The tax landscape in the Kingdom of Saudi Arabia (KSA) is witnessing a rapid transformation. The consolidation of the Corporate Income Tax (CIT) authorities with the Customs authorities have led to the transition of the former General Authority of Zakat and Tax (GAZT) to the Zakat, Tax and Customs Authority (ZATCA).
The objective of the transition was to ensure a greater level of coordination between the two authorities. This also meant a fresh set of challenges for taxpayers in addressing joint queries from ZATCA, covering Value Added Tax (VAT), Corporate Income Tax (CIT) and Customs. A frequent question that comes to mind is how do Customs, VAT and Transfer Pricing (TP) interplay and relate to the import of goods from related parties. The objective of the TP and Customs authorities is to ensure that goods are purchased at a value which is consistent and at a fair market value.
However, the end result could be conflicting due to the nature of the transaction flow.
Source Deloitte
