KSA Transfer Pricing: Local File and Master File Thresholds

If your UAE company owns a Saudi subsidiary, runs a branch in Riyadh, or charges management fees across the border, you are now inside two transfer pricing systems at once. The UAE has its rules. Saudi Arabia has its own, and they do not share the same thresholds, deadlines, or documentation triggers.

That gap is where UAE finance teams get caught. A charge that sits comfortably below a UAE documentation threshold can still force a full Local File and Master File on the Saudi side. Getting this wrong risks a Saudi adjustment, a matching UAE problem, and tax paid twice on the same profit.

This guide explains the Saudi Local File and Master File thresholds, how the phase-in works for zakat payers, and exactly how a UAE group should assess its exposure. Here is what we will cover:

• What the KSA Local File and Master File actually are
• The current threshold framework and the phased move ahead
• How UAE and Saudi obligations interact for cross-border groups
• Practical steps to close documentation gaps on both sides

What are the KSA Local File and Master File?

The Local File and the Master File are the two core transfer pricing documents in Saudi Arabia. They answer different questions, and Saudi groups usually need both once they cross the relevant threshold.

The Local File is entity-specific. It sets out the taxpayer's own controlled transactions, the related parties involved, the intercompany agreements, and the functional analysis of who performs which functions, uses which assets, and bears which risks. It is where you show that each related-party transaction sits within an arm's length range.

The Master File takes the group-wide view. It describes the multinational group's legal and operating structure, its supply chain and value drivers, its intangibles and financing arrangements, and its global transfer pricing policies. Together the two files give the Zakat, Tax and Customs Authority (ZATCA) both the local detail and the global context.

These documents follow the international standard. The three-tier model of Local File, Master File, and country-by-country reporting comes from the OECD's BEPS Action 13 final report, and the underlying pricing methodology sits in the OECD Transfer Pricing Guidelines 2022. UAE readers will recognise the same architecture, because the UAE built its own regime on the same foundation.

The takeaway

The Local File proves entity-level pricing. The Master File explains the group. Saudi groups above the threshold maintain both, and UAE parents supporting Saudi entities are often the ones who hold the group information the Master File needs.

How do these differ from the Saudi disclosure form and CbCR?

This is the distinction UAE teams most often miss, so it is worth being precise.

The Controlled Transaction Disclosure Form (CTDF) is a filing. Every taxpayer with related-party transactions submits it with the annual return, and it carries no size threshold. A single intercompany invoice brings you into scope. You can read the mechanics in SBC's guide to the Saudi transfer pricing disclosure form and the 30 April deadline.

The Local File and Master File are not filed with the return. They are maintained internally and produced to ZATCA on request, and they only become mandatory above set thresholds.

Country-by-country reporting (CbCR) is a separate, group-level filing for the largest multinational groups. It reports revenue, profit, tax, and economic activity across jurisdictions. It is a notification and report, not a description of how each entity prices its transactions.

Confusing these four obligations is the fastest way to under-comply or over-comply. The disclosure form catches almost everyone. The files catch the larger players.

What are the current KSA Local File and Master File thresholds?

Here we move from confirmed structure into the threshold detail. The following reflects the framework set out in the Saudi Transfer Pricing Bylaws and the current practice described in SBC's detailed analysis of KSA Local File and Master File thresholds. Because Saudi threshold specifics are best confirmed against your own facts, treat the figures below as current professional analysis rather than a substitute for a filing-stage review.

Saudi Arabia splits taxpayers into categories, and the threshold depends on which category you fall into. The two categories that matter most for UAE-linked groups are ordinary taxpayers (including mixed-ownership entities) and zakat payers.

Taxpayers and mixed entities

For taxpayers and mixed-ownership companies, the line is a single figure. Once annual controlled (related-party) transactions exceed SAR 6 million, both the Local File and the Master File become mandatory. At or below SAR 6 million, both files are not required, though the disclosure form and general documentation obligations still apply.

