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Zakat is levied on every Saudi or GCC state’s establishment that suffices the Kingdom’s residency requirements and conditions. It is also levied on the shares of Saudi partners in mixed companies.
Non-Saudi establishments: Income tax is levied.
Saudi or GCC establishments: Zakat is levied (if residency conditions are satisfied by GCC establishments).
Mixed establishments: Zakat is levied upon the Saudis’ share of the capital. Income tax is levied upon the non-Saudi share of net profit.
Beneficiaries of Social Insurance.
-Zakat is not levied on such entities if the following obligations are met:
-The funds are not owned by a particular person.
-The revenues are allocated for general charitable purposes.
-The charity is licensed by accountable authorities, and its objectives are identified.
GAZT is responsible for collecting Zakat from all establishments subject to Zakat Law. It deposits the collected Zakat in the Saudi Arabian Monetary Agency's account allocated for the Ministry of Social Affairs.
The zakat payable amount is identified according to the filed Zakat Returns. Then, the establishment's due Zakat is estimated according to its filed returns. Zakat due amount equals (2.5%) of the Zakat Base. Zakat Base represents the total sources of funding, excluding fixed assets and the like. Finally, GAZT calculates Zakat Base in according to the following formula:
Zakat Base + total sources of funding – fixed assets and the like.
All due payment can be paid to the General Authority of Zakat and Tax through SADAD payment system via code no. (020).
It is not permissible to delay the payment of due Zakat.
Any Zakat evasion can be reported by contacting the following channels, noting that such reports are handled with high confidentiality:
GAZT’s website: WWW.GAZT.GOV.SA
Email: Taxevasion@gazt.gov.sa
Call Center: 19993
Twitter Account: @gazt_care
All ordinary and necessary expenses required for the activity, whether they were already paid or still payable in order to reach the net result of the activity, are deductible as per to the following requirements:
It should be an actual expenditure substantiated by supporting documents or other proofs that allow GAZT to confirm them even if it is linked to previous years.
It should be relevant to business activity, not to personal expenses or other pursuits.
It should not be of capital nature. If capital expenses are involved within the expenses, the result of the business activity will be amended and the capital expenditure will be added to the fixed assets and addressed according to the regular percentages.
The establishment is not permitted to deduct the employee’s share in such funds from Zakat Base.
We need a definition for Zakat Return. A Zakat Return is required to be filed by any establishment that practices any profitable or business activity.
There are two types of Zakat Returns:
Zakat Accounts Return: for establishments that have regular accounts (financial statements).
Zakat Estimated Return: for Saudi and GCC establishments, that meet the terms of residency, and in case such establishments do not own regular accounts.
Every establishment subject to Zakat is obligated to file its zakat returns within 120 days as of the end of its fiscal year through GAZT online portal.
The taxable person who has terminated his business activity should notify GAZT within 60 days from the termination date, file confirmation of financial obligations clearance.
A Zakat Return is amended either electronically by the GAZT portal or by field inspection.
Financial statements for Zakat propose are required to be audited by an independent certified public accounting firm before filing them.
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The zakat payable amount is identified according to the filed Zakat Returns. Then, the establishment's due Zakat is estimated according to its filed returns. Zakat due amount equals (2.5%) of the Zakat Base. Zakat Base represents the total sources of funding, excluding fixed assets and the like. Finally, GAZT calculates Zakat Base in according to the following formula:
Zakat Base + total sources of funding – fixed assets and the like.
All payments made through the app or portal are accessible on the website.
Unless expressly exempt in the Bylaws, all related-persons transactions, regardless of their nationality, are within the scope of the Transfer Pricing Bylaws as long as the transaction falls within the definition provided in the Bylaws and as long as one of the parties to the transaction is at least a person subject to the Transfer Pricing Bylaws.
