Transfer Pricing Compliance – Country-by-Country Reporting (CbCR)
Overview
Multinational enterprise (MNE) groups with a calendar year-end should note that the Country-by-Country (CbC) Report for FY2024 must be filed with ZATCA by December 31, 2025. This is a key annual compliance obligation for qualifying groups and forms an integral part of Saudi Arabia’s broader commitment to international tax transparency and BEPS compliance.
Who Is Affected?
This requirement applies to:
- Saudi headquartered MNE groups where the Ultimate Parent Entity (UPE) is a resident in Saudi Arabia and the group meets the SAR 3.2 billion consolidated revenue threshold in the preceding year; and
- Inbound MNE groups whose UPE is a resident in a jurisdiction without an active CbCR exchange arrangement with Saudi Arabia.
Groups falling within these categories are required to file their CbC Report directly with ZATCA.
Why This Matters?
As the global tax landscape evolves, CbC information is increasingly being used by tax authorities to identify profit allocation risks and ensure alignment between reported profits, substance, and value creation.
Moreover, for groups operating or having presence in jurisdictions that have enacted the OECD’s BEPS 2.0 Pillar Two rules should focus on the concept of a Qualified CbC Report, which may influence eligibility for transitional safe harbours under Pillar Two. In 2025, the following MNEs would be impacted:
- Saudi headquartered MNEs in scope of Pillar Two rules in overseas jurisdictions enacted Pillar Two rules.
- Inbound MNEs in scope of Pillar Two rules in their jurisdictions and having presence in Saudi.
What Is a “Qualified CbC Report”?
The term Qualified CbC Report originates from the OECD’s Pillar Two Administrative Guidance, particularly in relation to the Transitional CbCR Safe Harbour.
It refers to a CbC report that:
- Is prepared using consistent and reliable financial data, derived from Qualified Financial Statements (QFS); and
- Meets the OECD’s standards for calculating Global Anti-Base Erosion Rules (GloBE) effective tax rates.
MNEs intending to rely on the Transitional Safe Harbor under Pillar Two should therefore assess whether their existing CbC reporting framework satisfies these qualification requirements, or whether process enhancements are required.
Action points
- Verify whether your MNE group meets the CbCR filing threshold or falls within the inbound reporting category in Saudi Arabia.
- Start data collection and validation for the FY2024 CbC Report well in advance of the December 31, 2025, filing deadline.
- For groups subject to Pillar Two, evaluate whether your current CbC report qualifies as a “Qualified CbC Report” for safe harbour purposes.
- Consider potential process alignment between CbCR and Pillar Two data reporting requirements.
A&M Insight
With multiple tax transparency regimes now converging, MNEs should view 2025 as a pivotal year for data readiness and consistency across reporting frameworks. Early internal reviews can help ensure a smooth filing process, preserve potential Pillar Two safe harbor benefits, and avoid compliance penalties or data mismatches across jurisdictions.