Zakat payers

Zakat payers are eased in over two phases, reflecting that transfer pricing arrived later for them. During the phase-in period, the documentation obligation depends on where controlled transactions fall against two figures: SAR 48 million and SAR 100 million.

What the phase-in means

The direction of travel is clear. In Phase 1, a zakat payer with controlled transactions between SAR 48 million and SAR 100 million can choose whether to prepare the files. In Phase 2, that middle band disappears, and the files become mandatory once controlled transactions pass SAR 48 million.

The practical reading is simple. A zakat payer sitting in the optional band today should assume it will be mandatory soon, and preparing early avoids a rushed first-time build later. This is a professional advisory observation, not a penalty rule, but it reflects how the phased design is structured.

How does documentation timing work in Saudi Arabia?

Timing is where good intentions fall apart, so treat these as three separate clocks.

The disclosure form is filed with the return, within 120 days of the financial year-end. For a calendar-year business, that means 30 April.

The Local File and Master File are not filed. They must be produced to ZATCA within 30 days of a formal request. Thirty days is far too short to write these documents from scratch, which is why they should be prepared contemporaneously and kept current.

Both files also need a yearly refresh. Updated entity information, current financial data, and fresh benchmarking are all expected each financial year. A file that leans on stale comparables is one of the things most likely to draw ZATCA scrutiny.

The takeaway

Prepare the files as if the 30-day request could arrive tomorrow. Refresh them annually. Never treat documentation as a one-time exercise, because an unrefreshed benchmarking study is a recognised audit weakness on both sides of the border.

Why UAE finance teams should not assume the thresholds match

This is the single most important point for a UAE reader. The UAE and Saudi thresholds are built differently, and applying one to the other creates real exposure.

Under the UAE regime, the formal Master File and Local File obligation is tied to Ministerial Decision No. 97 of 2023, which uses a standalone revenue test of AED 200 million or consolidated group revenue of AED 3.15 billion. Saudi Arabia, by contrast, keys its documentation to the value of controlled transactions, at figures like SAR 6 million for taxpayers.

Those are completely different measures. A UAE entity can sit well below the UAE documentation threshold and still trigger a full Saudi Local File and Master File because its related-party transaction value crosses the Saudi line. The UAE arm's length rule under Federal Decree-Law No. 47 of 2022 always applies, but the documentation trigger is not the same number.

The FTA Corporate Tax FAQs confirm that UAE transfer pricing applies to both domestic and cross-border related-party transactions, and the UAE Ministry of Finance Corporate Tax page confirms the regime applies for financial years starting on or after 1 June 2023. For the full UAE picture, SBC's UAE transfer pricing compliance guide walks through the obligations end to end.

How should a UAE group with a Saudi subsidiary assess exposure?

Start with the transaction, not the tax result. Map every flow between the UAE group and its Saudi entities: management fees, service charges, financing, royalties, and goods.

Then run each side against its own trigger. Test the Saudi entity's controlled transaction value against the SAR thresholds and its taxpayer category. Test the UAE side against the AED revenue thresholds and the UAE related-party disclosure thresholds of AED 40 million and AED 500,000.

Here is a practical example. Suppose Gulf Principal LLC, a UAE mainland company, charges a SAR 30 million annual management and support fee to its Saudi subsidiary, which is a 100% GCC-owned zakat payer with total controlled transactions of SAR 30 million. In Phase 1, that Saudi entity sits below SAR 48 million, so a Local File and Master File are not required, though the disclosure form still is. On the UAE side, if Gulf Principal's revenue is under AED 200 million and it is not in a large group, no UAE Master File is triggered either, but the arm's length principle and the AED 40 million disclosure test still bite.

Now change one fact. If the Saudi subsidiary's controlled transactions rise to SAR 120 million, the Saudi Local File and Master File become mandatory immediately, regardless of what the UAE side requires. Same group, same transaction type, entirely different documentation outcome.

The takeaway

Assess each jurisdiction on its own rules. The Saudi obligation can be heavier than the UAE one for the very same intercompany charge, and the trigger is the transaction value, not group revenue.

