The following words and phrases, wherever mentioned in the Law shall have the meanings ascribed thereto hereunder unless the context indicates otherwise. (a) Every taxpayer required to file a declaration shall file it in the prescribed form, include its identification number, and pay the tax due thereon to the Department. The annual cash flows shall be calculated by adjusting the natural gas investment tax base as follows: (a) Adding back any operational losses carried forward from previous years. The new fee will be 100 Saudi riyals (SAR) per dependant per month, around £21 or $27. (d) A person not complying with the provisions of paragraphs (b) and (c) of this Article is obligated to pay the Department an amount equal to the value of the properties in its possession, not exceeding the amount for which the freezsing was made. The Regulations shall determine the rules and restrictions specifying such allocations. (b) A partner shall take the cost base of the asset which equals the market value of the asset. The natural gas investment tax rate for any taxable year shall be determined on the basis of the internal rate of return on the cumulative annual cash flows of the taxpayer derived from natural gas investment activities. No income is taxed by Saudi Arabia, so the source of income does not matter. The Arabic version is the governing text. A taxpayer is subject to income tax stipulated under paragraph (b) of Article 7 of this Law on the following: (a) Its income from processing and fractionation of natural gas in a licensed independent plant. (b) A notice may be issued on the taxpayer's employer, and its validity may be limited to a specified period. (d) A payment made pursuant to this Article is considered a payment in advance against the taxpayer's total tax for the taxable year for which the payment was made. Saudi Arabia’s Minister of Finance issued Ministerial Resolution (MR) No. Operational losses incurred before the entry into force of the Council of Ministers' resolution number 3, dated 5/01/1421 H. may not be carried forward. (e) If an individual taxpayer splits its income and divides it with another person, the Department may adjust the tax base of the taxpayer and the other person to prevent any reduction in the due tax. The following types of income are exempt from income tax: (a) capital gains realized from disposal of securities traded in the Stock Market in the Kingdom in accordance with restrictions specified in the Regulations. (b) In addition to the penalties stipulated in Article 76 and in paragraph (a) of this Article, the taxpayer shall be subject to a fine of twenty-five percent (25%) of the difference in tax resulting from the taxpayer's or its certified accountant's providing false information or from fraud with the intention of tax evasion, and in particular in the following cases: Article 78: Liability of Certified Accountants. Cost base adjustments are distributed among assets according to the percentage difference between the cost base and the market value. A taxpayer shall pay its due tax in accordance with the declaration within one hundred and twenty days from the end of its taxable year. (c) The Department may re-allocate revenues and expenses in transactions among related parties or parties under the same body, so as to reflect the returns that would have resulted if the parties were independent and unrelated. (i) Where all the assets in a group are disposed of, the balance of the group may be deducted at the end of the year. ... Social insurance or any other contributions due on the employees as provided for by law. The provisions of this Law which are applicable to partnerships shall apply to the shares of general partners in partnerships limited by shares. (c) The Department has the power to reduce any of the payments due under this Article if it is convinced that the taxpayer's income for the taxable year, with the exception of the income of which tax is withheld from the source under Article 68 of this Law, shall be substantially less than the amount of income for the preceding year. (b) A person withholding tax under this Article shall comply with the following: c) The person responsible for withholding tax under this Article is personally liable to pay the unpaid tax and any delay fines resulting therefrom, in accordance with paragraph (a) of Article 77 of this Law, if any of the following cases applies to him: (d) In addition to what is stated in paragraph (b) of this Article, if tax is not withheld in accordance with the provisions of this Article, the beneficiary remains indebted to the Department for the amount of the tax and the Department may recover it from him, his agent or sponsor. (a) A taxpayer not complying with the provisions of paragraphs (a), (b), (d) and (f) of Article 60 of this Law shall be subject to a fine of one percent (1%) of its gross income provided that the fine does not exceed twenty thousand Saudi riyals (SR20,000). (d) For purposes of paragraphs (b) and (c) of this Article, a profiting asset is the asset that has a cost base lower than the market value and a losing asset is the asset that has a cost base higher than its market value. The taxpayer shall file separate tax returns and audited closing accounts for each gas exploration and production contract or agreement. A) Income tax law amendment. Saudi Arabia: Income Tax Law Date of adoption 6 March 2004 Entry into force In effect Text versions Arabic Source: – Kingdom of Saudi Arabia Bureau of Experts at The Council of Ministers, accessed: 21 May 2013. Only non-Saudi investors are liable for income tax in Saudi Arabia, and GCC nationals are considered as Saudi citizens for tax purposes. The partner is treated as having disposed of part of all of his share in the partnership, if the estimated distribution exceeds the partner's cost base in the partnership. (c) The cost base decreases, but not below zero, by the cost of distributions from the partnership to the partner and by the partner's share of partnership losses, and expenses as well as nondeductible expenses of the partnership, except for capital items. a non-resident who conducts