Transfer pricing in Saudi Arabia
Transfer pricing used to be a large-multinational concern. Since 2024 it reaches Zakat payers too — and the RHQ boom has put intra-group charges squarely in ZATCA's sights.
Arm's length, OECD-aligned, and enforced
Saudi transfer pricing rests on the arm's-length principle in the Income Tax Law and the Transfer Pricing Bylaws (2019, amended 2023), aligned with the OECD guidelines. Where a related-party transaction isn't at arm's length, ZATCA can reallocate or disregard its result — and adjust the tax accordingly.
Three documents, one on demand
| Filing | When | Who / trigger |
|---|---|---|
| Controlled Transaction Disclosure Form (CTDF) | With the annual return, within 120 days of year-end | Broadly all in-scope taxpayers with related-party dealings |
| Master File | On ZATCA request, within 30 days | Where documentation thresholds are met |
| Local File | On ZATCA request, within 30 days | Where documentation thresholds are met |
| Country-by-Country Report (CbCR) | Per group reporting rules | Very large MNE groups (consolidated revenue in the billions of riyals) |
The CTDF is filed proactively; the Master and Local Files are not — you prepare them and hand them over within 30 days if ZATCA asks. In practice that means having them ready, not writing them under a deadline.
Who has to hold documentation
| Taxpayer | Master / Local file threshold |
|---|---|
| Income-tax & mixed-ownership entities | Around SAR 6 million of related-party transactions |
| Zakat payers | Phased — broadly SAR 100 million (2024–2026), reducing from 2027 |
| All in-scope taxpayers | File the CTDF regardless of size |
The 2023 amendments extended transfer pricing — and Advance Pricing Agreements — to Zakat payers for financial years from 2024. “We only pay Zakat, so TP doesn't apply to us” is no longer true. Thresholds move, so confirm the current figures.
Intra-group charges are the audit population
An RHQ exists to charge affiliates for regional services — precisely the kind of intra-group transaction transfer pricing polices. The RHQ's 0% tax benefit only covers eligible activities priced at arm's length; over-charge or mis-price the group services and that's exactly where the benefit unwinds and adjustments follow.
Any group running management fees, royalties or cost-sharing into or out of Saudi Arabia is a natural audit candidate — and those same charges are what withholding tax keys off, so the positions are read together.
A well-staffed RHQ with unsupported intercompany charges still has a problem. Align your transfer pricing, withholding-tax and RHQ positions from the outset — ZATCA reads them as one story.
Contemporaneous, defensible, aligned
Keep documentation contemporaneous rather than reconstructed after a query; price intra-group transactions on a defensible method; file the CTDF on time; and align the transfer-pricing position with your withholding-tax and RHQ treatment. Where a position is material or uncertain, an Advance Pricing Agreement with ZATCA can lock in certainty before you rely on it.
Questions we get asked first
Does transfer pricing apply if I only pay Zakat?
Yes. The 2023 amendments extended the transfer-pricing rules — and Advance Pricing Agreements — to Zakat payers for financial years from 2024. Zakat status is no longer an exemption from TP.
What do I actually have to file?
A Controlled Transaction Disclosure Form with your annual return, within 120 days of year-end. Master and Local Files aren't filed proactively — you prepare them and provide them within 30 days if ZATCA requests them.
When is the disclosure form due?
Within 120 days of the fiscal year-end, alongside the annual return.
What are the documentation thresholds?
Around SAR 6 million of related-party transactions for income-tax and mixed-ownership entities; a phased, higher threshold for Zakat payers (broadly SAR 100 million in 2024–2026, reducing from 2027). Confirm the current figures.
Why does transfer pricing matter so much for RHQs?
Because an RHQ's income arrives through intra-group charges, and its 0% relief only applies to eligible activities priced at arm's length. Mispriced group fees are the fastest way to unwind the benefit and trigger adjustments.
If money moves within your group, TP is now your problem
Transfer pricing in Saudi Arabia is no longer a big-multinational-only concern — it reaches income-tax payers, Zakat payers and RHQs alike, and ZATCA reads it together with withholding tax and the RHQ regime. Document contemporaneously, price defensibly, and align the positions, and intra-group charges stay an asset rather than an exposure.
Group charges running into Saudi Arabia?
We align your transfer pricing, withholding tax and RHQ positions so they hold up together at audit.
Speak to an Advisor →Related reading
This article is general information, current as of 2026, and is not legal or tax advice for any specific situation. Confirm current thresholds and filing rules with ZATCA before acting.