1. The following terms and expressions, wherever stated in these Bylaws, shall have the meanings set out herein:

   1. "Approved Transfer Pricing Methods" means the methods enumerated in Article 7 of the Bylaws and used for calculating the arm's length price.^[1]

   2. "Arm's Length Principle" or "Arm's-Length" In the event that the terms and conditions of commercial and financial transactions conducted between related persons differ from the terms and conditions of commercial and financial transactions conducted between independent persons, the unrealized profits which could have been realized by any of the related persons, had it not been for those terms and conditions, shall be included within the profits of those persons. ^[2]

   3. The "Arm's-Length Range" shall have the meaning given in Article 11 of the Bylaws.

   4. "The Authority" means the General Authority of Zakat and Tax.

   5. The "Bylaws" means these Transfer Pricing Bylaws issued by The Authority pursuant to Board Resolution No [6-1-19] dated 25/05/1440H corresponding to 31/01/2019, and any amendments thereto.^[3]

   6. "Comparable Transaction" means a Comparable Transaction as defined in Article 5 of the Bylaws.

   7. "Constituent Entity of an Multinational Group" means:^[4]

      1. any separate entity of a Multinational Group, that is included in the consolidated financial statements of the group for financial reporting purposes, or or that must be included if the shares of such entity are traded on a stock exchange.

      2. The entity referred to in the preceding paragraph if it is not included in the consolidated financial statements of the Multinational Group due to its size or because its impact is not material.

      3. Any permanent establishment of a separate entity that is part of a Multinational Group as referred to in subparagraph (a) or subparagraph (b) above, in cases where the separate entity prepares separate financial statements for the permanent establishment for purposes of financial disclosure, tax determination, zakat determination, regulatory compliance, or internal administrative control, or where it is required to prepare them.

   8. "Consolidated Financial Statements" means the financial statements of an MNE Group in which the assets, liabilities, income, expenses and cash flows of the Ultimate Parent Entity and the Constituent Entities are presented are presented through consolidated financial statements.^[5]

   9. "Controlled Transactions" means any Transaction involving Related Persons or Persons Under Common Control. Controlled Transactions shall include any notional Transactions or consideration exchanged between a Person and its Permanent Establishment, to the extent that such Transactions are recognized for the purposes of the Law.

   10. "Country-by-Country Report" or "CbC Report" means a report required to be submitted pursuant to Article 18 of the Bylaws.

   11. "Disclosure Form of Controlled Transactions" means the document or set of documents required by the Authority pursuant to Article 14 of the Bylaws.

   12. "Effective Control" means the ability of a Person to control the business decisions of another Person. For purposes of these Bylaws, a Person or group of Persons, either jointly or severally, directly or indirectly, are presumed to be able to control the business decisions of another Person in any of the following cases - without limitations:

       1. such Person or Persons have the ability to conclude an agreement to provide management services to the company or otherwise effectively perform the functions of management for the other Person;

       2. such Person or Persons have the ability to act as trustee (manager) of the other Person or Persons under a trust arrangement;

       3. such Person or Persons have the ability to directly or indirectly control the composition of 50% or more of the board of directors or has/have the right to appoint or dismiss the representatives of management of the other Person or Persons;

       4. such Person or Persons have a legal or de facto right to receive, directly or indirectly, 50 percent (50%) or more of the profits of the other Person or Persons;

       5. such Person or Persons, except where such Person is a Financial Institution, have provided loans to the Person or Persons directly or indirectly and the total outstanding balance of such loans represents 50 percent (50%) or more of the long term & short term debt and capital excluding retained earnings as set out in the final financial statements for the tax/Zakat year subject to the declaration;^[6]

       6. such Person or Persons, with the exception of Financial Institutions, have issued guarantees to cover 25% or more of the total value of the loans of the other person as set out in the final financial statements for the tax/Zakat year subject to the declaration;^[7]

       7. 50% or more of the absolute aggregated valueof all transactions of the other person as reflected in the final financial statements for the taxable/Zakat year under declaration depend on its transactions with this person.;^[8]

       8. such Person or Persons are Related Person to a Person who directly or indirectly holds fifty percent (50%) or more of a juridical person or they participate, directly or indirectly, in the management of the juridical person;

       9. a Person is or Related Persons, jointly or severally, are the principal or supplier of a Person under an exclusive agency, distributorship arrangement or any such similar contract for the sale of goods, services or rights and such Person is a dependent agent of the principal and who is prohibited from entering into other similar agency, distributorship arrangement or any such similar arrangement for the duration of the Person's relationship with the principal;

       10. in the case of Nonresident Person or Related Persons, where a substantial portion of the business activities of a Resident Person depends on Transactions with the Nonresident Person or Related Persons, and the Resident Person's business activities depend on rights in intangible property granted to such Person on an exclusive basis directly or indirectly by the Nonresident Person or Related Persons; or

       11. the Person is or Related Persons, jointly or severally, are able to control the business decisions of the other Person in any other way as evidenced by the facts and circumstances.

