Transfer Pricing in the GCC: Building a Compliant Local File After CbCR

The Gulf’s transfer-pricing landscape has evolved quickly. Country-by-Country Reporting (CbCR) was the first milestone—Saudi Arabia in 2019, Qatar in 2021, the UAE from 2023.

Now tax authorities are moving to the next layer of documentation: the Local File (and Master File).

If your group’s consolidated turnover exceeds the local threshold—or you simply transact with related parties across borders—you will need a robust Local File by your 2025–26 filing season.

This guide explains who must file, the mandatory sections, GCC country differences, and a six-step roadmap to produce an audit-ready Local File this year.

1. CbCR vs Local File—Why Both Matter

Document	Purpose	Filing Thresholds (GCC)	Filing Deadline*
CbCR	Top-level revenue & profit allocation	≥ SAR 3.2 bn (KSA) AED 3.15 bn (UAE) QAR 3 bn (Qatar)	12 months after FY-end
Local File	Transaction-level pricing justification	≥ SAR 48 m (KSA) ≥ QAR 10 m (Qatar) ≥ AED 50 m (UAE—draft)	On request (30 days KSA) or with return (Qatar)

* Deadlines confirmed as of August 2025; UAE Master File/Local File rules expected to mirror ESR timing (nine months after FY-end).

2. Core Components of a GCC-Compliant Local File

1. Local Entity Overview – ownership, management, organisational chart.
2. Controlled Transactions – detailed list by counter-party, value, currency.
3. Functional Analysis (FAR) – functions, assets, risks borne by the local entity.
4. Benchmarking Study – arm’s-length range using TNMM, CUP, etc.
5. Financial Information – segmented P&L and balance sheet tying to statutory accounts.
6. Supporting Documents – intercompany agreements, invoices, APAs.

3. Country-Specific Variations (2025)

Requirement	Saudi Arabia	Qatar	UAE (draft CPD)
Language	Arabic or English	English	English
Submission	30 days upon request	Attach to tax return	Expected “upon request”
Benchmark refresh	Every 3 yrs (annual update)	3 yrs	3 yrs
Penalties	Up to SAR 500k	Up to QAR 300k	Admin fine TBD

4. Data Sources & Technology

1. ERP & Accounting – segment transactions by counter-party and GL code.
2. CRM / Billing – pull transaction volumes, pricing terms.
3. Third-party databases – Thomson Reuters, RoyaltyRange, TP Catalyst for benchmarking.
4. Document-management tools – store PDF agreements, board minutes, AP invoices.

5. Six-Step Roadmap to Build Your 2025 Local File

1. Threshold test – confirm if turnover or intercompany value exceeds local limit.
2. Gather legal docs – latest AOA, intercompany agreements, CbCR XML.
3. Run functional interviews – map value-creation functions (sales, R&D, IP).
4. Extract trial balance data – isolate related-party P&L lines; reconcile to audited FS.
5. Perform benchmarking – choose TNMM/CUP, screen comparables, derive arm’s-length range.
6. Draft & review – compile narrative + financial tables, get sign-off from finance and tax.

Typical timeline: 8-10 weeks from data extraction to final PDF.

6. Common Pitfalls (and How to Avoid Them)

Pitfall	Quick Fix
Using global Master File as Local File	Tailor the functional analysis to local entity only.
Aggregating services & goods in one TNMM margin	Split by transaction type; different comparables required.
Ignoring foreign-currency revaluations	Restate to functional currency before benchmarking.
Late data pulls from ERP	Schedule quarterly exports to avoid year-end bottleneck.

7. Compliance Checklist 2025

• Threshold exceeded? (Yes/No)
• Intercompany agreements current?
• FAR tables completed?
• Benchmarking updated (< 3 yrs old)?
• Segmented financials tie to audit?
• PDF & Excel workpapers archived (6 yrs min)?

8. How INDGenius AccountingHelps

• Threshold & risk assessment – 30-minute call to confirm Local-File eligibility.
• Benchmarking & documentation – full study using RoyaltyRange / TR data.
• Quick-turn review – we sanity-check your draft file in 48 hours.

Book a discovery session now—avoid last-minute penalties and keep the tax authority off your back.

FAQ – Transfer Pricing & Local File in the GCC

Q1. Does every GCC country require a Local File?
No. Saudi Arabia and Qatar mandate it now. The UAE is expected to require Local & Master Files once final regulations are issued. Oman, Kuwait and Bahrain have not yet introduced formal TP documentation rules.

Q2. What is the turnover threshold for a Local File in Saudi Arabia?
Groups with a consolidated turnover ≥ SAR 48 million must prepare a Local File.

Q3. Can I submit my Local File in English?
Yes for Qatar and the UAE; Saudi Arabia accepts English but may request Arabic translation.

Q4. How often must I update my benchmarking study?
Every three years, with a financial-data refresh annually.

Q5. What penalties apply for non-submission?
Saudi Arabia: up to SAR 500,000. Qatar: up to QAR 300,000. UAE amounts TBD but expected to align with regional norms.