On 10 December 2018, General Authority of Zakat and Tax (GAZT) released draft transfer pricing regulations (TPBy-laws) for public consultation. The regulations broadly follow international standards, including the arm’s-length principle and documentation standards asset out in the OECD Transfer Pricing Guidelines.

The TP Bylaws is ‎applicable to persons considered taxpayers in Saudi Arabia under the corporate ‎Income Tax Law. Generally, this includes without limitation multinational enterprise‎groups, one or many members of which are deemed a taxable person in SaudiArabia.‎

The provisions of the Bylaws shall be applicable to Controlled Transactions to which Taxable Persons are a party to during the fiscal year ending 31 December 2018. The provisions relating to the Authority’s right to request information about Controlled Transactions shall be effective as of the 31 December 2018 and the authority shall have the right to request information related about all Controlled Transactions to which these Bylaws apply regardless of the date of such transactions.

Under the draft law, taxpayers with controlled transactions in excess of SAR6 million during the fiscal year will need to prepare Master File containing information on the global business operations and transfer pricing policies of the Multinational Enterprise Group to which the taxable person belongs.

A taxable person shall be required to maintain at all times, and, when requested in writing provide the Authority with all or any part of, a Local File containing detailed information on all Controlled Transactions of the Taxable Person.

In addition, Saudi Arabian taxpayers that are members of an MNE Group with consolidated group revenue exceeding SAR3.2 billion will be subject to CbC reporting in the Kingdom of Saudi Arabia, and will be required to notify GAZT regarding the submission of the CbC report within 120 days of the end of the Reporting Year.