   13. Financial Institution" means a juridical person, the substantial and primary business of which is to conduct banking, financing or both, and that is regulated by one or more central government agencies responsible for licensing and supervising it in jurisdictions in which it operates.

   14. "Functional Analysis" means the analysis or study aimed at identifying the economically significant activities and responsibilities undertaken, assets used or contributed, and risks assumed by the parties to the Transactions.

   15. The "Guidelines" means the document or set of documents issued by GAZT setting forth all information and details related to these Bylaws, including, without limitations, the interpretation, implementation, enforcement, and application thereof.

   16. "Independent Persons" means Persons that are not Related Persons or Persons under Common Control.

   17. "International Agreement" means the Multilateral Convention for Mutual Administrative Assistance in Tax Matters, any bilateral or multilateral tax convention, or any tax information exchange agreement to which the Kingdom is a party and pursuant to which jurisdictions commit to the mutual exchange of tax information, including automatic exchange of such information.

   18. The "Law" means The Income Tax Law issued by Royal Decree No. (M/1) dated 15/1/1425H and the amendments thereon.

   19. "Local File" means the file referred to in Article 17 of the Bylaws.

   20. "Master File" means the file referred to in Article 16 of the Bylaws.

   21. "Multinational Group" means^[9]:

       1. Two or more persons that have tax residence in different countries; or

       2. A group to which a person subject to tax in a country other than their country of residence belongs, as a result of having a permanent establishment in that country.

   22. "Person" means a natural or juridical person; where a juridical person is any non-natural person recognized by law or fact to have legal personality, including Permanent Establishments.

   23. "Persons under Common Control" two or more juridical persons are deemed Persons under Common Control if either:

       1. the Person or Related Persons, either individually or jointly, control directly or indirectly fifty percent (50%) or more of such Persons where:

          1. with respect to Partnerships, control means the actual ownership, right to use and dispose of as an owner, or the ability to own with reasonable certainty the rights to its income or capital.

          2. with respect to Capital Companies, control means actual ownership, right to use and dispose of as an owner, or the ability to own with reasonable certainty, the voting rights to its capital or its income.

          3. with respect to agencies that administer properties endowed for specific purposes, control means having the rights to, or a beneficial interest in their income or assets; or

       2. the Person or Related Persons, either separately or jointly, directly or indirectly is or are able to control the business decisions of such juridical person or otherwise have Effective Control over such juridical person.

   24. "Qualifying Competent Authority Agreement" means an agreement that is between authorized representatives of the jurisdictions that are parties to an International Agreement pursuant to which the jurisdictions are required to automatically exchange CbC Reports.

   25. "Related Persons" means

       1. two or more natural persons if they are:

          1. relatives through marriage or are otherwise relatives to the fourth degree; or

          2. partners in a partnership.

       2. a natural person is considered related to a juridical person in any of the following circumstances:

          1. if the natural person is a partner in a Partnership and he, either alone or together with a Related Person or Persons, directly, indirectly (or both) controls fifty percent (50%) or more of the voting rights, income, capital of the Partnership.

          2. if the Person or a Related Person thereto is a shareholder in a Capital Company and he, either alone or together with a Related Person or Persons, directly, indirectly (or both) controls fifty percent (50%) or more of the voting rights, income or capital of the Capital Company.

          3. as for agencies administering property held in a trust, fund or any such similar arrangement, a natural person is considered related thereto if he benefits or is capable of benefiting from them, either alone or with a related Person or Persons.

          4. if the Person alone or jointly with a Related Person thereto directly or indirectly participates or is able to participate in the management, control or capital of a juridical person.

       3. two or more juridical persons are considered Related Persons in any of the following cases:

          1. they are Persons under Common Control.

          2. If the person who controls, or a person who has Effective Control over the business decisions of a legal person, has, alone or together with a Related Person, Effective Control over the other legal person.^[10]

          3. If the controlling person, or a person who has effective control over the business decisions of a legal person, enjoys, individually or together with a related person, effective control over the other legal person.

          4. Where the same group of persons enjoys Effective Control over each of the juridical persons.

       4. Notwithstanding the foregoing, companies shall not be considered Related Persons merely by reason of State ownership of each of them, nor shall State-owned companies be considered Related Persons merely by reason of the representation of the State’s nominees as members of their boards of directors.^[11]

   26. "Reporting Entity" means a Constituent Entity of a Multinational Enterprise Group that is required to submit a Country-by-Country Report to the Authority or to another tax authority on behalf of the Multinational Enterprise Group.^[12]

   27. "Tax/Zakat Year" means the Tax Year in accordance with the Law, or the Zakat Year in accordance with the Implementing Regulations for the Collection of Zakat, as the case may be.^[13]

   28. "Small Enterprises"^[14] means [the juridical person, the establishments, and the entity], or the entity, whose transactions with Related Persons - based on the Arm’s Length Principle - do not exceed the following:

       1. An Income Taxpayer or a Mixed Taxpayer (a taxpayer subject to both Income Tax and Zakat): Six Million (6,000,000) Saudi Riyals during a twelve-month period.

