Saudi Income Tax Law: everything to know about the possible reform

The newly proposed law is currently open for public feedback…

The Kingdom of Saudi Arabia has recently announced its plans to introduce a new Saudi Income Tax Law as part of a reform to modernise its tax system, attract international investments, and insure complete transparency.

In October, the Zakat, Tax and Customs Authority (ZATCA) released a draft of the laws in line with Vision 2030 for public input until Monday December 25.

According to Arabian Business, under the draft of the income tax law (DITL), persons currently subject to corporate income tax (CIT) in Saudi Arabia include:

  • Those with shares in resident companies owned by non-Saudi persons (and non-GCC person);
  • Persons who carry out activities in the field of natural gas investment, oil and hydrocarbons production, or both;
  • Non-residents who have a permanent establishment in KSA;
  • A non-resident who has income from a source in KSA; and
  • A natural person who carries out activities in KSA in a continuous and independent manner; and
  • Owners of shares in entities that carry out oil and hydrocarbons production (except publicly listed entities)

The draft income tax law proposes that all income sourced in Saudi Arabia will be subject to corporate income tax regardless of monetary threshold. Taxable income includes income from properties, shares in Saudi companies, services performed in Saudi Arabia, and income generated by a non-resident’s Saudi permanent establishment.

Income exempt from tax according to the draft includes income derived from the disposal of securities that are traded in the Saudi stock exchange regardless of whether or not the disposal is carried out through the Saudi stock exchange, a recognised foreign stock exchange, or any other means.

To record your opinion visit: istitlaa.ncc.gov.sa

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