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Saudi Arabia’s Transfer Pricing Regulations: Ensuring Fair Taxation


Transfer pricing regulations play a crucial role in preventing tax avoidance and ensuring fair taxation in cross-border transactions. In Saudi Arabia, the General Authority of Zakat, Tax, and Customs Authority (ZATCA) oversees the implementation and enforcement of transfer pricing rules. This article provides a comprehensive overview of the statutory rules, regulations, circulars, and the application of OECD guidelines in Saudi Arabia’s transfer pricing regime.

I. Relevant Rules, Regulations, and Statutory Basis:

Saudi Arabian tax laws include a general “anti-avoidance” clause that requires related-party transactions to be conducted at arm’s length. Ministerial Resolution 1776 of 19 March 2014 empowers the General Authority of Zakat and Tax (GAZT) to issue rules for determining the fair value or arm’s length value of related party transactions according to international standards.

The Transfer Pricing By-Laws:

The GAZT published the Transfer Pricing By-Laws in their final form on 15 February 2019, which apply to taxpayers, including Permanent Establishments, under the Corporate Income Tax Law. These By-Laws provide detailed guidelines and methodologies for determining the arm’s length pricing of related-party transactions.

The Second Edition:

On 1 June 2020, the second edition of the Transfer Pricing By-Laws was issued. This edition introduced definitions of beneficial ownership, a group, and the de facto owner of intangibles. Additionally, further guidance was provided on country-by-country reporting, aligning the regulations with international standards.

The Third Edition:

In November 2021, ZATCA published the third edition of the transfer pricing guidelines, incorporating updates consistent with the OECD transfer pricing guidance on financial transactions issued in February 2020. These updates reflect Saudi Arabia’s commitment to aligning its transfer pricing practices with international standards.

Proposed Amendments:

On 30 July 2022, ZATCA initiated a public consultation on proposed amendments to the transfer pricing treatment of taxpayers under the income tax and the Zakat. These amendments aim to ensure consistent transfer pricing rules for both income tax and Zakat taxpayers. Key changes include the requirement for Zakat taxpayers engaging in related-party transactions exceeding SAR 6 million to maintain a Master File and a Local File. Additionally, a transfer pricing disclosure form would need to be submitted with the annual income tax declaration.

II. Taxing Authority and Tax Law:

Prior to May 2021, the General Authority of Zakat and Tax (GAZT) was responsible for collecting Zakat and taxes and ensuring their efficient administration. However, on 4 May 2021, the Cabinet announced the merger of GAZT and the General Authority of Customs, forming a unified entity known as the Zakat, Tax, and Customs Authority (ZATCA). This consolidation aims to enhance tax administration efficiency, coordination, and effectiveness.

III. OECD Guidelines Application:

As a member state of the Gulf Cooperation Council (GCC), Saudi Arabia closely aligns its tax regulations with international standards. The GCC has formed a customs union and aims to establish a monetary union in the future. The Organisation for Economic Co-operation and Development (OECD) guidelines are generally followed, and the Transfer Pricing By-Laws in Saudi Arabia were finalized after consultation with the OECD and other relevant organizations. This adherence to international standards ensures consistency and promotes a level playing field for businesses operating in the region.


Saudi Arabia has implemented comprehensive transfer pricing regulations and guidelines to ensure fairness and prevent tax avoidance in related-party transactions. The Transfer Pricing By-Laws, along with the proposed amendments, provide clear guidance on determining the arm’s length pricing. By aligning its practices with international standards and consulting with organizations such as the OECD, Saudi Arabia strives to create a transparent

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