       2. A Zakatpayer: Forty-Eight Million (48,000,000) Saudi Riyals during a twelve-month period.

   29. "Surrogate Parent Entity" "Surrogate Parent Entity means the Constituent Entity of a Multinational Enterprise Group that has been designated to file the Country-by-Country Report of the Group with the competent tax authority in its jurisdiction of tax residence on behalf of the Ultimate Parent Entity.

       This applies upon fulfillment of one of the conditions set forth in Article 18 of these Instructions. ^[15]

   30. "Systemic Failure" refers to the neglect by a jurisdiction, or its failure to comply with the obligations of automatic exchange of information under an effective and valid agreement to which the Kingdom is a party, where such neglect is due to reasons not consistent with the provisions of that agreement, or to the continuous failure of a jurisdiction to provide reports regarding each Multinational Group that has Constituent Entities in the Kingdom.^[16]

   31. "Taxpayer" means a Person subject to tax as per the Law or the Implementing Regulations for the Collection of Zakat. For purposes of the Bylaws, if a person who does not fall within the definition of a Taxpayer under the Law or the Implementing Regulations for the collection of Zakat is required to comply with the Bylaws or any part thereof, the term Taxpayer is be deemed to include such Person.^[17]

   32. "Terms" "Economically Relevant" or "Economically Relevant Terms" means the characteristics, elements, factors, or any other aspect of the Transactions that Independent Parties may take into account when evaluating the Transaction.^[18]

   33. "Transaction" means any arrangement, understanding, agreement, or mutual practice whether or not legally enforceable or intended to be legally enforceable, undertaken between two or more Persons.

   34. "Transfer Pricing" means setting of prices for Controlled Transactions, including but not limited to the transfer of goods, services, loans, capital and intangibles (intellectual property).

   35. "Transfer Pricing Method" means any method used for pricing transactions, whether it is one of the approved transfer pricing methids or any other method used in accordance with the provisions of Article 7 and Article 9 of the Bylaws.^[19]

   36. "Uncontrolled Transaction" means any Transaction other than a Controlled Transaction.

   37. "Ultimate Parent Entity of a Multinational Group" means the entity that is a member of the Multinational Group and which:^[20]

       1. Directly or indirectly owns sufficient interests in one or more entities belonging to that Group such that it is required to prepare consolidated financial statements in accordance with generally accepted accounting principles in its country of tax residence, or would be so required if its if its shares were listed for trading on the stock exchange in its country of tax residence; and

       2. No other entity belonging to that Group that owns directly or indirectly an interest described in subsection (a) above.

   38. "Zakat Collection Regulations" means the Implementing Regulations of the Zakat Law issued pursuant to Ministerial Resolution No. (2216) dated 07/07/1440H (14 March 2019), together with any amendments thereto, or any successor regulations.^[21]

   39. "Declaration" means the tax return, in respect of persons subject to the obligations of the Tax Law, the Zakat return, in respect of persons subject to the obligations of the Zakat Implementing Regulations, or the Zakat and Tax return, in respect of persons subject to both.^[22]

   40. "Group" means two or more Related Persons who are required to prepare consolidated financial statements in accordance with the relevant accounting standards, or who would be required to prepare consolidated financial statements if one of such persons were a listed entity on a public securities exchange.^[23]

2. AII other terms not defined herein have the same meaning as defined in the Law and/or Implementing Regulations, or in the Zakat Collection Bylaws, or the commonly accepted meaning if not defined in any of them.^[24]

All provisions of these Instructions shall apply - unless otherwise stated - to every person considered a Taxpayer under the Law and its Implementing Regulations, or under the Zakat Collection Bylaws, or under both, as the case may be.^[25]

1. For purposes of Income tax and and Zakat, the terms and conditions of transactions between Related Persons shall be similar to the provisions and conditions of comparable transactions conducted between Independent Persons.^[26]

2. A Controlled Transaction shall be considered to be conducted on an Arm's Length basis if the Terms of such Controlled Transaction are materially similar to the Terms of a Comparable Transaction between Independent Persons.

3. The tax base or Zakat base - if applicable - of a Permanent Establishment in the Kingdom shall be determined according to the Arm's Length Principle. Subject to the provisions of the relevant International Taxation Agreement to which the Kingdom is a Party, expenses that may be deducted from the tax base of a Permanent Establishment shall be determined in accordance with the Chapter 5 of the Law.^[27]

1. If the terms or returns of transactions between related persons differ from the terms or conditions of a comparable transaction between Independent Persons, the Person involved in such transactions and to whom these Bylaws are applicable shall make adjustments to their tax base or zakat base - or to both, as the case may be - so as to include the returns that would have been received but for the dissimilar conditions and report such adjustments in their tax declarations to be submitted to the Authority.^[28]

2. Where terms, conditions or remuneration of a Controlled Transaction are not similar to conditions of a Comparable Transaction between Independent Persons, the Authority may:

   1. Direct one or more persons connected to the transaction to adjust their tax base or Zakat base, so as to include the returns that such Persons would have received but for the dissimilar conditions;^[29] or

   2. Reallocate or disregard the result arising out of a Controlled Transaction as to reflect the result that would have arisen from a Comparable Transaction.

