Saudi Arabia

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

General tax rate is 20%
Tax rate for Petroleum or gas related activities companies range from 30% to 85%.

   
Tax rate on long-term capital gains Long-term capital gains are treated as ordinary income and taxed at 20%
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies Dividends are taxable at a 5% rate since the new tax law came into effect on 30 July 2004.
   
Tax rate on branches Branches are imposed tax on profits made in Saudi Arabia.




Income tax

Fiscal year The financial year begins on 1st January and ends on 31st December of each year.
   
Income tax rate Saudis and GCC nationals are not subject to income tax. Foreign employees are not taxed on their wages and salaries. Self employed foreigners who are resident in Saudi Arabia are not taxed on income from non-Saudi sources but only on Saudi-source income. Wherever applicable, the tax rate is progressive from 5 to 30% and divided into 5 brackets:
0-6,000 SR*0 - 5%
6001-16,000 SR5%
16,001-36,000 SR10%
36,001-66,000 SR20%
   
Tax deductions or other allowances There are several types of tax deductions for non-residents on their income generated out of activities in Saudi Arabia. For more details, the concerned person has to get in touch with the Ministry of Trade and the local fiscal authorities.
In application of the article 10.1 of the agreement of non-double taxation; income, which a resident of Saudi Arabia gets from a liberal or other independent activities, is taxable only in Saudi Arabia. In this case, the taxpayer is required to withhold tax on a deemed profit basis and to remit the withheld tax to the DZIT when it files its own tax return. However, personal deductions are not deductible.



VAT rates

Standard rates No VAT, indirect tax or sales tax exists in Saudi Arabia.
   
Reduced rates There is no VAT in Saudi Arabia.



Other important taxes


Name of tax
Rate
Religious tax called Zakat .  
The rate is 2.5% of capital employed.  


 

Accounting

Introduction
Saudi accounting rules are governed by the Ministry of Trade, which publishes an official guide about all the accounting practices.


Obligations and publications
Companies in Saudi Arabia have at least to fill an accounting book and a projected balance sheet with annual results as well as a profit and loss account.

Certification and auditing
The external control of accounts must be given to a body of auditors chosen by the company.

Professionals and representative organizations
There is an accountant association in Saudi Arabia : the Saudi Organisation for Certified Public Accountants. ( SOCPA).

Comments
The role of committees is very important, especially the committee of audit.



Useful links
For further information, please contact the SAGIA (Saudi Arabian General Investment Authority).

Last modified in 2006 - ongoing update
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