How do the pricing mechanics affect cross-border UAE-Saudi positions?

Thresholds decide whether you document. The pricing mechanics decide whether the documentation survives review. Four elements do the heavy lifting.

Transfer pricing methods

Both regimes recognise the OECD's five methods, and both expect you to justify why the chosen method fits the transaction. A method that works for a routine Saudi distributor will not fit a UAE principal that owns the intangibles. Method selection should follow the facts, and the same transaction should be described consistently on both sides.

FAR analysis

The functional analysis is the backbone. It decides how each entity is characterised and what return it should earn. A UAE headquarters that actually sets strategy and controls risk cannot be described as a routine service provider in the Saudi file. SBC's guide to what a proper functional analysis looks like sets out how to build one that holds.

Comparables

Benchmarking is heavily scrutinised in both countries. The comparable set behind your range needs to be defensible on independence, functional match, and geography. See how to select reliable comparables and when an authority can reject your comparables. Because Gulf-specific data is thin, both authorities often see regional data sets, which need a clear rationale.

Intercompany agreements and true-ups

The contract, the conduct, and the analysis must tell one story. An agreement that says cost-plus while invoices run on a different basis is a gap an auditor will find. SBC's note on intercompany agreements in the UAE explains why the paperwork alone does not prove arm's length. Year-end true-ups should be documented before they hit the accounts, not reverse-engineered to force a margin into range.

How documentation gaps create double tax risk

This is where the two systems collide. If ZATCA adjusts a Saudi entity's profit upward because the pricing was not supported, the extra Saudi tax does not automatically reduce the UAE profit on the other side. Without a matching UAE corresponding adjustment, the same slice of profit can be taxed in both countries.

The Saudi cost of getting it wrong is real. Weak or missing documentation lets ZATCA make its own adjustment, and penalties then attach to the increased liability, as set out in SBC's guide to KSA transfer pricing penalties. Late payment charges can then run from the original due date.

On the UAE side, Article 34 of Federal Decree-Law No. 47 of 2022 allows a corresponding adjustment where a foreign authority adjusts a transaction to reach an arm's length result, but that relief depends on your position being consistent and documented. The FTA Corporate Tax page and the FTA guides and references page are the authoritative UAE reference points, and the FTA legislation page hosts the underlying decisions.

The takeaway

A documentation gap on one side becomes a double tax problem across both. Keep the UAE and Saudi files consistent so that if one authority adjusts, the other side can respond in kind.

Confirmed facts, interpretation, and advisory observations

To use this guide well, separate the three layers.

• Confirmed legal and factual points: The Local File, Master File, disclosure form, and CbCR are distinct obligations. The UAE regime applies for financial years starting on or after 1 June 2023, applies to domestic and cross-border related-party transactions, and ties formal documentation to AED 200 million standalone or AED 3.15 billion group revenue. The OECD three-tier model underpins both regimes.
• Professional interpretation: The Saudi threshold figures (SAR 6 million for taxpayers, and the SAR 48 million and SAR 100 million bands for zakat payers) reflect the framework in the KSA Transfer Pricing Bylaws as described in the researched topic context. Confirm the specifics against your entity's facts before filing.
• Practical advisory observations: Preparing files early in the optional zakat band, refreshing benchmarking yearly, and keeping the UAE and Saudi files consistent are recommendations that reduce audit and double tax risk. They are good practice, not statutory rules.

Common mistakes UAE groups make

• Assuming the Saudi threshold matches the UAE threshold. It does not; one is transaction based, the other revenue based.
• Treating the Saudi disclosure form as optional. It has no threshold and applies to all related-party dealings.
• Leaving the Local File and Master File until a ZATCA request arrives. Thirty days is not enough to build them.
• Reusing last year's benchmarking without a refresh. An unrefreshed study is a recognised audit trigger.
• Letting the UAE and Saudi files describe the same transaction two different ways.
• Ignoring the phase-in for zakat payers and being caught unprepared when the middle band closes.
• Booking year-end true-ups without documenting the reasoning first.