The purpose of transfer pricing is to ensure that all transactions between related persons are priced at an arm’s length basis. Transfer pricing is a concept used for taxation purposes; it is not in and of itself a tax (such as VAT). However, the underlying principle of transfer pricing (arm’s length) is one that should be reflected when calculating taxable income (tax base). This is to assure that profits are not displaced through related person transactions, thus guaranteeing that tax on profit is levied justly. Any transfer pricing change will drive to a recalculation of the corporate income tax base.
Persons subject to Zakat (i.e., 100% Zakat payers) are not subject to the Transfer Pricing Bylaws. However, taxpayers under the Income Tax Law and its Implementing Regulations are subject to Transfer Pricing Bylaws which includes 100% taxable persons or mixed companies (subject to Zakat and tax), except for Article 18 of Transfer Pricing Bylaws which is applicable to all persons, including those subjects to Zakat by 100%. This Article states that multinational enterprises group whose consolidated annual revenues exceed SAR 3.2 billion shall submit a Country-by-Country (CbC) report in accordance with all provisions and details provided in the same Article.
The Transfer Pricing Bylaws are applicable to all persons considered taxpayers pursuant to the Income Tax Law. Transfer Pricing Bylaws are also applicable to persons not considered taxpayers but recognized in respect of certain responsibilities stipulated in Transfer Pricing Bylaws, such as the submission of a Country-by-Country report (CbC).
A number of obligations deriving from the Transfer Pricing Bylaws, the most significant of which are:
Submit the Transactions Disclosure Form along with the tax return. The Disclosure Form must be in an electronic form that is part of the tax return.
Sustain a Master File containing – generally- information on the global business of the MNE group to which the taxpayer resides. Taxpayers who carry out transactions, the arm’s length value of which does not exceed SAR 6 million in a 12-month period are exempt from this commitment.
Secure Local File including – generally - information on all the taxpayer’s transactions. Taxpayers who carry out transactions, the arm’s length value of which does not exceed SAR 6 million in a 12-month period, are exempt from this commitment.
Country-by-Country (CbC) Report – where consolidated group revenue of the MNE group exceeds SAR 3.2 billion, for all persons belonging to the group and who, according to the Bylaws are considered to be entities committed to submitting the CbC Report, must submit the CbC Report.
The term “restructuring” does not resonate with a particular application or single propose as it may refer to the process of local or international restructuring of financial and business relationships between related persons. This includes but is not limited to termination or ssubstantial renegotiation of existing arrangements. Restructuring may also include business internal reallocation of functions, assets, risks within an MNE. Relationships with unrelated persons may also be a reason for the restructuring and/or be affected by it. Additionally, changing job descriptions of team members or rationalizing business processes, including reducing the number of workers or closing operational processes, can be considered as reconstruction. In case that a reconstruction process takes place, the taxpayer should click (yes) in the disclosure form, and it has to be reported.
Any person who directly owns 5% or more of the taxpayer’s listed shares (Shareholders) must be listed down in the Disclosure Form.
GAZT is the authority entrust with the implementation and management of all taxation affairs in Saudi Arabia, including transfer pricing. GAZT issues transfer pricing guidelines, enforce Transfer Pricing Bylaws, and undertake transfer pricing audits.
Transfer pricing is not an emerging concept. Articles 63 and 64 of the Income Tax Law detail transactions between related persons. Transfer pricing relates to the setting of prices for transactions carried between related persons, including but not limited to the transfers of goods, services, loans, and intangibles. The function of Bylaws is to oversee that taxpayers guarantee that their transactions with related persons are priced and structured as any transactions with independent or unrelated persons.
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Capital gains earned by a non-resident GCC company as a result of the sale of full or portion of its shares in a Saudi company is subject to tax as stipulated in paragraph 2 (b) of Article 1 of the Implementing Regulations. The non-resident GCC Company has to file a capital gains assessment and pay the imposed tax at 20% tax rate.
As stipulated in Article 11 paragraph (4) of the Implementing Regulations, losses of a company in which a change or modification of its ownership or control is 50% or more are not permitted to be carried forward except for losses that occur after the change in ownership (Unless the company continues to conduct the same business activity).