3. The Authority shall make a determination as to whether Controlled Transactions are conducted on an Arm's Length basis in accordance with the relevant provisions of these Bylaws.

1. For purposes of these Bylaws, an Uncontrolled Transaction is comparable to a Controlled Transaction when:

   1. There are no significant differences between them that could materially affect the financial indicator being examined under the appropriate Transfer Pricing Method;

      or

   2. When such material differences exist, if a reasonably accurate comparability adjustment is made to the relevant financial indicator of the Uncontrolled Transaction in order to eliminate the effects of such differences on the comparison.

2. To determine whether two or more Transactions are comparable, the following factors shall be considered to the extent that they are Economically Relevant to the facts and circumstances of the Transactions:

   1. The characteristics of the property or services transferred;

   2. The functions undertaken, assets employed, and risks assumed by each Person with respect to the Transactions, including:

      1. functions, including without limitation, design, manufacturing, assembling, research and development, servicing, purchasing, distribution, marketing, advertising, transportation, financing, management, etc.;

      2. assets, including without limitation, plant and equipment, the use of valuable intangibles, financial assets, etc., and the nature of the assets used, such as the age, market value, location, property rights protection available, etc.;

      3. risks, including without limitation, market risks, risks of loss associated with the investment in and use of property, plant, and equipment, risks associated with the success or failure of investment in research and development, financial risks caused by currency exchange rate and interest rate variability, credit risks, etc.;

   3. The contractual terms of the Transactions;

   4. The economic circumstances in which the Transactions take place;

   5. The business strategies pursued by the parties to the Transactions; and

   6. Any other Economically Relevant aspect of the Transaction.

1. The Arm's Length remuneration of a Controlled Transaction shall be determined by applying the method that, under the facts and circumstances, provides the most reliable measure of an Arm's-Length result. Except and to the extent provided in Chapter 9 of the Bylaws, the most appropriate Transfer Pricing method shall be selected from among the Approved Transfer Pricing Methods. In each case, the most appropriate Transfer Pricing method shall be used taking into consideration the following criteria:

   1. The respective strengths and weaknesses of the Approved Methods;

   2. The appropriateness of an approved method of the nature of the Controlled Transaction, determined in particular through an analysis of the functions undertaken by each Person in the Controlled Transaction (taking into account assets used and risks assumed);

   3. The availability of reliable information needed to apply the selected Transfer Pricing method; and

   4. The degree of comparability between the Controlled and Uncontrolled Transactions, including the reliability of comparability adjustments - if any - that may be required to eliminate differences between them.

1. The following are Approved Transfer Pricing Methods for purposes of Article 6 hereof:

   1. Comparable Uncontrolled Price Method whereby a comparison is made between the price charged for property or services transferred in a Controlled Transaction to the price charged for property or services transferred in a comparable Uncontrolled Transaction.

   2. Resale Price Method whereby a comparison is made between the resale margin that a purchaser of property in a Controlled Transaction earns from reselling that property in an Uncontrolled Transaction with the resale margin that is earned in comparable Uncontrolled purchase and resale Transactions.

   3. Cost Plus Method whereby a comparison is made between the mark up on those costs directly and indirectly incurred in the supply of property or services in a Controlled Transaction with the mark up on those costs directly and indirectly incurred in the supply of property or services in a comparable Uncontrolled Transaction.

   4. Transactional Net Margin Method whereby a comparison is made between the net profit margin relative to an appropriate base (e.g. costs, sales, assets) that a Person achieves in a Controlled Transaction with the net profit margin relative to the same base achieved in comparable Uncontrolled Transactions.

   5. Transactional Profit Split Method allocates to each related Person participating in a Controlled Transaction the portion of common profit (or loss) derived from such Controlled Transaction that an Independent Person would earn or expect to earn from a comparable Uncontrolled Transaction. When it is possible to determine an Arm's-Length remuneration for some of the functions performed by the Related Person in connection with the Controlled Transaction using one of the Approved Methods, the transactional profit split method shall be applied based on the common residual profit that results once such functions are so remunerated.

2. The methods set forth in paragraph (1) herein shall not be deemed to be enumerated in any particular order of preference. The Authority may from time to time set forth any relevant information regarding the selection of an appropriate Transfer Pricing method in the Guidelines.

1. It is not necessary to apply more than one method to determine the arm's length remuneration for a given controlled Transaction.

2. Where a Taxpayer has used an Approved Transfer Pricing Methods to establish the remuneration of a Controlled Transaction and such method is consistent with the relevant provisions of the Bylaws to the satisfaction of the Authority, then the Authority's examination of whether the remuneration of a Controlled Transaction is consistent with the Arm's-Length principle shall be based on the Transfer Pricing method applied by the Taxpayer.

A Taxpayer may apply a Transfer Pricing method other than the Approved Transfer Pricing Methods provided that the Taxpayer must be able to demonstrate that under the facts and circumstances, none of those methods provides a reliable measure of an Arm's-Length result and that the suggested method satisfies the provisions under Article 6 of the Bylaws.