Practical recommendations for UAE finance teams

• Build one master list of every UAE-Saudi related-party transaction, with value, method, and counterparty.
• Test each Saudi entity against its taxpayer category and the SAR thresholds, and each UAE entity against the AED revenue and disclosure thresholds separately.
• Prepare the Saudi Local File and Master File contemporaneously where the threshold is met, and keep them producible within 30 days.
• Refresh benchmarking annually and re-run the full comparable search on a sensible cycle, as covered in how often to update benchmarking.
• Align intercompany agreements, invoices, and actual conduct so both authorities read the same story.
• Coordinate the UAE and Saudi positions so a foreign adjustment can be matched by a corresponding adjustment.
• Bring in specialist support through SBC's Transfer Pricing services and Corporate Tax services, and review current thinking on the SBC insights hub and across the full range of services.

Frequently asked questions

What are the KSA Local File and Master File thresholds?

For taxpayers and mixed-ownership entities, both files become mandatory once annual controlled transactions exceed SAR 6 million. For zakat payers during the phase-in, files are not required up to SAR 48 million, optional between SAR 48 million and SAR 100 million, and mandatory above SAR 100 million. In the next phase, they become mandatory above SAR 48 million. Confirm the current specifics against your own facts before filing.

Do the Saudi files need to be filed with the tax return?

No. The Local File and Master File are maintained internally and produced to ZATCA within 30 days of a formal request. Only the disclosure form is filed with the annual return.

Are the UAE and Saudi thresholds the same?

No. The UAE ties formal documentation to revenue (AED 200 million standalone or AED 3.15 billion group), while Saudi Arabia ties it to the value of controlled transactions. A UAE entity below the UAE documentation threshold can still trigger full Saudi documentation.

Does the Saudi disclosure form have a threshold?

No. Any taxpayer with related-party transactions must file the Controlled Transaction Disclosure Form with the return, regardless of size. A single intercompany transaction is enough.

How does a Saudi transfer pricing adjustment affect the UAE side?

If ZATCA adjusts a Saudi entity's profit, the same profit can be taxed twice unless the UAE makes a corresponding adjustment. Article 34 of Federal Decree-Law No. 47 of 2022 allows a UAE corresponding adjustment where a foreign authority adjusts to reach an arm's length result, but consistent documentation on both sides is essential.

How often should the Saudi files be refreshed?

Every financial year, with updated entity information, current financials, and fresh benchmarking. Reliance on outdated comparables is one of the most common triggers for scrutiny.

Does the UAE arm's length rule apply even below the disclosure thresholds?

Yes. The AED 40 million and AED 500,000 figures are disclosure triggers, not exemptions. The arm's length requirement under Article 34 applies regardless of transaction size.

Final takeaway

For UAE groups with Saudi operations, the key insight is simple: two systems, two triggers, one consistent story. Saudi Arabia keys its Local File and Master File to the value of controlled transactions, while the UAE keys its documentation to revenue, so the same intercompany charge can create very different obligations on each side.

Map your transactions, test each entity against its own rules, prepare the Saudi files before a request lands, and keep both files aligned so a single adjustment does not become double tax. If you want help scoping your UAE-Saudi exposure, explore SBC's Transfer Pricing and Corporate Tax services, or contact the SBC team.

15/6/26 Bahrain's First Transfer Pricing

Page Title: Bahrain Transfer Pricing Guide: What It Means for UAE Groups
Meta Title: Bahrain Transfer Pricing Under the DMTT: A UAE Guide
Meta Description: A practical UAE guide to Bahrain's first transfer pricing guide under the DMTT, its scope, methods, documentation, and what it means for UAE groups.
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Secondary Keywords: Bahrain Local File Master File, UAE Bahrain cross-border transfer pricing, arm's length principle Bahrain, GloBE ETR transfer pricing, Bahrain related party transactions
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