Paragraph (b / 1) of Article Four of the Tax Law considers the following cases as permanent establishment for non-residents: construction sites, assembly facilities and its supervisory operation. Therefore, the GCC company that will execute such contract will be considered as a permanent establishment and will be subject to Income Tax, not Withholding Tax.
Article 18 of the Law stipulates that all expenses of enhancements and improvements of each Group of assets incurred during the year will be regarded as expenses, provided that the total amount of such expenses do not exceed 4% of the rest of the value of the Group (ie, after calculating the depreciation at the end of the year in which the expense was incurred). If these expenses exceed 4% of the rest of the Group, the excess amount will be added to the rest of the value of the Group to be consumed in the following years.
Partners of the non-resident joint-liability company are not obligated to file separate returns. Such a company will be accountable for its share in the Saudi company's return as a non-resident permanent establishment as stipulated in the provisions of paragraph 4 (d) of the Income Tax Law.
A consortium will register on GAZT and file its returns, and each Party will file its own independent return on due dates and pay the due tax.
If the international hotel company has an actual presence in Saudi Arabia, like having an office and employees in local hotels to manage and oversee its operations, in this case, its business activity will be governed by the permanent establishment's regulations and related provisions. The management expenses are subject to income tax, and all profits transferred to the head office are subject to a 5% Withholding Tax as stipulated in the provisions of Article (68) of the Tax Law and Article (63) of the Regulations.
If a company does not have an actual presence in Saudi Arabia and all of its management and operations are overseen from abroad, then it will be regarded as a non-resident establishment and all profits received are subject to a 20% Withholding Tax as stipulated in the provisions of Article (68) of the Tax Law and Article (63) of the Regulations.
Direct expenses of the permanent establishment are viewed as expenses when its a part of deductible expenses. In addition to satisfying general regulatory provisions as stipulated in paragraph (1) of Article 9 of the Implementing Regulations.
The foreign partner who owns less than 50% in a mixed Saudi company does not fall within the definition of Related Persons as stipulated in article 64 of the Income Tax Law, so such services are not subject to a 15% Withholding Tax, but a 5% Withholding Tax, because the definition of ownership is only effectuated when the percentage of ownership is 50% or more as stipulated in paragraph (c) of Article (64) of the Law.
The income of a foreign non-resident natural person from deposits to his accounts in local banks is not taxable unless the person is engaged in a professional, commercial, or business activity. In such a case, his income from his deposits in local banks will be taxed on his other incomes. As a result, he is obligated to declare such income when filing the annual tax return to GAZT.
Losses incurred by a foreign or mixed company from the sale of shares in the Saudi Stock Exchange will not be deducted from the profits when calculating the tax levied upon the shares of the foreign partner therein; the profits resulting from the sale of the shares are not added to the taxed profits as long as the sale was carried out in accordance with the Capital Market Law and satisfy the provisions of Article 10 (a) of the Income Tax Law and Article 7 of its Implementing Regulations.
As stipulated in provisions of Article 61 of the Income Tax Law, all persons and government entities will provide GAZT with information regarding contracts concluded with the private sector within three months from the contract effective date.
Capital gains from the disposal of securities, including government stocks and bonds specified in Article (2) of the Capital Market Law issued by Royal Decree No. M / 30 dated 02/06/1424 H will be exempted from tax under the provisions of Article Ten of the Income Tax Law when the controls and conditions stipulated in Article Seven of the Implementing Regulations of Income Tax Law are available only if the taxable investor is a resident. However, If the investor is a non-resident legal entity, it will be liable for income tax on the capital gains it earns from the sale of such investments based on paragraph 2 (b) of Article 1 of Implementing Regulations of Income Tax Law regardless of the legal form of the investee company in the financial market.
The expenses of the head office incurred by the branch that are not included within the deductible expenses in accordance with the Income Tax Law and in which they have been taxed, tax for such payments will be deducted from the income tax payable by the permanent establishment in accordance with paragraph (g) of Article (68) of the Income Tax Law.