If a Taxpayer carries out, under the same or similar circumstances, two or more Controlled Transactions that are economically closely linked to one another or that form a continuum such that they cannot reliably be analyzed separately, those Controlled Transactions may be combined to perform the comparability analysis to apply the transfer pricing methods.

1. The Arm's Length Range is a range of acceptable Arm's Length financial indicator figures (such as (without limitation) prices, margins, or profit shares) produced by the application of the most appropriate Transfer Pricing method selected in accordance with Chapter 4 of the Bylaws to a number of Uncontrolled Transactions, each of which is relatively equally comparable to the Controlled Transaction based on a comparability analysis conducted in accordance with these Bylaws.

2. The Authority shall set forth rules, conditions and limitations related to the selection of a point within the Arm's Length Range in the Guidelines.

1. A Controlled Transaction, or a set of Transactions that are combined according to Article 10 of the Bylaws shall not be subject to an adjustment by the Authority where the Authority is satisfied that the relevant financial indicator derived from the Controlled Transaction or set of Transactions and being tested under the appropriate Transfer Pricing method selected in accordance with Chapter 4 of the Bylaws is within the Arm's Length Range.

2. Where the relevant financial indicator derived from a Controlled Transaction or from a set of Transactions that are combined falls outside the Arm's Length Range, the Authority may adjust it pursuant to these Bylaws; any such adjustment shall be to a point within the Arm's Length Range that best reflects the facts and circumstances of the case.

1. Taxpayers may not rely on Comparable Transactions, or information related thereto, that are not or could not be made available to the Authority.

2. In making an adjustment pursuant to these Bylaws, the Authority may not rely on Comparable Transactions or information related thereto that is not or could not be made available to the Taxpayer. The tax base or Zakat base^[30] of the Taxpayer shall not be adjusted if the information concerning the comparable Transaction is not available to the Taxpayer.

3. The Authority may accept the use of foreign Comparable Transactions by a Taxpayer in the event that domestic Comparable Transactions are not available or absence of domestic Comparable Transactions. In such case, the Taxpayer must be able to demonstrate to the Authority upon its request that the foreign Comparable Transaction, or Transactions are consistent with the requirements set forth in Chapter 3 of the Bylaws, and shall take into account the expected impact of geographic differences and other factors on the results of the foreign Comparable Transactions, including, without limitation, price and profitability.

4. The Authority shall set forth terms, rules and limitations pertaining to the use of information in the Guidelines as it deems necessary.

1. A Taxpayer shall submit to the Authority together with their return, a Disclosure Form containing information related to such Controlled Transactions, including the following:^[31]

   1. Information about Related Person or Persons party to the Controlled Transaction, including the name of such Person or Persons and the country or countries in which such Person or Persons reside and are established.

   2. Information about any business restructuring for the Multinational Group or the Taxpayer.^[32]

   3. Information about the legal and beneficial owners of the Taxpayer, including the name of such Person or Persons and the country or countries in which such Person or Persons is/are established and reside and the percentage of ownership.

   4. Total revenue, total expenses, the amount of net profit or loss, assets, total funds, advance payments, and debts, together with other components of the tax/zakat base, and the total deductible amounts from the tax/zakat base for the tax/zakat year subject to the declaration, as shown in the declaration submitted for that tax/zakat year. ^[33]

   5. Information about the type and nature of the relationship amongst the Related Persons party to the Controlled Transaction.

   6. A description of the nature of the business activity or activities of the Related Persons and of the Controlled Transactions.

   7. Transactional information, including aggregate amounts of consideration, nature of receipt or income or nature of payment or expenditure.

   8. Transfer Pricing method applied in accordance with Chapter 4 of the Bylaws.

   9. The Taxpayer shall disclose whether it has entered into a Transaction between Related Persons, or any Transaction without consideration or for non-cash consideration (such as swaps or deals), during the relevant tax or zakat period covered by the return. In the event that the Taxpayer declares that it has entered into a Transaction between two or more Related Persons, the Taxpayer must provide a statement with details of such Transactions, including information relating to the fair market value of the swaps or the consideration received, as applicable.^[34]

   10. Whether the Person maintains Transfer Pricing documentation as per Chapter 8 of the Bylaws, including the Master File and Local File.

2. Taxpayers shall submit the Disclosure Form of Controlled Transactions to the Authority within 120 days after the last day of the fiscal year. The Authority shall specify all administrative procedures concerning the submission of the Disclosure form of Controlled Transactions in the Guidelines.

3. Together with the Disclosure Form of Controlled Transactions the Tax Payer must submit an affidavit from a licensed auditor through which the auditor certifies that the Transfer Pricing policy of the MNE is consistently applied by and in relation to the Tax Payer.

4. At its discretion, the Authority may make further inquiries with Persons engaged in or party to a Controlled Transactions through interrogatories or similar form that the Authority sets.

1. The Authority may request any information related to Controlled Transactions that it deems necessary to carry out its regulatory functions and other duties.

2. Except as otherwise provided in Exceptions of the Bylaws, every Taxpayer who is a party to a Controlled Transaction shall keep the documentation required to confirm that the conditions of such transactions are at Arm's-Length.

