Ultimate guide on GCC Taxation

Question 7 of the FAQs states that unless expressly exempt in the By-Laws, all related party transactions, regardless of the place of residence, nationality, or domicile of the persons are within the scope of the By-Laws.

Our understanding is therefore that alongside cross-border controlled transactions, domestic controlled transactions are also within the scope of the By-Laws.

Scope of the By-Laws: Retrospective application

Question 8 of the FAQs state that whilst the By-laws apply to reporting years ended 31 December 2018 onwards, under the Income Tax Law, the GAZT has the right to request information, documents, or perform an audit for years prior to the effective date of the By-Laws.

Question 1 of the FAQs confirms that transfer pricing is not a new concept in the KSA’s income tax regime, with Articles 63 and 64 of the Law having addressed related-party transactions long before the introduction of these By-Laws.

Non-arm’s-length pricing

In circumstances where the terms, conditions, or remuneration of a controlled transaction are not consistent with the arm’s-length principle, the GAZT has the ability to reallocate or disregard the result of the controlled transaction.