In anticipation of the introduction of a transfer pricing policy in Saudi Arabia, the General Authority of Zakat and Tax made an amendment in 2014 to article 10(11) of the Saudi tax by-laws, laying down the concept of the arm's length principle and including a provision to disallow any charges by a related party if in excess of arm's length value. This article provides a detailed description of the transfer pricing regulations in the Kingdom.
On 30 May 2020, the Kingdom of Saudi Arabia (KSA) published updated transfer pricing (TP) guidelines to provide insight into the TP practice for taxpayers in the KSA, based on the application of the TP Bylaws. In this article, the author summarizes those TP guidelines with the objective to provide practical guidelines on the implementation of TP regulations in the KSA.
As part of an increased openness to international investment and the resulting need to address international tax issues, the Kingdom of Saudi Arabia (KSA) recently adopted transfer pricing regulations consistent with global norms. Due to the newness of these regulations in the KSA tax system and the general difficulty of resolving transfer pricing disputes, the KSA continues to review the experience of other countries with transfer pricing rules, enforcement and disputes.This is the first of three papers that will examine the current and anticipated problems with the application of transfer pricing rules and explore potential methods to improve the transfer pricing dispute process in the KSA. This paper will explore the context and motivation for the adoption of transfer pricing rules by the KSA, the rules themselves, and the general enforcement approach. The second and third papers will focus on the experiences of the Internal Revenue Service (“IRS”) of the United States (“U.S.”) resolving and avoiding transfer pricing disputes and transfer pricing penalties and compliance incentives regarding transfer pricing documentation to see what procedures the KSA should consider adopting.
On 30 May 2020, Saudi Arabia published new transfer pricing (TP) guidelines to provide insight and guidance concerning the TP practice in Saudi Arabia based on the application of the TP Bylaws. In this article, the author summarizes those TP guidelines with the objective of updating the qualified taxable persons regarding their legislative and administrative responsibilities under the TP regulations and to enable them to better understand the TP regulatory framework and TP documentation requirements in Saudi Arabia.
The Kingdom of Saudi Arabia (KSA) Tax Authorities (GAZT) released draft transfer pricing bylaws in December 2018. This article sets out a summary of the main provisions and it should be noted that there is a good amount of consistency with the OECD Transfer Pricing Guidelines; however, there are disclosure requirements due April 2019 for groups operating in KSA. In addition, local files must be produced within seven days of request and as such this will place an increased compliance burden on businesses that ordinarily adopt a risk-based approach to preparing local files.
In a global economy where multinational enterprises (MNEs) play a prominent role, governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdiction and that the tax base reported by MNEs in their country reflects the economic activity undertaken therein. For taxpayers, it is essential to limit the risks of economic double taxation.
This consolidated version of the OECD Transfer Pricing Guidelines includes the revised guidance on safe harbours adopted in 2013, as well as the recent amendments made by the Reports on Actions 8-10 and 13 of the BEPS Actions Plan and conforming changes to Chapter IX.
Saudi Arabia's new transfer pricing bylaws introduce new compliance requirements. Companies with a financial year ending on 31 December 2018 will need to provide disclosure of related party transactions by 30 April 2019.
This book gives an overview of the basic principles of transfer pricing and U.S. transfer pricing rules, and the impact of transfer pricing on other issues such as customs valuation, Section 404 of the Sarbanes-Oxley Act of 2002, and FASB Interpretation no. 48.