3. Taxpayers must have readily accessible and available, for review by the Authority upon its request sufficient documentation containing information and economic analyses evidencing that the conditions of its Controlled Transactions are at Arm's-Length.

4. The documentation relating to Controlled Transactions shall be provided to the Authority upon its request within the duration specified by the Authority in the request, provided that such duration shall be no less than (30) days after the date of such request.

1. Each Taxpayer is required to maintain and make available upon request by the Authority, a Master File containing information on the global business operations and Transfer Pricing policies of the Multinational Group to which the Taxpayer belongs. The following information should be included in the Master file:^[35]

   1. The organizational structure of the Multinational Group, showing the ownership of the entities belonging to the Group and their geographical location.^[36]

   2. A description of the business activities of the Multinational Group, including the following:^[37]

      1. important drivers of business profit;

      2. a description of the supply chain for the MEN Group's largest products and service offerings by turnover plus any other products and services amounting to more than 5% of group turnover;

      3. a list of service arrangements between members of the Multinational Group, or any similar arrangements, other than research and development services. This shall include a description of the capabilities of the principal locations providing important services and transfer pricing policies for allocation of the costs of services and determining prices to be paid for intra-group services;^[38]

      4. a description of the main geographical markets for the group's products and services;

      5. a brief written functional analysis describing the principal contributions to value creation by individual entities within the group, i.e. functions performed, important assets used, and important risks assumed; and

      6. A description of the most important transactions relating to business restructurings, acquisitions, and liquidations during the relevant tax/zakat year.^[39]

   3. The intangible assets of the Multinational Group, which include the following:^[40]

      1. a general description of the Multinational Group’s strategy for the development, ownership and exploitation of intangibles, including location of principal research and development facilities and of research and development management.^[41]

      2. a list of the intangible assets of the Multinational Group that are material for Transfer Pricing purposes, and the identity of the legal and beneficial owner of such intangibles.^[42]

      3. a list of important agreements among identified related parties concerning intangibles, including cost contribution arrangements, principal research service agreements and license agreements.

      4. a general description of the group's transfer pricing policies related to research, development and intangibles.

      5. Information on the transfer of ownership of intangible assets, or rights therein, between Related Persons during the tax/zakat year, including the entities, countries, and compensation involved.^[43]

   4. Information on the Multinational Group's intercompany financial activities, including:^[44]

      1. a general description of how the group is financed, including material financing arrangements with independent lenders;

      2. the identification of any members of the Multinational Group who engage in principal financing activities for the group, including the country under whose laws the entity is organized and the place of effective management of such entities;^[45] and

      3. Transfer pricing policies of the Multinational Group related to financing arrangements between Related Persons.^[46]

   5. Information pertaining to the Multinational Group's financial and tax positions, including:^[47]

      1. the Multinational Group's annual consolidated financial statement for the tax/zakat year of the reporting entity, prepared for financial reporting, regulatory, administrative, tax or other purposes;^[48] and

      2. a list of transfer pricing agreements concluded between the Multinational Group and tax authorities, and the interpretative tax decisions relating to the allocation of revenue among countries.^[49]

2. The Master File, or a part thereof, shall be provided or made available to the Authority upon its request within the period specified by the Authority in the request, provided that such period shall be no less than Thirty (30) days from the date of the request.

1. A Taxpayer shall be required to maintain at all times, and, when requested in writing provide the Authority with all or any part of, a Local File containing detailed information on all Controlled Transactions of the Taxpayer. The Local File shall include:

   1. Taxpayer's information, including:

      1. a description of the management structure of the Taxpayer, its organization chart, a description of the individuals to whom the Taxpayer's management reports and the countries in which such individuals maintain their principal offices;

      2. a detailed description of the business and strategy pursued by the Taxpayer including a statement of any business restructuring operations or transfers of tangible or intangible assets, or rights therein, in which the Taxpayer participated or that affected the Taxpayer during the current tax/zakat year and the preceding year, as applicable, and an elaboration on aspects of such Transactions that affect the local entity and its key competitors; ^[50]

   2. Documentation on material Controlled Transactions. For Controlled Transactions in which the Taxpayer is involved generally, the following information should be included:

      1. a description of the Controlled Transactions (e.g. procurement of manufacturing services, purchase of goods, provision of services, loans, financial and performance guarantees, licenses of intangibles, etc.) and the context in which such Transactions take place;

      2. the amount of intra-group payments and receipts for each category of Controlled Transactions involving the Taxpayer (e.g. payments and receipts for products, services, royalties, interest, etc.) broken down by country of tax residence the foreign payer or recipient;

      3. an identification of Related Persons involved in each category of Controlled Transactions, and the relationships amongst them;

      4. copies of all intercompany agreements concluded by the Taxpayer;

      5. a detailed comparability and functional analysis of the Taxpayer and relevant Related Persons with respect to each documented category of Controlled Transactions, including any changes compared to prior years;

      6. an indication of the most appropriate transfer pricing method with regard to the category of Transaction and the reasons for selecting that method;

      7. an indication of which related Person is selected as the tested party, if applicable, and an explanation of the reasons for this selection;

