidated position.

Ministerial Decision No. 97 of 2023 prescribes the Master File content in line with the OECD's BEPS Action 13 framework: the group's organisational structure, a description of its businesses and key value drivers, the ownership and location of important intangibles and related agreements, a description of the group's intercompany financing arrangements, and the group's consolidated financial and tax position. It is a narrative document about the group as a whole, not the UAE entity specifically.

A description of the UAE entity's business and its role in the group's value chain, a listing of its material related-party and connected-person transactions by category, the FAR analysis behind those transactions, the transfer pricing method selected for each category with supporting rationale, and the benchmarking analysis — comparable search, screening criteria, and resulting arm's length range — that evidences the pricing applied.

Often yes, with review — an existing global Master File can typically be adapted for UAE purposes rather than rebuilt from scratch, provided it genuinely reflects the group's current structure, intangible ownership, and consolidated financials. What cannot be borrowed from the parent's documentation is the Local File, which must be UAE-entity-specific and cannot rely solely on a foreign document's generic content.

The stipulated production period is generally 30 days from the FTA's request, though the precise timeframe should be confirmed against the specific request received and current FTA guidance. Because this window is short relative to the analytical work involved in a defensible study, PNPC's standard approach is to have both documents already built and indexed before any request arrives, not to start the analysis once the clock starts running.

If the FTA requests the documentation and the taxable person cannot produce it, or produces documentation that does not adequately support the pricing applied, the FTA can adjust the taxable income to what it considers the arm's length outcome would have been. This can mean additional Corporate Tax, administrative penalties for non-compliance, and interest on the additional tax from the original due date.

Method selection follows the FAR analysis, not the other way around. For each material transaction category we assess which party performs which functions, owns which assets including intangibles, and bears which commercial risks, and select the most appropriate of the five OECD-recognised methods — Comparable Uncontrolled Price, Resale Price, Cost Plus, Transactional Net Margin Method, or Transactional Profit Split — based on that analysis and the availability of reliable comparable data.

Yes, where the amounts are material. Payments and benefits to Connected Persons under Article 36 — owner or director salary, rent paid on premises they personally own, interest on shareholder loans — must be at market value to remain fully deductible for Corporate Tax purposes, and the Local File should document the benchmarking that supports those terms alongside the entity's related-party transactions.

The content requirements are the same, but a Qualifying Free Zone Person's Local File carries an additional, higher-stakes dimension: if related-party pricing with a mainland or foreign affiliate is found not to be arm's length, the FTA can recharacterise the income involved, which can affect whether it still counts as Qualifying Income and, in more serious cases, threaten the QFZP status itself if non-qualifying revenue exceeds the permitted threshold.

The financial data underlying the study is generally refreshed annually to reflect the tested party's actual results for the year. The underlying comparable company search itself is typically refreshed on a multi-year cycle, commonly every three years or sooner if the industry or the entity's functional profile changes materially, consistent with OECD guidance on documentation currency.

Yes, and this reconciliation is one of the most important quality checks PNPC performs before considering either document complete. The disclosure form is filed with the Corporate Tax return and is what the FTA sees first — if its figures do not match the Local File and the audited financial statements exactly, that mismatch is one of the most common triggers for a follow-up FTA information request.

No, though they are related tiers of the same OECD BEPS Action 13 documentation framework. CbCR, governed by Cabinet Resolution No. 44 of 2020 as amended, is a group-level, jurisdiction-by-jurisdiction financial breakdown filed with the Ministry of Finance, separate from the FTA. The Master File and Local File are governed by Ministerial Decision No. 97 of 2023 and are maintained for, and produced to, the FTA. A group above the CbCR threshold is very likely also in scope for the Master File and Local File, and PNPC scopes and builds all three together where applicable.

For a first-time engagement with reasonably prompt data turnaround, PNPC typically completes related-party mapping, FAR analysis, method selection, benchmarking, and full drafting of both documents within 6 to 8 weeks, timed to be filing-ready ahead of the Corporate Tax return due date. Delays in document collection from the client are the most common cause of timeline slippage.

Yes. For groups that have already passed one or more Corporate Tax financial years without formal documentation, we assess the exposure, reconstruct the best-available FAR analysis and benchmarking support for the closed periods using whatever records exist, and put a contemporaneous process in place going forward. Retrospective work is inherently constrained by data availability, but it puts the business in a materially stronger position than facing an FTA request with nothing on file.

PNPC scopes the engagement based on the number of related-party transaction categories requiring benchmarking, whether the Master File needs to be built new or can be adapted from an existing group document, the complexity of the FAR analysis, and whether this is a first-time build or an annual refresh. A fixed, written fee is agreed after an initial scoping call and before work begins.

Because the obligation to maintain contemporaneous documentation exists from the moment the thresholds are met, independent of whether a request is ever issued, and because a document built in the ordinary course — with FAR conversations held while they are current and a benchmarking search run without deadline pressure — is measurably stronger than one reconstructed inside a 30-day response window. Waiting also means several years of undocumented related-party activity can accumulate before the gap is discovered.