Transfer Pricing Audit Support
The General Authority of Zakat and Tax (GAZT) introduced transfer pricing regulation in Saudi Arabia on February 15th, 2019. Transfer pricing refers to a pricing arrangement of tangible goods, services, intellectual properties, or intangible goods during intra-group transactions within related business entities. Transfer pricing is considered a prominent risk management technique in global business because the regulation considers the increasing frequency and diversity of intercompany transactions and international enforcement efforts. The regulation mandates conducting all transactions at arm’s length. Arm’s length refers to the market price agreed by an unrelated or independent company. Reve Consult offers impeccable transfer pricing audit support where our clients can expect to create, manage, document, report, review, and protect their transfer pricing policies. We address the potential tax risks of your business and help you overcome them with the best business strategies.
Transfer Pricing Documentation Review
Transfer pricing documentations are the records and report maintained by businesses to ascertain that they conduct their transaction with related parties at arm’s length. This confirms prompt reporting and taxation of profits in KSA. The obligation to prepare the detailed transfer pricing documentation depends on the aggregate value of related-party transactions. The Transfer Pricing documentation is classified into local files, master files, and country-by-country reporting, each having a different threshold for compulsory documentation. Maintaining transfer pricing documentation is essential to ensure compliance with regulatory standards, avoid penalties, and ensure transparent financial practices.
Intercompany/Related Party Transactions Analysis
This process involves examining the transactions of a transfer pricing to ensure that they comply with the arm’s length principle. The analysis ensures that even the transactions between related entities are carried out as if they occurred between independent parties in an open market. All entities of MNCs making transactions with their related entities are instructed to conduct an intercompany transaction analysis in Saudi Arabia. It is to ensure that financial transactions comply with the transfer pricing regulations of KSA, preventing potential tax adjustments and penalties. Reve Consult analyses the scenario and submits clear documentation of pricing policies that foster trust with tax regulations.
Benchmarking and Economic Analysis
Benchmarking Analysis is the market research that compares existing performance and pricing of intercompany transactions against similar independent entity transactions. It is essential for preparing a defensible transfer pricing audit. Economic Analysis is a systematic approach that evaluates the broader economic factors influencing intercompany transactions. It analyses market conditions, industry trends, and economic circumstances to select the most productive and cost-effective strategy that fulfills the business objective. Although the Saudi regulations instruct every company to conduct benchmarking and economic analysis, those exceeding the specified transaction threshold are mandated to perform these analyses.
Audit Defense and Dispute Resolution
In audit defense, the company prepares and defends its transfer pricing policies and documentation when audited by Saudi Tax authorities. During audit defense, we need to respond to inquiries from tax authorities and justify that our transfer pricing adheres to ZATCA regulations. Dispute resolution resolves any prospective conflicts due to transfer pricing adjustments imposed by tax authorities. Both these processes are essential to ensure regulatory compliance, mitigate risk, and business protection. Reve Consult assists companies engaged in cross-border or intercompany transactions to have a regulatory synergy with tax authorities. In case of any disputes, we make immediate efforts to negotiate settlements, file appeals, and seek resolutions through Mutual Agreement Procedure (MAP) and arbitration.
