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July 13, 2022

Saudi Arabia issues public consultation document to modify Transfer Pricing Bylaws

  • Transfer pricing documentation requirements such as TP disclosure forms, local and master files would now apply to zakat payers if the proposed amendments to the TP Bylaws are approved.

  • Zakat-paying groups should monitor the proposed changes to the TP Bylaws and review their process for documenting intercompany transactions and their overall TP policies.

  • Comments on the proposal may be submitted by 30 July 2022.

Executive summary

On 4 July 2022, the Saudi Arabia Zakat, Tax and Customs Authority (ZATCA) issued a public consultation document proposing to amend the Transfer Pricing (TP) Bylaws (Amendments to Transfer Pricing Bylaws to be applied to Zakat payers). One of the major proposed amendments, if approved, will result in the applicability of TP documentation to zakat payers such as TP disclosure forms, and local file and master file requirements, in addition to the existing Country-by-Country Reporting (CbCR) requirements for qualifying multinational groups.

Comments on the proposal may be submitted by 30 July 2022.

Detailed discussion


On 15 February 2019, the ZATCA (formerly General Authority for Zakat and Tax) issued the final TP Bylaws after a public consultation process that started in December 2018. The ZATCA subsequently published TP guidelines (including updates of such guidelines — most recent update as of November 2021) as well as Frequently Asked Questions for the explanation of provisions in the TP Bylaws.

The current version of the TP Bylaws exempts 100% zakat payers from TP documentation provisions (TP master file, TP local file, and TP disclosure forms and affidavits), and only 100% income tax paying entities and mixed entities (paying both zakat and income tax) are subject to TP documentation requirements. It is important to note that qualifying zakat payers should comply with CbCR requirements under the current TP laws.

In general terms, the arm’s-length principle was embedded as part of the new zakat regulations published on 14 March 2019. Zakat entities under these provisions are expected to establish related parties’ transactions under the arm’s-length principle. However, they are not required to maintain specific TP local files, master files or disclosure forms under the existing TP Bylaws.

Proposed changes

Through the public consultation document issued on 4 July, the ZATCA has proposed to bring 100% zakat payers under the scope of the TP documentation process, similar to the current requirements for taxpayers and mixed entities. The proposed changes mostly refer to substitution of the word “taxpayers” with “zakat payers and taxpayers. Other proposed changes relate to either the practical implementation of bringing zakat payers under the ambit of the TP Bylaws or minor adjustments in already existing definitions.

If the major proposed amendments are approved, zakat payers would similarly be subject to regular TP audit procedures by ZATCA, if their related party transactions are deemed to deviate from the arm’s-length principle.


Zakat-paying groups should monitor the proposed changes to the TP Bylaws and review their process for documenting intercompany transactions and their overall TP policies. It is important for these groups to be prepared for this change and ready to comply with the proposed documentation requirements.


For additional information with respect to this Alert, please contact the following:

EY Consulting LLC, Dubai

Ernst & Young Professional Services (Professional LLC), Riyadh

Ernst & Young — Middle East, Manama

  • Patrick Oparah, Transfer Pricing |

Ernst & Young LLP (United States), Middle East Tax Desk, New York


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