Abstract

The purpose of this research to identify the existence of differences in taxes paid to the government due to different practices implemented in terms of transfer pricing by foreign companies operating in Saudi Arabia. The transfer pricing policies implemented by the foreign companies can lower the taxable income of the company which results in lower taxes for the companies. This study was conducted for multiple domestic and foreign countries operating in Saudi Arabia. Alhassan and Bajaher (2016), used different regression models to understand the relationships between transfer pricing, taxable income and the taxes paid by the companies operating in Saudi Arabia for the years 2016, 2017 and 2018 . These regression models were used to identify and measure the differences in taxes paid by the domestic and foreign companies operating in the country. The results of the statistical analysis showed that foreign companies pay more taxes as compared to the domestic companies in the country. The analyses showed that there is a mean difference of nearly 1.8% in the taxes paid by the companies based on their locations.