Income tax in Saudi Arabia
:Filing tax returns is mandatory, for all the following
A. Resident financial company with shares owned by non-Saudi partners
B. Non-Saudi resident natural person participating in activities within the Kingdom
C. Non-resident individual participating in activities within the Kingdom through a permanent establishment
D. Non-resident individual earning other income subject to tax from sources within the Kingdom
E. Individual engaged in natural gas investment
F. Individual engaged in oil and hydrocarbon production
Taxable Base
A. The taxable base for a resident financial company is the shares owned by non-Saudi partners from its income subject to tax from any activity within the Kingdom, deducted by the recognized expenses under this system.
B. The taxable base for a non-Saudi resident natural person is their income subject to tax from any activity within the Kingdom, deducted by the recognized expenses under this system.
C. The taxable base for a non-resident individual participating in activities within the Kingdom through a permanent establishment is their income subject to tax from the activity of that establishment or related to it, deducted by the recognized expenses under this system.
D. The taxable base for an individual natural person is calculated independently from others.
E. The taxable base for a financial company is calculated independently from contributors or partners.
Tax Rates
A. The tax rate on the taxable base for a resident financial company, non-Saudi resident individual, and non-resident individual resulting from activities within the Kingdom through a permanent establishment is twenty percent (20%) of their income subject to tax. B. The tax rate on the taxable base for a taxpayer in the natural gas investment sector is thirty percent (30%). C. The tax rate on the taxable base for a taxpayer in oil and hydrocarbon production is eighty-five percent (85%).
Tax Year
A. The tax year corresponds to the fiscal year of the state. B. A taxpayer is allowed to use a twelve-month period different from the state’s fiscal year under specified regulations. C. If a taxpayer changes their tax year, the period between the last complete tax year before the change and the start date of the new tax year is considered a short and independent financial period.
Tax Payment
Taxpayers are required to pay the due tax based on their return within one hundred and twenty days from the end of their tax year.
Accelerated Tax Payments
A. Taxpayers generating revenue exceeding 2 million Saudi Riyals in the tax year must make three accelerated payments at specified times.
B. The payment amount is calculated using a percentage of the unpaid tax, and the payment can be reduced if the taxpayer’s income for the tax year significantly decreases compared to the previous year.
C. The payment made is considered a payment on account of the total tax liability for the tax year.
Penalties
A. A penalty of one percent (1%) of total revenues, with a maximum of twenty thousand Saudi Riyals, is imposed on a taxpayer failing to comply with the filing requirements.
B. In case of failure to submit the return on time, a larger penalty is imposed based on a progressively increasing percentage depending on the delay period from the regulatory deadline.
C. The imposed penalty is calculated based on the difference between the due tax amount and the amount paid.
D. The provisions of this system regarding collection and mandatory procedures apply to penalties as they apply to taxes.
