On 15 February 2019, the Board of Directors of General Authority of Zakat and Tax (GAZT) of Saudi published a resolution approving transfer pricing  Bylaws as well as an additional FAQs document. The law consists of 26 articles, divided into 12 chapters, which explain the basic principles of transfer pricing through transactions between relevant persons or persons under common control.

Taxpayers can use other Transfer Pricing methods if none of the above methods provide a reliable measure of the result of Arm-Length and that the proposed method meets such requirements.

Some of the main features of the bylaws are summarized as follows:

Disclosure form:

Businesses will have to submit a disclosure form to the tax authorities 120 days after the end of the financial year. In addition taxpayers need to include all related party transactions, regardless of their value, as well as other business related, financial and transactional information as well as part of the annual income tax return.

Country-by-Country Reporting (“CbCR”):

CbCR must be prepared and filed for ultimate parent entities in KSA. The format is closely aligned with the OECD guidelines and must be filed 12 months after the reporting year. Notifications (i.e. that the business is filing elsewhere) are due 120 days after the reporting year and the CbCR only applies to groups with turnover exceeding 3.2 billion riyal ($853 million).

Master file/Local file:

The master file and the local file must be made available to the Authority upon request within the period specified by the Authority in the request, provided that this period is at least 30 days after the date of the request. However, an exemption is also provided for the preparation of the master file and local file for small enterprises, which are defined as controlled transaction companies whose arm-length total does not exceed 6 million SARs over a 12-month period. Although the GAZT applies, these small businesses may still have to provide documentation in certain cases.

In addition, the GAZT has stated on its website, and described further in the FAQs, that it will provide an extension of 60 days to the requirements to submit the Master file and Local file on request for 2019 only. It states that the GAZT may request the Master file and/or the Local file any time following the 120 days after the end of the reporting year. The extension of 60 days to provide the Master file and/or Local file would be in addition to the minimum 30 days upon request.