      8. a summary of the important assumptions made in applying the transfer pricing methodology;

      9. if relevant, an explanation of the reasons for performing a multi-year analysis;

      10. a list and description of selected comparable Uncontrolled Transactions (internal or external), if any, and information on relevant financial indicators for independent enterprises relied on in the transfer pricing analysis, including a description of the comparable search methodology and the source of such information;

      11. a description of any comparability adjustments performed, and an indication of whether adjustments have been made to the results of the tested party, the comparable Uncontrolled Transactions, or both;

      12. a description of the reasons for concluding the relevant Transactions were priced on an arm's length basis based on the application of the selected transfer pricing method;

      13. a summary of financial information used in applying the transfer pricing methodology; and

      14. a copy of existing unilateral and bilateral/multilateral Advance Pricing Agreements and other tax rulings to which the Authority is not a party and that relate to Controlled Transactions;

   3. Industry analysis which provides complete and thorough analysis of the Taxpayer industry, including but not limited to:

      1. major competitors;

      2. SWOT analysis;

      3. power of suppliers;

      4. power of buyers;

      5. availability of substitutes;

      6. size;

      7. demand and supply trends;

      8. entry requirements;

      9. key international target markets;

      10. market share; and

      11. modes of delivery.

   4. Financial information, including:

      1. Annual financial statements for the tax / zakat year^[51] concerned of the Taxpayer. If audited financial statements exist, these should be supplied and if not, existing unaudited financial statements should be supplied;

      2. Information and allocation schedules showing how the financial data used in applying the transfer pricing method may be tied to the annual financial statements; and

      3. Summary of schedules of relevant financial data for comparables used in the analysis and the sources from which that data was obtained.

2. Upon request by the Authority, a Taxpayer must provide or make available to the Authority the Local File or the requested parts thereof within the time specified by the Authority in the request, provided that such time shall be no less than Thirty (30) days from the date of the request.

1. Each Ultimate Parent Entity or, when applicable, each Surrogate Parent Entity of an Multinational Group shall file with the Authority a Country-by-Country Report conforming to the requirements set forth in the Bylaws and the Guidelines with respect of its tax / Zakat year on or before the date specified in subparagraph D of this Article.^[52]

2. A Constituent Entity that is not the Ultimate Parent Entity or Surrogate Parent Entity of an Multinational Group shall file with the Authority a Country-by-Country Report conforming to the requirements set forth in the Bylaws and the Guidelines with respect to the tax / Zakat year of the Multinational Group of which it is a Constituent Entity, no later than the date specified in subparagraph D of this Article, if the following criteria are satisfied:^[53]

   1. That the Entity is a Taxpayer in the Kingdom.^[54]; and

   2. One of the following conditions applies:

      1. the Ultimate Parent Entity or Surrogate Parent Entity of the Multinational Group is not obligated to file a Country-by-Country Report in the jurisdiction in which it is a tax resident^[55];

      2. the jurisdiction in which the Ultimate Parent Entity or in which the Surrogate Parent Entity is a tax resident is party to an International Agreement that is valid and enforceable at the time specified in paragraph D of this Article, and under which the competent authority of the Kingdom can obtain the Country-by-Country Report, and such jurisdiction has not suspended the agreement at that date.^[56]; or

      3. the Ultimate Parent Entity of the Multinational Group, or the Surrogate Parent Entity of the Multinational Group, is resident for tax purposes in a jurisdiction that is a party to an International Agreement in force at the time specified with the Kingdom, but which does not implement automatic exchange of information, or where such implementation is suspended, or in the event of its continuous failure to provide the Country-by-Country Report automatically to the Kingdom in respect of the Multinational Group that has a Constituent Entity in the Kingdom.^[57]

3. In the case where more than one Taxpayer in the Kingdom belongs to the same Multinational Group and one or more of the conditions set out in paragraph B above apply, the Multinational Group may designate one of those Entities to file the Country-by-Country Report with the Authority with respect to any tax / Zakat Year under declaration, on or before the date specified in paragraph D of this Article and to notify the Authority that that the country-by-country report is being filed on behalf of all the other taxpayers belonging to the same multinational group.^[58].

4. The Country-by-Country Report must be submitted in the format prescribed by the Authority not later than 12 months after the last day of the tax / Zakat Year of the Multinational Group.^[59]

5. Forms of the CbC reports and the information required to be provided therein shall be specified in the Guidelines.

6. Each taxpayer belonging to a multinational group, including the ultimate parent entity and the surrogate parent entity of the group, must notify the Authority within one hundred and twenty (120) days from the end of the tax / Zakat year of the identity of the reporting entity of the group and the jurisdiction in which it files the country-by-country report.^[60]

7. Persons that are members of a Multinational Group with a consolidated group revenue exceeding Three Billion & Two Hundred Million Saudi Riyals (SAR 3.2 Billion) during the tax / Zakat year as reflected in its Consolidated Financial Statements for that preceding year must submit a country-by-country report and the notification provided for in this Article.^[61]

8. The Authority shall establish and specify the types, content and recommendations in relation to the documentation and notifications described in this Article.

