Zakat, Tax and Customs Authority ( ZATCA ) announced the Unilateral Advance Pricing Agreements ( APA ) process on 19 May 2024. This initiative follows approved amendments to the Transfer Pricing Bylaws, which introduced provisions for Advance Pricing Agreements (APA) under Article 23 vide Decision No. (8-2-23) dated 08/28/1444 AH. It is anticipated that ZATCA’s additional guidelines for APAs will be consistent with the OECD guidelines.

Advance Pricing Agreement:
An Advance Pricing Agreement (APA) is a binding arrangement between a taxpayer and a tax authority that sets a pre-approved transfer pricing method for related parties and international transactions. The purpose of the APA is to offer a clear framework for determining transfer pricing for controlled transactions between related entities, ensuring adherence to the arm’s length principle.