On 4 July 2022, Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) issued a draft of Transfer Pricing (TP) Bylaws and invited public consultation. The public consultation period is open until 30 July 2022. The final Transfer Pricing Bylaws will be released within the next two months and applicable during the fiscal year ending 31 December 2022. The proposed TP Bylaws includes the following main changes:

Applicable Taxpayers

Currently, the Transfer Pricing Bylaws are applicable to all entities that are fully or partially held ownership in non-GCC (Gulf Cooperation Council) countries. The Zakat payers’ entities are only required to submit a country-by-country (CbC) report and notification. The draft TP Bylaws define ‘taxable persons’ who are wholly owned ownership in GCC countries, having related party transactions.

Related Party Definition

The related party definition regarding effective control has been expanded in the definition of related persons.

TP Disclosure Form

Saudi Arabian taxpayers that have controlled transactions need to submit the disclosure form within 120 days after the last day of the fiscal year.

The draft TP Bylaws proposes to include additional information in TP disclosure form, such as the detail of assets, total funds, advance payments, debts, and other components of the Zakat base, amounts deductible from the Zakat base, and details of all controlled transactions including non-monetary transactions.

TP Documentation

Master file and Local file thresholds remain SAR 6 million. Natural persons and small size entities with related party transactions less than SAR 6 million in the year are not necessary to submit from the Master file and Local file.

Other changes

The draft TP Bylaws added definitions of ‘Zakat Collection Law’, ‘Declaration’ and ‘Group’, and proposes to change the name from ‘multinational enterprise group’ to ‘multinational group’.