OECD proposes revisions to intra-group service guidance: Key transfer pricing considerations for MNEs

On 1 June 2026, the Organization for Economic Cooperation and Development (OECD) released a public consultation document proposing revisions to Chapter VII, “Special considerations for intra-group services,” of the OECD Transfer Pricing Guidelines. The revisions provide expanded guidance on aspects including the delineation of intra-group services, the application of the benefit test, and the determination of arm’s length charges.

Given that Saudi Arabia’s transfer pricing (TP) framework is broadly aligned with OECD principles, the proposed revisions may have practical implications for multinational enterprise (MNE) groups operating in the Kingdom, particularly in relation to the documentation and substantiation of intra-group service arrangements.

Understanding intra-group services

An intra-group service is performed by a member of an MNE group for the benefit of its affiliates. Typical examples of intra-group services include management, IT, legal, accounting, technical and HR support. As the beneficiaries of intra-group services are typically based in several jurisdictions, intra-group service transactions are subject to the TP laws and regulations of their countries.

Saudi Arabia’s TP framework for intra-group services

Saudi Arabia introduced TP regulations in 2019, and they were extended to Zakat payers effective 2024. The regulations apply to tangible, intangible, financial transactions and intra-group services, and they are based on the OECD guidelines, which incorporate the arm’s length principle for pricing related party transactions.

Hence, intra-group service transactions involving a Saudi-based related party that is subject to tax or Zakat should be priced as if the service was provided to or by a third-party. Where the pricing differs from an arm’s length price, the Zakat, Tax, and Customs Authority (ZATCA) may adjust the inter-company price. An adjustment will likely result in either a decreased deduction or increased taxable income depending on whether the Saudi-based related party is the beneficiary or provider of the intra-group service.

Proposed revisions to OECD intra-group services guidance

Of most significance is the requirement to delineate the intra-group service transaction according to the guidance in Chapter I of the OECD guidelines.
This mandatory first step should be performed before benefit test analysis and method selection for pricing the transaction.
A comprehensive functional analysis should be performed, to identify the commercial and financial relations between associated enterprises to identify the economically relevant characteristics of the transaction.
The mere existence of a legal contract or proof of payment will no longer suffice.

A new four-part framework for performing entity-by-entity benefit test analysis is required where there are multiple recipients of intra-group services.
Analysis should no longer be on an outcome-based approach, rather the expected commercial value of the service should be considered and documented.
Greater emphasis on distinguishing shareholder activities from chargeable services.
CEO and board activities should no longer be automatically characterized as shareholder services, and hence non-chargeable services.
Where CEO and board services are provided to multiple affiliates, costs need to be apportioned appropriately and there may be a need for apportionment for mixed activities.

Another significant change involves the introduction of the profit split method for high value, intangible driven service transactions.
The profit split method may also be appropriate where related parties share economically significant risks associated with the service transaction.
This change reflects the increasing use of technology in the provision of intra-group services and the impact of the broader digital economy on cross-border transactions.
Where intra-group services are linked to the transfer of goods or intangibles, the aggregation and segregation principles in Chapter III of the OECD guidelines should be considered before concluding on the existence of a separate service transaction.

Introduction into Chapter VII of a new section dedicated to documentary evidence, which is aligned with Chapter V of the OECD guidelines.
Higher burden of proof is now required with an explicit requirement to document how the services provide commercial or economic value to the beneficiary.

The consultation document also includes 21 new examples and case studies covering the above topics.
One of the examples references AI and machine learning by considering their implications on TP. This reflects the increasing use of AI and other technology to prepare TP documentation and the creation of economic value across borders.

Key takeaways

The revisions to Chapter VII are the most significant in over a decade as they modernize the approach to pricing intra-group services.
This is reflected in the adoption of the profit-split method to price transactions involving significant functional contributions, the increasing use and transfer of intangible assets embedded in intra-group services and the assumption of economically significant risks.
The revisions also substantially increase the economic and documentary burden on MNE groups with far greater granular analysis required to meet the expanded benefit test requirements.

The consultation document (accessible here) offers stakeholders an opportunity to submit feedback and responses to specific questions by 22 July 2026.

For guidance on the proposed revisions to Chapter VII or inquiries regarding the TP implications for Saudi MNEs with intra-group service transactions, please contact our KPMG professionals.