Saudi Arabia Transfer Pricing Documentation Requirements: Master File, Local File, and CbCR Explained

Saudi Arabia’s documentation framework (Articles 15–18 of the Bylaws) mirrors OECD BEPS Action 13. The three tiers serve distinct purposes — and none is filed proactively as a routine matter. The Master File and Local File are maintained and provided on ZATCA request; the Disclosure Form is the annual proactive filing.

Under Article 19, the following are not required to maintain Master File or Local File documentation:

• Natural persons (other than organisations)
• Small Enterprises: below SAR 6 million total controlled transactions (CIT/mixed) or SAR 48 million (Zakat-only) per 12-month period
• State-owned companies excluded from Zakat collection
• Investment funds

The Small Enterprise exemption covers documentation only. The arm’s length standard and Disclosure Form remain mandatory. ZATCA may override the exemption for entities transacting with special economic zone entities, tax-exempt parties, or where ZATCA suspects artificial or abusive arrangements.

A key 2023 addition: consolidated Zakat group companies are excluded from TP on transactions between themselves — but must still disclose transactions with entities held at less than 100%.

The Master File provides ZATCA with a group-level picture. It is prepared by the MNE Group (typically at the UPE level) and made available to each jurisdiction on request. The Saudi entity must ensure it can be produced within 30 days of a ZATCA request.

Required content under Article 16 of the Bylaws:

• Organisational structure: legal and beneficial ownership, geographic location of operating entities
• Group business description: key profit drivers; supply chain for largest products/services (5%+ of group turnover); important intragroup service arrangements; main geographic markets; brief functional analysis of value creation by entity; significant restructurings/acquisitions/divestitures during the year
• Intangibles: R&D and IP strategy; list of material intangibles with legal/economic owners; important intercompany IP agreements (cost contribution arrangements, R&D service agreements, licences); transfers of intangibles during the year
• Intercompany financing: how the group is financed; central financing entity identification; group-wide financing TP policies
• Financial and tax positions: consolidated financial statements; list of existing unilateral APAs and tax rulings allocating income between countries

The Local File is the most practically significant documentation obligation. It is the transaction-level record supporting the arm’s length position for every category of controlled transaction involving the Saudi entity. Four sections are required:

Section 1 — Taxable Person information: management structure, organisation chart, reporting lines; detailed business strategy description including any business restructuring involvement.

Section 2 — Material controlled transactions (for each category): transaction description and context; intragroup payment amounts by country; related party identification; copies of all intercompany agreements; detailed comparability and functional analysis; TP method selection with reasons; identification of tested party; key assumptions; list of comparables with financial data; comparability adjustments; reasons for arm’s length conclusion; summary of financial information used; copies of any existing APAs or rulings.

Section 3 — Industry analysis: major competitors; SWOT analysis; supplier and buyer power; availability of substitutes; market size, demand/supply trends, entry requirements, market share.

Section 4 — Financial information: annual financial statements (audited if they exist); allocation schedules linking financial data to the TP analysis; summary schedules of comparables data.

CbCR obligations apply to MNE Groups with consolidated group revenue exceeding SAR 3.2 billion in the preceding tax/Zakat year.

The CbCR is due within 12 months after the last day of the MNE Group’s tax/Zakat year. The UPE or SPE resident in Saudi Arabia files it. A Saudi Constituent Entity (non-UPE) must file locally if: the UPE is not required to file in its own jurisdiction; or there is no qualifying competent authority agreement with Saudi Arabia; or automatic exchange is not effectively operating.

The CbCR Notification is entirely separate — due within 120 days after year-end, filed by every Saudi Constituent Entity of a qualifying MNE Group. It discloses the identity and residence of the Reporting Entity and the country where the CbCR is filed.

The Disclosure Form (Article 14) applies to all Taxable Persons with controlled transactions, regardless of size. It is due within 120 days after year-end and must include: related party information; business restructuring details; ownership information; financial summary data; transaction descriptions and amounts; the TP method applied; a statement on non-monetary or no-consideration transactions; and confirmation that Master File and Local File documentation is maintained.

Critically, it must be accompanied by an affidavit from a licensed Saudi auditor certifying that the MNE Group’s TP policy is consistently applied by and in relation to the taxpayer. This requirement, introduced in the March 2023 amendments, requires advance coordination with the external auditor — it is not a routine sign-off.

• Preparing documentation after a ZATCA enquiry. “Readily accessible and available” means contemporaneous. Retrospectively prepared documents carry significantly less evidentiary weight.
• Missing intercompany agreements. Article 17 requires copies of all intercompany agreements as part of the Local File. Missing or outdated contracts are a direct documentation gap.
• Inadequate functional analysis. Two paragraphs of generic activity description do not constitute a functional analysis. It must be specific, risk-analysed, and tied directly to the TP method selection.
• Unadjusted foreign comparables. Applying European benchmarks to a Saudi entity without adjusting for geographic risk differences is methodologically weak.
• Missing the CbCR Notification. Many qualifying taxpayers are unaware of this as a separate filing obligation. The 120-day deadline applies regardless of where the CbCR itself is filed.