Transfer prices Registration.

Transfer pricing is the practice of determining the prices of goods or services that are traded between related companies, such as a parent company and its subsidiaries. The objective of transfer pricing is to ensure that the prices of these transactions are consistent with market prices and are not manipulated to reduce the tax liability of the companies involved.

In Saudi Arabia, the transfer pricing rules are administered by the Zakat, Tax and Customs Authority (ZATCA). Companies are required to maintain documentation to demonstrate that their transfer prices are consistent with market prices and comply with the arm’s length principle.

To register for transfer pricing in Saudi Arabia, companies must follow these steps:

1. Prepare transfer pricing documentation: Companies must prepare transfer pricing documentation that demonstrates that their transfer prices comply with the arm’s length principle. This documentation must be maintained for a period of five years.
2. Submit transfer pricing documentation to ZATCA: Companies must submit their transfer pricing documentation to the ZATCA upon request. The ZATCA may also require companies to submit their transfer pricing documentation as part of a tax audit.
3. Comply with transfer pricing regulations: Companies must comply with the transfer pricing regulations in Saudi Arabia, which require that transfer prices be consistent with market prices and comply with the arm’s length principle.

It is recommended that companies seek the advice of a qualified tax consultant or accountant to ensure that their transfer pricing documentation is prepared in accordance with the transfer pricing regulations in Saudi Arabia and to prepare for any transfer pricing audits that may be required.

• Transfer prices filing.

In Saudi Arabia, companies are required to file a Transfer Pricing Disclosure Form with the Zakat, Tax and Customs Authority (ZATCA) as part of their annual tax return. The Transfer Pricing Disclosure Form must be submitted to the ZATCA within 120 days of the end of the company’s fiscal year.

The Transfer Pricing Disclosure Form requires companies to provide detailed information about their related party transactions, including the types of transactions, the entities involved, the amounts involved, and the transfer pricing methods used to determine the prices of the transactions. Companies must also provide details of any advance pricing agreements (APAs) or other transfer pricing arrangements that have been entered into with related parties.

To file the Transfer Pricing Disclosure Form, companies must follow these steps:

1. Obtain the form: The Transfer Pricing Disclosure Form can be downloaded from the ZATCA’s website or obtained from ZATCA office.
2. Complete the form: Companies must complete the form with the required information about their related party transactions and transfer pricing arrangements.
3. Submit the form: The completed Transfer Pricing Disclosure Form must be submitted to the ZATCA through the ZATCA’s online portal or by mail.
4. Maintain transfer pricing documentation: Companies must also maintain transfer pricing documentation to support the information provided in the Transfer Pricing Disclosure Form. This documentation must be kept for a period of five years.

It is recommended that companies seek the advice of a qualified tax consultant or accountant to ensure that their Transfer Pricing Disclosure Form is completed accurately and to prepare for any transfer pricing audits that may be required by the ZATCA.

• Handling ZATCA assessments for Transfer prices.

If a company is selected for a transfer pricing audit by the Zakat, Tax and Customs Authority (ZATCA) in Saudi Arabia, it is important to handle the audit in a professional and thorough manner to minimize any potential tax liabilities or penalties.

Here are some steps that a company can take to handle a transfer pricing audit from the ZATCA:

1. Review transfer pricing documentation: The company should review its transfer pricing documentation to ensure that it is accurate, up-to-date, and complete.
2. Prepare for the audit: The company should prepare for the audit by gathering all relevant documentation, including financial statements, tax returns, invoices, contracts, and any other relevant documents related to related party transactions.
3. Cooperate with the ZATCA: The company should cooperate with the ZATCA during the audit, providing any information or documentation requested in a timely manner.
4. Respond to any findings: If the ZATCA identifies any issues during the audit, the company should work with the ZATCA to address these issues and respond to any findings or recommendations.
5. Seek professional advice: If necessary, the company should seek the advice of a qualified tax consultant or accountant to assist with the audit and address any complex transfer pricing issues that may arise.
6. Appeal any adverse decision: If the ZATCA issues an adverse decision or assessment, the company may have the right to appeal the decision through the appropriate channels.

It is important for companies to maintain accurate and complete transfer pricing documentation and comply with the transfer pricing regulations in Saudi Arabia to avoid the risk of a transfer pricing audit and potential tax liabilities or penalties.