Certified Public Accountant's statement on the validity of the return means that the accountant confirms the validity of the tax return, especially that the return information is derived from the books and records of the establishment and verify its compatibility, and that the return was prepared as per the provisions of the Saudi Income Tax Law. This will be complied with if the taxable income exceeds one million Saudi riyals. The taxable income in question is the total income before deduction of expenses. The standards to be followed by the accountant are the standards set out in the Income Tax Law and its Regulations in addition to the standards issued by the Saudi Organization for Certified Public Accountants.
Research and development expenses that can be deducted are the expenses that incurred only in Saudi Arabia as stipulated in Article Nine of the Implementing Regulations of Income Tax Law.
In case there are businesses related the supply contracts to Saudi Arabia that is not explicitly specified in the agreement, the revenues of each related business carried out in the kingdom are estimated at 10% of the total value of the contract. If the value of the related businesses is determined, they are taxable according to the nature of such businesses.
Directors' wages paid to the owner, partner or shareholder will not be considered as deductible expenses (except for the wages paid to the shareholder in the joint-stock companies) as stipulated in the provisions of paragraph (1) of Article ten of the Implementing Regulations of Income Tax Law.
In this case, the non-resident partner is subject to Zakat, while any distributed profits are subject to Withholding tax.
Establishments are not obligated to file financial statements along with tax returns. However, GAZT may request them whenever it is deemed necessary.
Amounts received by visiting doctors or any similar temporary business in Saudi Arabia are subject to Income Tax or Withholding Tax. This is distinguished according to whether the residency conditions are applicable or not, unless such amounts have risen from an employment relationship.
Taxpayers can file an amended tax return after GAZT’s approval. GAZT is entitled to either accept or reject the amended return or, in case of acceptance, amend it and impose fines as stipulated in the Tax Law, as appropriate.
If the value of the accompanying business is not defined? Since the term of implementing the supply contract is less than three months, the non-resident company that concluded such contract does not have a permanent establishment in Saudi Arabia to conduct its business activities wholly or partially and does not have a licensed agent in the Kingdom, this company is not considered a permanent establishment in Saudi Arabia. The amount paid to such establishment in return is subject to Withholding Tax as stipulated in the provisions of Article (68) of Income Tax Law and (63) of the Implementing Regulation. This does not require an estimation of the value of accompanying business as long as the value is detailed in the contract. However, if the value of the services is not identified, each accompanying business will be estimated by 10% of the total contract value. Moreover, the service will be subject to Withholding Tax, provided that it will be identified according to the type of service accompanying the supply.
A company's branch in Saudi Arabia is not authorized to reduce the calculated Income Tax with the value of the paid amount of the Withholding Tax in return of the technical services provided by its headquarters outside Saudi Arabia.
A.The tax rate imposed on the tax base is 20% for:
Resident capital company.
Natural non-Saudi residents who conduct business in Saudi Arabia.
Non-resident persons who conduct business in Saudi Arabia through a permanent establishment.
B. The Income Tax imposed on the income base of a taxpayer working in natural gas investment sector is 20% only.
C. The Income Tax imposed on the income base of a taxpayer working on oil and hydrocarbons production is as follows:
50% imposed on a taxpayer whose total capital investment in Saudi Arabia exceeds three hundred and seventy-five billion Saudi Riyals.
65% imposed on a taxpayer whose capital investment in Saudi Arabia exceeds three hundred billion Saudi Riyals and up to three hundred seventy-five billion Saudi Riyals.
75% imposed on a taxpayer whose capital investment in Saudi Arabia exceeds two hundred and twenty-five billion Saudi Riyals and less than three hundred billion Saudi Riyals.
85% imposed on a taxpayer whose capital investment in Saudi Arabia is no more than two hundred and twenty-five billion Saudi Riyals.