business in the Kingdom through a permanent establishment. Article 19: Expenses for Geological Surveying and Preliminary Work for the Extraction of Natural Resources. M/22 dated 4/5/1425H (corresponding to 22/6/2004AD) WITH THE HELP OF ALMIGHTY ALLAH, WE, FAHD IBN ABDULAZIZ AL-SAUD, KING OF THE KINGDOM OF SAUDI ARABIA, Upon the Article (70th) of the Basic Law of Saudi Arabia, issued upon the Royal Decree No. Ten percent (10%) of the unpaid tax if the delay exceeds thirty (30) days and does not exceed ninety (90) days of the date specified by Law. (g) When fifty percent (50%) of the compensation of the assets disposed of during the current and previous taxable years exceeds the balance of the value of the group at the end of the taxable year, regardless of the amount of such compensation, the value of the group shall be reduced to zero and the excess included in the taxpayer's taxable. (b) The cost base increases by the amount of a partner's share in a partnership's income (along with his exempt income) included in the partner's gross income. a person engaged in the field of natural gas investment. (c) In determining taxable income, a natural person may not take into account gain or loss on disposal of an asset that is not for use in the activity. No income is taxed by Saudi Arabia, so the source of income does not matter. (b) The cost of goods sold during the taxable year shall be deducted. (d) The Department and the taxpayer may appeal the decision of the Preliminary Objection Committee before the Appeal Committee within sixty days from the date of receiving the decision. 4. (f) fines and financial penalties paid or payable to any party in the Kingdom, excluding those paid for breach of contractual conditions and obligations. 5122 dated 24/12/1441 AH corresponding to August 14, 2020 has been issued to amend Article (1) Para. (a) Expenses incurred by the taxpayer for the repair or improvement of depreciable assets in each group may be deducted. (b) The gross income and expenses of a resident company, and any other taxpayer who keeps or is required by Law to keep commercial books according to the accounting principles generally accepted in the Kingdom, are determined according to such books after adjustments of the accounts so as to conform to the rules of this Law. (g) If tax is withheld for an amount paid to a taxpayer which is included in its tax base, the tax withheld shall be deducted from the tax due on the taxpayer against the tax base. For the purposes of this Law, investment funds shall be considered capital companies, Partnership: A general partnership, a silent partnership, or a limited partnership, Resident: A natural person, a company that satisfies the residency conditions of Article Three of this Law, any governmental department or ministry, or public entity, or any other corporate person or entity formed in the Kingdom, Non-resident: Any person who does not satisfy the requirements of the status of a resident, Saudi citizen: A person holding Saudi nationality or who is treated as such, Commercial books: Set of commercial books kept by the taxpayer in which all commercial transactions are recorded, as described in Royal Decree No. (l) Where an asset owned by a taxpayer is converted to personal use or otherwise ceases to be used in the generation of income, the taxpayer is deemed to have disposed of the asset for its market value, with the recognition of the resulting gain but not the loss. (l) As an exception to the provisions of the previous paragraphs, assets under Cuild, Operate and Transfer (BOT) or Build, Own, Operate and Transfer (BOOT) contracts may be depreciated over the contract period or over the remaining period of the contract, if acquired or renewed during that period. 1 defines activity as commercial activity in all its forms that is … Tax Treaty. (a) A partnership's transfer of a non-cash asset to a partner therein, including liquidation of the partner's share, is treated as a disposal of the asset by the partnership, with declaration of gain or loss on the transfer date. A Royal Decree No. (f) A partnership shall file an information declaration in accordance with Article 36 of this Law, on or prior to the sixtieth day following the end of its taxable year. Amending depreciation groups and rates stipulated in Article 17 of this Law. (a) If the taxpayer fails to pay a tax due by the dates specified by Law, the Department may seize the taxpayer's movable and immovable properties as allowed by Shariah . Salary & Wages in Saudi Arabia and its Deducution Rule. The Minister may delegate what he deems fit of this authority to the Director-General of the Department. Article 64: Related Persons and Persons under Common Control. The Zakat is an annual flat rate of 2.5 percent of the assessable amount. 5123 has been issued to reflect the same amendment from a Zakat perspective. The Department: Department of Zakat and Income Tax, Tax: Income tax imposed in accordance with this Law, Taxpayer: Any person subject to tax in accordance with this Law, Activity: A commercial activity in all its forms, or any vocational, professional or other similar activity for profit. Corporate tax in Saudi Arabia. by the law. (b) A bad debt may be deducted when stricken off the taxpayer's books when there is suitable evidence proving the impossibility of collecting it, as specified in the Regulations. A resident is not subject to any tax on employment related income or salary. filing forged or fictitious invoices or documents, or changing of purchase or sale invoices or other documents with the intention of understating profits or overstating losses. Article 42: Change of partners in a partnership. July 30, 2004 ), effective 13 Jumah II 1425 ( March 6 2004. 6, 2004 ), amending the corresponding provisions of the partner 's Interest a certificate the. The Zakat is an annual flat rate of 2.5 percent of the asset and expenses... A permanent establishment in the property beyond the official sale points transporting natural gas a! Is located in the field of oil and hydrocarbons production also be responsible the... 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