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April 11, 2023

Saudi Arabia approves amendments to the Transfer Pricing Bylaws to include zakat payers as part of covered entities

  • Saudi Arabia has announced the approval of amendments to the transfer pricing Bylaws (TP Bylaws) addressing how TP compliance rules should be implemented for zakat payers.
  • Zakat payers are expected to comply with these TP requirements from 1 January 2024.

Executive summary

On 7 April 2023, the Zakat, Tax and Customs Authority (ZATCA) announced the issuance of Decision of the Board of Directors of the Zakat, Tax and Customs No (8-2-23) dated 28/08/1444AH (Decision), approving changes that will include zakat payers within the scope of the Saudi Arabian TP Bylaws. The new requirements for zakat payers will be implemented in two phases as the amended TP Bylaws are published; which of the two phases applies will depend on the zakat payers' aggregate value of related-party transactions during the year. Among the relevant changes, the amended TP Bylaws will include provisions for entering into advance pricing agreements (APAs) negotiated with the ZATCA if requested by income tax and zakat payers.

Detailed discussion


In September 2022, following a July 2022 public consultation on potential amendments to the TP Bylaws, the ZATCA published a summary of the questions that participants had raised, along with comments indicating whether ZATCA agreed, partially agreed or disagreed with the participants' views.

Approved changes for covered entities

The ZATCA's Decision on the approved changes is based on the results obtained from the public consultation. The most relevant change will include zakat payers in the TP documentation provisions of the current TP Bylaws.

Changes to the TP Bylaws highlighted in ZATCA's latest announcement include:

  • The TP Bylaws will apply to both taxpayers and zakat payers starting 1 January 2024.
  • Certain provisions will address requirements that zakat payers prepare a TP Local File and Master File.
  • Other provisions will explain the procedure for requesting and negotiating APAs between ZATCA and both income tax and zakat payers.
  • Zakat payers whose aggregated value of related-party transactions is less than or equal to SAR48m will be exempt from the TP documentation requirements.

The following table summarizes the TP documentation compliance requirements before and after the approved changes to the TP Bylaws are implemented:

TP compliance requirement for 100% zakat payers

Before the approved amendments

After the approved amendments





Local File




Upon the ZATCA's request

Master File




Upon the ZATCA's request

Country-by-Country Report (CbCR)*


Article 3 notification (CbCR)**


* For Saudi Arabian headquartered groups with consolidated revenue exceeding SAR3.2b

** For entities that are part of a multinational group filing CbCR, the Saudi Arabian entity needs to file the notification in the ZATCA's Automatic Exchange of Information (AEOI) portal.

Implementation of the proposed changes to the TP Bylaws is expected to occur in two phases, as shown below:

Implementation phases

Aggregated value of related party transactions




Phase 1*

1 January 2024

Not applicable



Phase 2**

1 January 2027

Not applicable



*Investment funds are exempted from compliance obligations in Phase 1.

**Investment funds are included as covered entities in Phase 2.


For fiscal years beginning on or after 1 January 2024, zakat-paying groups should comply with the new TP Bylaws' requirements by preparing and maintaining a Local File and Master File, depending on the value of aggregated related-party transactions. In the second phase, beginning 1 January 2027, zakat payers' TP compliance obligations will increase, based on a lower aggregated value of the related-party transactions threshold.

EY will issue an additional Tax Alert discussing the specifics of the above announcement after detailed guidelines have been published.


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

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

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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