The Zakat, Tax and Customs Authority (ZATCA) in Saudi Arabia published the third edition of its Transfer Pricing (TP) Guidelines on 29 July 2024, introducing several changes.
Key updates include:
- Exemptions for group companies: Group companies that file a single zakat return under the Zakat Collection Ordinance are exempt from the transfer pricing documentation requirements. However, these companies must disclose transactions with companies in which they have less than 100% ownership.
- Advance pricing agreements (APAs): The Guidelines now include a dedicated section outlining the procedures and scope of an APA. A new Section 6 on APAs. APAs can be requested for transactions with related parties valued at SAR 100 million or more. Applications must be submitted at least 12 months before the financial year begins, and include specific documentation. Approved APAs are binding for three years.
- Transaction price adjustments: The Guidelines provide guidance on making transaction price adjustments directly in the accounting records. Taxpayers are required to document the method used for these adjustments in their transfer pricing documentation.
