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How will you specify the arm’s length price for each transaction?

The arm’s length price of a transaction is defined by choosing and employing common appropriate practices as stipulated under Articles 6 and 7 of Transfer Pricing Bylaws that implement the most credible measures of an arm’s length result under specified facts and conditions:
  • Comparable Uncontrolled Price (“CUP”) Method
  • Resale Price Method
  • Cost Plus Pricing Method
  • Transactional Net Margin Method (“TNMM”)
  • Transactional Profit Split Method.
It should be taken into consideration that the most suitable method should be chosen in line with the following factors:
  • Appropriateness of the applied methods for the transaction
  • Availability of all substantial information needed to implement the transfer pricing method
  • Level of comparability required based on the method
  • The extent to which transactions between related persons and transactions are similar for the purpose of comparison.​​
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Last Update: 04 Sep 2020 06:06 PM Saudi Arabia Time