TME LEGAL | DUBAI – RECHT KLAR

KSA: New Transfer Pricing Guidelines for Zakat Payers

KSA: New Transfer Pricing Guidelines for Zakat Payers


The Zakat, Tax, and Customs Authority (ZATCA) of Saudi Arabia has released comprehensive guidelines for Zakat payers regarding the treatment of related-party transactions. These guidelines provide clarity on the Zakat treatment of various transactions and introduce critical changes to align with the amended Transfer Pricing Bylaws set to take effect on 01.01.2024.


The amendments to the Transfer Pricing Bylaws by the Board of Directors of ZATCA on 07.04. 2023 extended the applicability of Transfer Pricing provisions to Zakat payers, marking a significant shift in the regulatory landscape. The subsequent issuance of detailed guidelines aims to facilitate a smooth transition for Zakat payers by offering practical insights into related-party transactions.


Key Highlights


The guidelines categorize related-party transactions into three main types:


– Commercial transactions
– Indirect financing
– Direct financing


These classifications provide a structured approach for Zakat payers to assess the nature of their transactions and determine the appropriate Zakat treatment.


The guidelines stress the need for Zakat payers to assess the nature of their transactions and align them with the provided guidance. Businesses must review existing pricing mechanisms, establish a robust transfer pricing policy, and develop a compliance roadmap to meet the forthcoming requirements.


The amended Transfer Pricing Bylaws introduced compliance requirements that mandate submitting a Controlled Transaction Disclosure Form and Transfer Pricing Affidavit with Zakat returns. Zakat payers must also prepare a Transfer Pricing Local File and Master File, subject to specific exemptions during two distinct phases.


As the 01.01.2024 deadline approaches, Zakat payers must proactively review their related-party transactions, assess compliance preparedness, and implement necessary changes to ensure adherence to the new guidelines. This includes a thorough review of existing pricing mechanisms, establishing a comprehensive transfer pricing policy, and implementing robust processes and controls.


How TME Services Can Support


Issuing these guidelines is pivotal for Zakat payers in Saudi Arabia. It underscores the importance of aligning with the updated regulatory landscape, ensuring transparency in related-party transactions, and adopting best practices to meet the evolving compliance requirements. By taking proactive steps, businesses can confidently navigate this regulatory shift and contribute to a more transparent and compliant business environment.


TME Services is a team of 45 professionals in legal-, tax-, accounting and compliance with over 18 years of experience. We advised a significant number of SMEs in the context of the implementation of the tax framework in the UAE and KSA over the last decade to make sure that our clients are well-oriented in the new and fast-evolving tax landscape and to reduce the legal liability of managers which may arise in connection with non-compliance.

Share:

More Posts

The UAE Advances as a Global AI Powerhouse

The UAE Advances as a Global AI Powerhouse

Through a combination of strategic investment, regulatory foresight, and partnerships with top technology firms, the country is positioning itself as a global AI powerhouse. With AI expected to be a major driver of economic growth, the UAE is well on its way to becoming a world leader in artificial intelligence and digital transformation.

The Smart Rental Index in Dubai: A Legal Analysis

The Smart Rental Index is a crucial instrument for regulating the rental market in Dubai. It contributes to market stability and transparency, providing legal guidance for both tenants and landlords. However, there remains room for optimization, particularly in considering individual property characteristics and maintaining flexibility for investors. A continuous adaptation of the index to market conditions could help establish a balanced relationship between tenant protection and economic attractiveness for landlords and investors.

Conversion from Leasehold to Freehold Properties in Dubai

The Dubai Land Department (DLD) has announced that private property owners in two prominent areas, Sheikh Zayed Road (from the Trade Centre Roundabout to the Water Canal) and Al Jaddaf, can convert their property ownership to freehold status. This opportunity is available to all nationalities and applies to 457 eligible plots: 128 in Sheikh Zayed Road and 329 in Al Jaddaf. The initiative is part of Dubai’s Real Estate Strategy 2033, aimed at driving growth and strengthening the emirate’s position as a global hub for real estate investment.

Recent Developments in Employment Law in the UAE: Focus on Abu Dhabi Global Market and Remote Work

Significant reforms to UAE employment law will take effect in April 2025, focusing on the groundbreaking regulations of the Abu Dhabi Global Market. These updates redefine employee rights, introduce comprehensive protections for remote workers, and reinforce the UAE’s position as a leader in flexible work models. The new regulations mark an important step in the evolution of the labor market, aligning it with the modern demands of the workforce