Disclosure Requirements

Effective 15 February 2019, taxpayers are required to submit a Disclosure Form along with the annual tax declaration (120 days after year-end). The Disclosure Form should include, inter alia, the following information:

Information on related parties including identification and countries of incorporation and tax residence;
Information on any restructuring operations affecting the taxpayer or the group;
Information on the effective or beneficial owner of related persons, including identification and countries of incorporation and tax residence;
Aggregate revenues, expenditure and net profit or loss as per the annual tax return;
Information on the type of relationship and nature of transactions between the related persons;
Details on the transactions including aggregate amounts and nature of revenues and expenditure;
The transfer pricing method(s) used;
Information on any transactions contracted for no consideration or non-monetary consideration including barters and exchanges; and
Information on whether the taxpayer maintains the standard documentation required, including Master file and Local file. A statement from a registered public accountant authorized to operate in Saudi Arabia to the effect that the resident taxpayer follows the transfer pricing policies of the group must be attached to the Disclosure Form.

A statement from a registered public accountant authorized to operate in Saudi Arabia to the effect that the resident taxpayer follows the transfer pricing policies of the group must be attached to the Disclosure Form.

Standard Documentation

As per the TP guidelines, there are four transfer pricing (TP) documentation requirements: (i) the General documentation, (ii) the Master file, (iii) the Local file and (iv) the Country-by-Country (CbC) Report.

General documentation is required to be maintained by taxable persons who are a party to a controlled transaction within the same tax jurisdiction as well as cross-border controlled transactions;
The Master file provides an overview of the MNE’s global business, the transfer pricing policy and economic activities/functions of the related persons;
The Local file provides detailed information on controlled transaction with the taxable person and is, accordingly, supplementary to the Master file; and
The CbC report includes tax jurisdiction wise information on various information relating to the MNE’s global activities.
The Master file, Local file and CbC reporting requirements are broadly in line with the OECD TP guidelines.

General Documentation

The transfer pricing guidelines do not prescribe any specific documentation that needs to be maintained under general documentation. However, the guidelines recommend that the general documentation must include sufficient information to support the determination of the arm’s length pricing of the controlled transactions and similar information as required under the Master File and Local file requirements including functional analysis and economic analysis must be maintained.

The general documentation is required to be provided to ZATCA upon request, within 30 days from the date of request.

Under the new transfer pricing guidelines (updated in June 2024), group companies that submit a unified Zakat declaration under the Zakat collection regulations are exempt from transfer pricing documentation requirements, provided that the transactions with companies in which they have 100% ownership are disclosed. However, upon request by the tax authorities, the entity must file the transfer pricing documentation within the specified time (minimum 30 days from the date of request).

Master File

The Master file documentation requirements are applicable from the reporting year ending on 31 December 2018.

The contents of a Master file include:

Details of the MNE's organizational structure, including a chart illustrating the MNE’s legal and ownership structure and geographical location of operating entities;
Description of the MNE’s business(es), including important drivers of business profit, description of the goods or services of the MNE group amounting to more than 5% of the group’s turnover, important service arrangements between members of the MNE group, geographical markets, functional analysis, restructuring arrangements and other information;
Description of the MNE’s intangibles, including a description of the MNE's strategy regarding intangibles, location of R&D facilities and management, a list of important intangibles of the MNE group, transfer pricing policies and agreements regarding R&D and intangibles, and other information;
Details of the MNE's intercompany financial activities, including how the group is financed, financing agreements with unrelated lenders, group members providing a central financing function for the group and other information; and
Information on the MNE's financial and tax positions, including annual consolidated financial statements for the year concerned and a list and description of any existing advance pricing agreements (APA) and tax rulings related to the allocation of income.

Small enterprises having controlled transactions with total arm’s length value not exceeding SAR 6 million in a 12-month period are exempted from preparing the Master file. However, the tax authorities may still instruct such small enterprises to prepare documentation in certain cases.

The Master file is required to be provided to ZATCA upon request, within a specified duration (minimum 30 days from the date of request). The documentation may not be requested earlier than 120 days after the reporting year.

