English translation published by the Legislation and Legal Opinion Commission. The Arabic text published in the Official Gazette remains the legal reference in the event of any discrepancy.
Market Value replaces the agreed value for a Supply between Related Persons only when both conditions are met: the agreed value is below Market Value and the customer cannot deduct Input Tax in full.
Groups, Related Persons and internal-pricing, finance and tax teams.
A relationship alone does not trigger Market Value. Both conditions must coexist; where they do, the VAT base may exceed the contract or invoice price.
Current text
Must the agreed value be replaced?
- 1
Confirm the parties are Related Persons under the statutory definition.
- 2
Compare the agreed value with Market Value at the transaction date.
- 3
Determine whether the customer has a full Input Tax deduction right.
- 4
Retain valuation evidence and be ready to provide it within 30 days if requested.
Connected provisions
Official guides and tools
Below-market sale to a related company
If an asset is sold to a Related Person for 60 when Market Value is 100, the base does not automatically become 100. The customer's inability to deduct Input Tax in full must also be established.
Questions to help you apply it
- Are the parties Related Persons?
- Is the agreed value below Market Value?
- Can the customer deduct Input Tax in full?