9. All the types of documentation contained in this Article shall be submitted to the Authority in the language and form specified by Authority.

1. Notwithstanding any provision to the contrary, the following Persons are not required to maintain the documentation described in Article 16 and Article 17:

   1. Natural persons other than establishments;^[62]

   2. Small Enterprises;

   3. Fully state-owned companies exempted from Zakat liability;^[63]

   4. Investment funds.^[64]

2. Notwithstanding the provisions of the preceding paragraph, the Authority may, at its discretion, direct any Person to prepare and maintain documentation related to Controlled Transactions and to request such Person to provide such documentation within thirty (30) days from the date of receiving the written request from the Authority in any of the following cases:

   1. Where Controlled Transactions are performed with Persons deemed to be residents of, or established in a special economic zones situated in the Kingdom;

   2. Where Controlled Transactions are carried out with Persons who are legally granted any exemption or relief from tax or zakat obligations, or both, in the Kingdom;

   3. If the Authority determines that the transaction – or any part thereof – is fictitious or artificial, or that its principal purpose is to reduce tax or Zakat burdens, or to alter the tax or Zakat effect that would otherwise result from the transaction, or if the form of the transaction does not reflect its substance and nature.;^[65]

   4. Where the Person has submitted a request for a corresponding adjustment in accordance with Chapter 10 of the Bylaws; or

   5. Where the provision of the requested document(s) is necessary for the authority to obtain for purposes of fulfilling of the obligations of the Kingdom under an International Agreement to which the Kingdom is a party.

3. Group companies that submit a unified Zakat declaration in accordance with the Zakat Collection Bylaws shall be exempt from transfer pricing of transactions conducted between them, provided that such companies disclose transactions with companies in which they hold less than 100% ownership. The Authority shall nevertheless have the right to request transfer pricing documentation for such transactions within the period it specifies, which shall not be less than thirty (30) days from the date of the request. ^[66]

1. Where a Taxpayer has entered into a Controlled Transaction with a Nonresident Person located in another jurisdiction that is a party to an International Agreement and the competent authority of such country has made or proposed an adjustment in relation to a Transaction with the resident Person to the tax base of such Nonresident Person based on the Arm's-Length principle, the Authority shall:

   1. Examine the consistency of that adjustment with the arm's length principle. If the Authority concludes that the adjustment is consistent with this principle, then it shall make an appropriate adjustment to the tax base of the resident Taxpayer with the view to eliminate economic double taxation when it corresponds with the Arm's-Length principle set out in these Bylaws both in principle and as regards the amount; and

   2. When applicable, communicate with the relevant foreign competent authority in accordance with the mutual agreement procedures set in the relevant International Agreement with the country party to such agreement, if the Authority concludes that the adjustment made by the foreign competent authority is not appropriate.

In order for the Authority to invoke the corresponding adjustment procedure, the Taxpayer should submit an application to the Authority by disclosing all required facts and circumstances substantiating their claim.

1. The Authority may reject to apply the provisions of the corresponding adjustments in any of the following cases:

   1. If the transaction – or part thereof – is fictitious or sham, or if its principal purpose is to reduce the tax or Zakat burdens, or to alter the tax or Zakat effect resulting from the transaction, or if the form of the transaction does not reflect its substance and nature.^[67]

   2. In cases where a final decision has been made in relation to the subject matter of the Taxpayer's claim by the competent judicial body and such decision is no longer appealable.

2. The statutory time limitations period established under Article 65 of the Law shall apply to the taxpayer subject to tax, and Articles 21, 22, and 23 of the Zakat Collection Bylaws shall apply to the taxpayer subject to the Zakat Collection Bylaws. ^[68]

1. A Taxpayer may apply for an Advance Pricing Agreement subject to the following conditions:

   1. The minimum threshold of the transaction(s) covered by the Advance Pricing Agreement shall not be less than one hundred million (100,000,000) Saudi Riyals, provided that the Authority may exclude certain transactions deemed complex from the application of this threshold.

   2. The Advance Pricing Agreement procedures must commence no later than twelve (12) months prior to the beginning of the first year in which the Agreement is intended to apply.

2. A pre-filing meeting shall be held with the Taxpayer before acceptance of the Advance Pricing Agreement application, in accordance with the procedures determined by the Authority.

3. The Advance Pricing Agreement shall be concluded for a period not exceeding three (3) years, subject to the submission of annual reports by the Taxpayer evidencing compliance therewith.

4. The Authority may extend the Advance Pricing Agreement to subsequent years upon request.

The Authority shall follow the audit rules and procedures stipulated in the Law, the Zakat Collection By-Law, and the rules set forth in the Guideline when auditing related party transactions. ^[70]

Transfer Pricing Guidelines may be issued upon approval by the Governor of the Authority.

All Provisions of the Law, its implementing regulations, and the Zakat Collection Bylaws shall be interpreted and construed in a manner consistent with the provisions of these Bylaws.^[71]

1. These Transfer Pricing Bylaws shall be published in the official gazette and shall take effect from the date of publication therein, without prejudice to the Law and the Zakat Collection Regulations.^[72]