A practical, keyword-rich briefing for corporate taxpayers in Saudi Arabia on the 2024 transfer pricing (TP) changes, zakat payer obligations, and the launch of Advance Pricing Agreements (APAs), with checklists for ZATCA compliance, documentation, and audit readiness.
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Executive Snapshot: What Changed in 2024
- Scope expanded: Transfer pricing provisions now explicitly apply to 100% zakat payers for financial years starting on or after 1 January 2024. :contentReference[oaicite:0]{index=0}
- APA introduced: Saudi Arabia opened an APA framework (initially unilateral) with applications available for tax years beginning on/after 1 Jan 2024; the program was publicly launched on 19 May 2024. :contentReference[oaicite:1]{index=1}
- Guidelines updated: ZATCA released the third edition TP Guidelines on 24 June 2024 incorporating guidance relevant to zakat payers and practical aspects. :contentReference[oaicite:2]{index=2}
Why it matters: These changes affect documentation, pricing of intercompany transactions, audit exposure, and opportunities for prospective certainty via APAs for corporates operating in Saudi Arabia.
APA (Advance Pricing Agreement) Essentials for Saudi Corporate Taxpayers
Saudi Arabia’s APA framework gives taxpayers (including zakat payers) a path to agree up-front on transfer pricing methodologies with ZATCA. Initially, Saudi APAs are unilateral. :contentReference[oaicite:3]{index=3}
Key entry conditions (current program)
- Transaction value threshold: generally at least SAR 100 million with a single related party, though the ZATCA Governor may exempt sophisticated transactions. :contentReference[oaicite:4]{index=4}
- Timing: a complete APA application should be filed ≥ 12 months before the first fiscal year covered. :contentReference[oaicite:5]{index=5}
- Launch date: unilateral APA process publicized on 19 May 2024 with program details made available to KSA taxpayers. :contentReference[oaicite:6]{index=6}
Typical APA lifecycle (unilateral)
- Pre-filing discussion: scope, covered transactions, years, method (CUP, cost-plus, TNMM), tested party, and comparables.
- Formal application: factual/functional analysis, financials, benchmarks, proposed critical assumptions, and draft terms.
- Review & negotiations: clarification rounds, potential method refinements, and agreement text.
- Agreement & monitoring: agreed method for covered years plus annual compliance reports.
Note: In 2025, additional guidance describing the Saudi APA process in more detail was issued; the effective introduction of APAs still ties back to financial years starting on/after 1 Jan 2024. :contentReference[oaicite:7]{index=7}
Zakat Payers: Documentation Thresholds & Phasing (From FY2024)
ZATCA’s 2023 amendments extend TP rules to zakat payers with phased documentation requirements. For FY2024–FY2027 (Phase 1), Local/Master File thresholds apply as below; from FY2027 onwards (Phase 2), thresholds tighten. :contentReference[oaicite:8]{index=8}
| Phase | Aggregate Related-Party Transactions (SAR) | Local File / Master File Requirement | Notes |
|---|---|---|---|
| Phase 1 (FY2024–FY2027) | < 48m | Not applicable | Investment funds excluded from LF/MF in Phase 1. :contentReference[oaicite:9]{index=9} |
| Phase 1 | > 48m and < 100m | Optional | Consider preparing at least a streamlined Local File to defend returns. :contentReference[oaicite:10]{index=10} |
| Phase 1 | ≥ 100m | Mandatory | Ensure complete LF/MF with financial tie-outs and tested-party rationale. :contentReference[oaicite:11]{index=11} |
| Phase 2 (FY2027→) | > 48m | Mandatory | Lower threshold—more zakat payers in scope. :contentReference[oaicite:12]{index=12} |
ZATCA’s updated TP Guidelines (June 2024) also provide practical direction for documentation quality, selection of methods, and alignment with OECD guidance. :contentReference[oaicite:13]{index=13}
Files, Disclosures & CbCR—What to Prepare for FY2024+
- Transfer Pricing Disclosure/Control Form: Annual related-party transaction summary consistent with statutory FS and e-invoicing data.
- Local File: functional analysis, tested-party choice, benchmarking (search strategy, screens), audited FS tie-outs, and reconciliation to VAT/WHT where relevant.
- Master File: group structure, intangibles/DEMPE, financing, global value chain and allocation.
- CbCR: where thresholds apply; align notifications and filings with KSA country profile (OECD template). :contentReference[oaicite:14]{index=14}
Consistency control: Your LF/MF must reconcile with VAT returns, WHT forms, customs import values, and FATOORA e-invoicing extracts. Inconsistencies are high-signal triggers for reviews.
Audit Readiness & Risk Controls (Built for ZATCA’s Data-Driven Reviews)
- Map coverage: identify which Saudi entities/branches are in scope as taxpayers vs. 100% zakat payers under the 2024 rules. :contentReference[oaicite:15]{index=15}
- Evidence the benefit: for services, compile deliverables/timesheets; for IP, prepare DEMPE; for financing, keep pricing memos and thin-cap tests.
- Benchmarks & PLIs: refresh searches for FY2024; perform working-capital and capacity adjustments.
- E-invoicing triangle: reconcile FATOORA, VAT, WHT, and TP totals; explain variances.
- Consider an APA: where transactions meet scale/complexity and are stable in design, explore APA pre-filing well in advance (≥12 months). :contentReference[oaicite:16]{index=16}
2024–2025 Timeline & Action Plan
- Now: confirm FY start date and ownership (taxpayer vs. zakat payer); inventory related-party transactions and values.
- Q3–Q4 (year-end approaching): finalize intercompany agreements; book year-end true-ups consistent with benchmarks.
- Pre-filing for APA (if relevant): initiate scoping discussions and compile data pack well ahead of the 12-month window. :contentReference[oaicite:17]{index=17}
- Filing season: lodge Control Form/TP Disclosure, submit LF/MF when required, align with CbCR and statutory accounts.
FAQ: Saudi TP Changes & APAs
Do the 2024 rules affect entities paying only zakat?
Yes. For financial years starting on/after 1 Jan 2024, TP provisions extend to 100% zakat payers (with phased documentation thresholds). :contentReference[oaicite:18]{index=18}
Are APAs available to zakat payers or only income-tax payers?
APAs are available to both taxpayers and zakat payers for years beginning on/after 1 Jan 2024; the current mechanism is unilateral. :contentReference[oaicite:19]{index=19}
What’s the minimum size for APA eligibility?
Generally SAR 100 million with a related party, with the possibility of exemptions for sophisticated cases. :contentReference[oaicite:20]{index=20}
Where can I see the latest practical guidance?
Check ZATCA’s updated (third-edition) TP Guidelines from June 2024 and OECD country profile references for Saudi Arabia. :contentReference[oaicite:21]{index=21}
SEO Takeaways for Corporate Readers
- Saudi transfer pricing 2024: scope extended to zakat payers, phased Local/Master File thresholds.
- Unilateral APA Saudi Arabia: launch 19 May 2024; threshold ~SAR 100m; apply ≥12 months before first covered year.
- ZATCA TP guidelines: third edition (June 2024) with documentation and method selection guidance.
- Saudi CbCR & TP disclosure: align with financials, VAT/WHT, and e-invoicing to pass risk engine checks.
