The General Authority of Zakat & Tax Approve the Transfer Pricing Bylaws

 

Riyadh, 15 February 2019:
The Board of Directors of General Authority of Zakat and Tax “GAZT” has passed a resolution approving the Transfer Pricing Bylaws. The Bylaws aims to establish obligations on taxpayers that aim to counter certain tax behaviors and practices to minimize tax liabilities. The Transfer Pricing Bylaws are based upon the generally accepted framework by the international community.

 

This framework was a product of the Base Erosion and Profit Shifting (BEPS) initiative lead by the Organization for Economic Co-operation and Development (“OECD”) and the G-20; its purpose is enforcing the application of the arm’s length principle between related persons or persons under common control through integrating the principle in the domestic tax legislation and practices. 

 

The Bylaws includes 26 articles, divided into 12 chapters that illustrate the basic principles of transfer pricing via transactions between related persons or persons under common control. In addition, it includes provisions on transactions pricing methods to be used to determine the arm’s length price of transactions between related persons,  the transfer pricing documentation needed from taxpayers (including the Local file, Master file, County by Country Report - CbC), as well as provisions governing the mechanism for applying transfer pricing in the Kingdom of Saudi Arabia.

 

GAZT would like to bring to your attention that all periods to submit the Local File and Master File documentation will be extended by 60-days for any submissions required in 2019.

 

GAZT took into account the best and most suitable international practices when establishing the Bylaws to further increase businesses compliance and transparency, which subsequently will have a positive effect on investor confidence and the investment climate generally.

 

GAZT would like to mention that it has fully reviewed the feedback from the public on the previously published draft Bylaws before approving the final Bylaws. The Bylaws will be effective starting from 15 February 2019 and all taxable persons must comply with these bylaws in all their transactions and declaration as of that date; without prejudice to any duties or obligations under the income tax law and its implementing regulations.

 

The Transfer pricing bylaws is available on the following link