A non-resident company carrying out business activities in Saudi Arabia through a permanent establishment is taxed on income arising from or related to the permanent establishment.
No foreign tax relief is provided for in Saudi Arabia.
Resident Saudis and non-residents who conduct business through a permanent establishment and/or with income sourced from Saudi Arabia are subject to tax.However, they are not taxed on personal or employment income but only on business income earned.The disposal of shares in a resident company is typically subject to a 20% capital gains tax.However, if the shares were acquired after 30 July 2004 and the transfer is affected in accordance with the provisions of the Saudi stock market regulations, the capital gains on disposal are tax exempt.Individuals not conducting business or professional activity are not taxed on interest or dividend income.
An individual is resident in Saudi Arabia if (a) he/she has a permanent residence and is physically present in the Kingdom for a period more than 30 days in a tax year, or (b) he/she does not have a permanent residence and is physically present for more than 183 days in a tax year.
Saudi standards includes requirements on matters that are not covered by IFRS (such as Zakat or religious tax).
SMEs currently use standards issued by SOCPA, however the transition to IFRS for SMEs is expected to take place in 2018. A taxpayer's tax year begins on the date the taxpayer obtains a commercial registration or license, unless otherwise provided.
A taxpayer may use a different tax year in the following circumstances:- the different year was approved by the Directorate before the effective date of the income tax regulations;- the taxpayer uses a Gregorian financial year;- the taxpayer is a member of a group of companies or a branch of a foreign company that uses a different financial year.
The Saudi Organisation for Certified Public Accountants (SOCPA) promotes the accounting and auditing profession in the country.
The accountancy professional can practice provided their name is listed in the 'Register of Certified Public Accountants' with the Ministry of Commerce and Industry.