Government has published Ministerial Decree No. 221 of 2018 amending certain provisions of the Income Tax Law Executive Regulations under Ministerial Decree No. 991 of 2005 relating to transfer pricing rules on 22nd May 2018. The definition of related party transactions is amended in accordance with Article (38). The definition is more specific in relation to the right of the tax authority to review the use of arm’s-length pricing by associated enterprises. The use of arm’s-length pricing is limited to commercial or financial transactions between associated enterprises in relation to the exchange of goods and services, allocation of cost contribution, royalties, interests and other commercial or financial transactions.
The amendments also added the Transactional Net Margin Method and the Profit Split method for determining the arm’s length price under Article (39).
