On April 14, 2026, the United States and Saudi Arabia signed a new Tax Information Exchange Agreement (TIEA) with the aim of strengthening tax cooperation and facilitating the exchange of information between the two jurisdictions.
The agreement represents a significant step forward in international tax transparency and has new implications for companies with cross-border operations, particularly in the area of Transfer Pricing .
What does the new TIEA establish?
The agreement will allow tax authorities in both countries to exchange information relevant to tax administration and enforcement. In the case of Saudi Arabia, the Ministry of Finance and the tax authority ZATCA will participate, while in the United States the counterpart will be the IRS.
The scope of the exchange includes various taxes, among them:
- Income tax
- Zakat
- Value-Added Tax (VAT)
- Excise Tax
- U.S. Federal Taxes
The agreement strengthens mechanisms for cooperation and the exchange of tax information between both jurisdictions, primarily at the request of the competent tax authorities.
Impact on Transfer Pricing
The signing of this agreement increases the level of oversight over related-party transactions between companies in Saudi Arabia and the United States.
In this context, multinational organizations must pay special attention to the consistency of their Transfer Pricing documentation, as well as to the correct classification of intra-group payments and the economic rationale for their operations.
Tax authorities will have greater tools to:
- Verify consistency between tax and financial reports
- Cross-check information across jurisdictions
- Detect potential risks of tax base erosion
- Review Transfer Pricing policies and intra-group agreements
Furthermore, the agreement complements other international transparency standards already in place, such as FATCA and Country-by-Country Reporting (CbCR).
Increased scrutiny and compliance risks
Growing international cooperation on tax matters reflects a global trend toward more rigorous scrutiny of international operations.
Companies conducting business between Saudi Arabia and the United States must assess whether their current Transfer Pricing policies align with the arm’s length principle and whether they have sufficient documentation to respond to potential information requests.
Robust and up-to-date documentation will be key to mitigating tax risks, avoiding adjustments, and reducing reputational risks arising from international audit processes.
The entry into force of the TIEA between Saudi Arabia and the United States reinforces the global landscape of tax transparency and cooperation among tax authorities.
For multinational companies, this new framework necessitates strengthening their tax compliance strategies and comprehensively reviewing their Transfer Pricing policies in an environment of increased information exchange and international oversight.
At TPC Group, we support companies in reviewing and strengthening their Transfer Pricing policies, ensuring compliance with international standards and reducing tax risks in cross-border transactions.
Source: HomeTreasure