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Transfer pricing in Saudi Arabia now reaches companies that pay zakat
Transfer pricing in Saudi Arabia explained: the arm's length rule on related-party transactions, the SAR 6 million documentation threshold, the disclosure form every group files, and why zakat payers are now in scope. From a finance leader in Riyadh.
If your Saudi company buys from, sells to, or pays a company it is related to, Saudi Arabia expects those prices to be the prices strangers would have agreed. That is transfer pricing, and for years it was a concern only for foreign-owned groups. In 2026 it reaches further, into companies that pay zakat and once sat outside it.
What transfer pricing is
A group with entities in different countries moves money between them. A Saudi subsidiary pays its parent a management fee, buys inventory from a sister company, licenses a brand. Left alone, a group could set those internal prices to push profit wherever tax is lowest. Transfer pricing rules stop that. Every controlled transaction, meaning a deal between related parties, has to be priced at arm's length, the price independent companies would have struck.
ZATCA based its rules on the OECD model, so the language is familiar to any multinational. The enforcement is local, and it is tightening.
Who has to comply
Two things changed the map.
For income-tax payers and mixed-ownership companies the rules have applied for years. A company with controlled transactions above SAR 6 million in a twelve-month period has to hold a Master File and a Local File documenting how it set those prices.
The shift is that zakat payers, the fully Saudi and GCC-owned companies that used to sit outside transfer pricing, are now inside it, phased in by size. A purely local group that never thought about arm's length pricing can no longer assume the rules are someone else's problem.
The form with no threshold
Underneath the documentation thresholds sits an obligation with no threshold at all. Any taxpayer with related-party transactions files a Controlled Transaction Disclosure Form with its annual return, certified by a licensed auditor, within 120 days of the year end. There is no minimum size. One intercompany invoice is enough to put you in scope.
The Master File and Local File are not filed with the return. You prepare them and hold them, and ZATCA can demand them on review, giving you about thirty days to produce them. A group above SAR 3.2 billion in consolidated revenue also files a country-by-country report.
Why a CFO cannot delegate this
Transfer pricing is where tax meets how your group is actually wired. The management fee you pay head office, the rate on an intercompany loan, the royalty for the brand, each one is a transfer pricing position and a withholding tax event at the same time. Set them for tax convenience and document them later, and you have built two problems ZATCA can price against you on review.
The companies that handle this well decide the intercompany structure once, document it as they go, and file the disclosure as routine. The ones that struggle reconstruct it under a thirty-day deadline after a query lands.
The honest version
Transfer pricing is not new, but the set of companies it reaches is wider than it was, and the disclosure form now catches almost anyone with a related party. If your group moves money across its own entities, the time to get the pricing and the paperwork right is before the return, not after a request. It connects straight to the ownership and tax questions you answered at setup.
If your group has intercompany flows and no transfer pricing file, that is worth a conversation.
Written from operating experience in Riyadh. General guidance, not tax advice on any specific company.
Questions
What is transfer pricing in Saudi Arabia?
Transfer pricing requires transactions between related companies, such as a Saudi subsidiary and its foreign parent, to be priced at arm's length, the price independent parties would agree. Saudi rules follow the OECD model and are enforced by ZATCA through documentation and disclosure.
Do zakat payers have to comply with transfer pricing in Saudi Arabia?
Yes. Transfer pricing originally applied to income-tax payers and mixed-ownership companies, but zakat payers, fully Saudi and GCC-owned companies, are now being phased into the rules by size. Purely local groups can no longer assume transfer pricing does not apply to them.
What transfer pricing documents must be filed in Saudi Arabia?
Any taxpayer with related-party transactions files a Controlled Transaction Disclosure Form with the annual return, certified by an auditor, with no minimum threshold. A Master File and Local File are required above SAR 6 million of controlled transactions and produced within about 30 days of a ZATCA request.