KSA – APA Guidelines Issued By Zakat
The Zakat, Tax, and Customs Authority (ZATCA) has introduced the Advance Pricing Agreement (APA) Guidelines in February 2025 to provide tax certainty and minimize transfer pricing (TP) disputes for taxpayers engaging in controlled transactions. APA Guidelines represent a major advancement in promoting tax transparency and compliance for multinational enterprises in Saudi Arabia.
Some of the key highlights:
- ZATCA currently allows only unilateral APAs
- APA request must be initiated at least 12 months before the start of the first fiscal year covered by the agreement
- Covered transactions should exceed SAR 100 million annually, unless exempted for complex transactions
- APA duration is three years with, no roll back provision.
- Once an APA is in place, taxpayers must submit an ACR within 120 days after the end of the financial year.
The APA framework in most of the aspects aligns with international best practices. By enabling businesses to pre-establish transfer pricing methods, the APA framework encourages a collaborative relationship between taxpayers and ZATCA.