��������Ƶ

A Cost Sharing Agreement sets out how multiple parties will split expenses for a shared project or venture in Saudi Arabia. These agreements are particularly common in joint ventures, research partnerships, and infrastructure projects where companies pool their resources while following the Kingdom's Commercial Companies Law.

The agreement spells out each party's financial responsibilities, payment schedules, and how specific costs get divided. It needs to align with Zakat, Tax and Customs Authority (ZATCA) requirements and typically includes details about expense tracking, audit rights, and dispute resolution methods under Saudi law. Many Saudi companies use these agreements for large-scale developments in sectors like oil and gas, construction, and technology.

Use a Cost Sharing Agreement when launching joint projects with other companies in Saudi Arabia, especially for capital-intensive ventures like construction developments, research initiatives, or technology implementations. This agreement becomes essential before any shared expenses begin, helping prevent financial disputes and ensuring clear accountability.

The timing is particularly important for projects requiring ZATCA compliance and those involving foreign partners under Saudi investment regulations. Companies often implement these agreements when establishing research centers, developing infrastructure, or running joint marketing campaigns. Having this agreement in place before the first invoice arrives protects all parties and streamlines expense management throughout the project lifecycle.

• Project-Based Agreements: Used for specific ventures with defined timelines, like construction or research projects, detailing cost allocation methods and payment schedules
• Ongoing Operations Agreements: Cover continuous shared activities between Saudi entities, including facility management, IT services, or administrative costs
• Research and Development Agreements: Tailored for scientific or technical collaborations under Saudi innovation initiatives, with special provisions for intellectual property
• Joint Venture Cost Sharing: Structured for formal business partnerships under Saudi Companies Law, including detailed expense categories and profit-sharing mechanisms
• Infrastructure Development Agreements: Specifically designed for large-scale public or private infrastructure projects, addressing both capital and operational expenses

• Joint Venture Partners: Companies entering shared business ventures in Saudi Arabia who need to formalize their cost-sharing arrangements
• Corporate Legal Teams: In-house counsel who draft and review Cost Sharing Agreements to ensure compliance with Saudi commercial laws
• Financial Officers: CFOs and finance directors who implement the cost allocation methods and monitor shared expense tracking
• Project Managers: Teams overseeing joint initiatives who rely on these agreements to manage budgets and resolve financial disputes
• External Auditors: ZATCA-approved professionals who verify compliance with Saudi tax regulations and proper cost allocation

• Project Scope: Define the exact activities, timeline, and shared resources covered by the agreement under Saudi commercial law
• Party Details: Gather official company registration documents, tax IDs, and authorized signatory information for all participants
• Cost Categories: List all anticipated expenses, including direct costs, overhead, and any excluded items
• Allocation Method: Determine how costs will be divided (percentage, fixed amounts, or usage-based) and align with ZATCA requirements
• Payment Terms: Establish invoicing schedules, payment methods, and dispute resolution procedures that comply with Saudi banking regulations
• Documentation System: Set up tracking mechanisms for shared expenses and reporting requirements

• Party Identification: Full legal names, commercial registration numbers, and authorized representatives per Saudi Companies Law
• Cost Definition: Detailed breakdown of shared expenses, allocation methods, and payment schedules
• Duration & Termination: Agreement period, renewal terms, and conditions for early termination
• Compliance Clauses: References to ZATCA regulations and applicable Saudi tax requirements
• Dispute Resolution: Specific procedures aligned with Saudi arbitration laws and local court jurisdiction
• Audit Rights: Provisions for financial review and record-keeping requirements
• Force Majeure: Events excusing performance under Saudi law

Cost Sharing Agreements differ significantly from Asset Purchase Agreements in their fundamental purpose and structure under Saudi law. While both involve financial arrangements between parties, they serve distinct business objectives.

• Purpose and Scope: Cost Sharing Agreements focus on ongoing expense allocation between multiple parties, while Asset Purchase Agreements deal with one-time transfers of ownership
• Duration: Cost Sharing typically involves continuous collaboration and periodic payments, whereas Asset Purchase represents a single transaction with defined closing terms
• Financial Structure: Cost Sharing divides expenses among participants based on agreed percentages or formulas, while Asset Purchase involves a fixed purchase price and payment terms
• Regulatory Framework: Cost Sharing falls under Saudi partnership and tax regulations, while Asset Purchase primarily involves property transfer laws and ZATCA considerations