KSA APA
KSA – APA Program
The introduction of the APA program comes as a silver lining to the KSA Transfer Pricing tax regime. This welcome move demonstrates the proactiveness of the KSA Government in fostering a non- adversarial transfer pricing environment and providing tax certainty to MNEs in relation to their related party transactions. On May 19, 2024, ZATCA commenced receiving applications for Unilateral Advance Pricing Agreements from taxpayers and Zakat payers. While the comprehensive guidelines in this regard is yet to be rolled out by ZATCA, some of the key aspects of the KSA APA program as laid down in the amended TP Bylaws and the recent notification inviting applications for Unilateral APAs are brought here below-
A. Applicability
- Applicable to Taxpayers and Zakat Payers
- Applicable from Financial year beginning on or after January 01, 2024
B. Eligibility
- Transaction Threshold
- In order to apply for APA, the value of transactions with related parties shall not be less than SAR 100 million.(~26.66 million USD).
- Timing of Application
- The taxpayer/ zakat payer would be required to submit the completed application at least 12 months before the start of the first financial year covered by the agreement.
C. Type of APA
- As of now only applications for Unilateral APA are received by ZATCA. Further guidelines from ZATCA on the APA program is expected to provide more clarity on Bilateral and Multilateral APAs.
This alert summarises the critical aspects of the KSA APA program and also provides an overview of the general APA process with an intent to familiarize businesses and keep them abreast of the upcoming changes.