Local File

The Local file documentation requirements are applicable from the reporting year ending on 31 December 2018.

The contents of a Local file include:

Details of the local entity, including ownership structure, management structure, a local organization chart, detailed description of the business and business strategy, important business restructuring transactions, acquisitions and divestitures, key competitors and other information;
Details of material-controlled transactions involving the local entity, including descriptions of the transaction types, the amount of intra-group payments and receipts for each category of controlled transactions, identification of associated enterprises involved, inter-company agreements, functional analysis, transfer pricing methods used, comparables selected and adjustments made, related APAs, and other information;
Industry analysis which provides complete and thorough analysis of the taxpayers’ industry including but not limited to major competitors, strength, weakness, opportunity and threat analysis, power of suppliers, power of buyers, availability of substitutes, size, demand and supply trends, entry requirements, key international target markets, market share and modes of delivery; and
Financial information of the local entity, including financial accounts for the year concerned, information and allocation schedules, summary schedules of relevant financial data, and other information.

Small enterprises having controlled transactions with total arm’s length value not exceeding SAR 6 million in a 12-month period are exempted from preparing the Local file. However, the tax authorities may still instruct such small enterprises to prepare documentation in certain cases.

The Local file is required to be provided to ZATCA upon request, within a specified duration (minimum 30 days from the date of request). The documentation may not be requested earlier than 120 days after the reporting year.

Country-by-Country (CbC) Report

MNE groups having consolidated revenue of SAR 3.2 billion or more in the previous year are required to submit Country-by-Country (CbC) reports.

The CbC reporting requirements are applicable to any entity or person, regardless of whether that person or entity is subject to only income tax, Zakat or both (see Sec. 13.4.1.). A CbC report is required to be filed by the ultimate parent entity or the surrogate parent entity of the MNE group. However, a constituent entity other than the ultimate parent entity or the surrogate parent entity may be required to file a CbC report where:

The ultimate parent entity or surrogate parent entity of the MNE group is not obligated to file a CbC report in its tax jurisdiction, in which it is a tax resident;
The jurisdiction in which the ultimate parent entity or in which the surrogate parent entity is a tax resident is party to an international agreement that is valid and enforceable during the statutory period for the submission of the CbC report, but is not a party to qualifying competent authority agreement that is enforceable at that time; or
The jurisdiction in which the ultimate parent entity or in which the surrogate parent entity is a tax resident systemically fails to automatically provide the ZATCA with CbC reports related to the activities of the MNE groups that have constituent entities in Saudi Arabia.

Where the CbC report is required to be filed locally in Saudi Arabia, the contents of the CbC report include the following for each jurisdiction:

Table 1:

revenues (unrelated parties, related parties, and total);
profit (loss) before tax;
income tax paid (cash basis);
income tax accrued - current year;
stated capital;
accumulated earnings;
number of employees; and
tangible assets - other than cash and cash equivalents.

Table 2:

constituent entities resident in each tax jurisdiction (including Tax ID and address);
jurisdiction of organization or incorporation if different from jurisdiction of residence; and
main business activities of each constituent entity.

Table 3:

additional information or explanation deemed necessary to understand the CbC report.

A CbC report is required to be filed within 12 months after the end of the reporting fiscal year. The first reporting year for CbC reporting purposes is the fiscal year beginning on or after 1 January 2018.

A CbC notification is also required to be submitted within 120 days after the end of the relevant reporting fiscal year (30 April 2023 for the fiscal year ending 31 December 2022) as part of the annual tax declaration. CbC notification includes information regarding the ultimate parent entity and the entity that submits the CbC report. In case there are several taxpayers belonging to the same MNE group, CbC notification is required to be submitted by each taxpayer indicating the identity of the reporting entity.

Language of Documentation

The TP guidelines do not specify the language of the documentation, however the FAQs recommended the Arabic language for Master file and Local file. The CbC report must be submitted in the language specified by the tax authorities (submission in English may be accepted).

Penalties

There are no specific transfer pricing adjustment penalties in Saudi Arabia and the adjustments may be subject to standard tax penalties (see Sec. 14.5.).

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