D. The Income Tax imposed to a person working in Saudi Arabia in both oil and hydrocarbons production sector, and natural gas investment sector is the total tax payable of the tax base of such person under paragraphs (B) and (C) of this article.
Resident capital companies that have shares of non-Saudi partners.
Natural non-Saudi residents who conduct business in Saudi Arabia.
Non-resident persons who conduct business in Saudi Arabia through without having a permanent establishment.
Non-resident persons who generate taxable income from resources in Saudi Arabia.
A person working in the natural gas investment sector.
A person working in the oil and hydrocarbon production sector.
Yes, if the user is currently unable to complete their new registration or their update/change to the information in the registration form, then they can save it as a draft and send it later.
As long as the organization is not licensed by competent authorities in Saudi Arabia as a charitable organization according to its laws and regulations, then it is not deemed a charity organization in Saudi Arabia. Accordingly, unless the income obtained by this organization is exempted from taxes in Saudi Arabia, then it will be subject to taxes as per its laws and regulations and will be defined as a non-resident permanent establishment and will be obligated to register in GAZT. Also, it will be required to file tax returns and pay due duties as per the statutory dates. Such organizations will be expected to retain its books and records within Saudi Arabia, and commit to declaring any expenses paid to non-resident entities and will be subject to withholding tax as stipulated in Article 68 of the Income Tax Law.
If the shipper is a resident or a non-resident that carries out business through a permanent establishment, it should; as a result, file a tax return within the time-limit of 120 days starting from the end of its fiscal year. Subsequently, Its net profit will be subject to a 20% Income Tax of its tax base. If the shipper is non- resident and doesn’t carry out any business activities in Saudi Arabia through a permanent establishment, it will be subject to a 5% Withholding tax of the total amount paid to it from the source in Saudi Arabia.
The Withholding Tax on dividends distributed to non-residents is deducted after deducting the income tax from the profit.
No, there is no difference.
These amounts will not be considered deductible as stipulated in Article 9 of the Implementing Regulations of the Income Tax Law.
In order for the sign-in process to take place in the website, a pre-authorized username must be provided. If a username already exists on the old GAZT website or a post address, you can use in your user registration process on the new website.
Yes, if the user is currently unable to complete their new registration or their update/change to the information in the registration form, then they can save it as a draft and send it later.
The website of the General Authority of Zakat and Tax (GAZT) provides more information and details about VAT. For further inquiries, contact a VAT customer service agent through social media channels or via our Direct Line.
For more detailed information, please visit the technical instructions page on the GAZT website.
In the event of any conflict between the Provisions of VAT Law and Regulations and the content of this page, VAT Law and Regulations will prevail.
-Create an account and login at the GAZT website.
-Fill the tax return.
-Send the return and receive back your invoice.
Taxpayers can use deduction and add-on notices to amend any VAT declared in previous invoices.
Tax invoices must include the name and address of the supplier and customer.
Tax invoices should include all the requirements stipulated in Article 53 of the Implementing Regulations of the VAT Law.
After filing a tax return, the taxpayer receives an (SADAD) invoice that includes the invoice number and the amount of the tax due. The taxpayer must then pay the amount due to a GAZT bank account through the (SADAD) Payment Gateway either online or through an ATM. The taxable person (natural/legal) will then receive a receipt of the amount along with a tax return reference number.
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Settlement of Tax Disputes
Selling property, whether a residential or commercial, lies under the purposes of registration in VAT tax, except for the sale of a personal residence in accordance with the provisions of article 9, paragraph 7, of the VAT Implementing Regulations.
IFRS and Value Added Tax are two separate systems, the first is concerned with accounting standards; the second is a tax law.
GAZT executes and oversee all tax-related procedures in the Kingdom, registration and deregistration of taxpayers, management of the process of submitting tax returns and tax refunds and conducts audits and inspection visits. GAZT also has full authority to impose fines on those non-compliant with VAT Law and its Implementing Regulations.
VAT is an indirect tax levied on all goods and services purchased and sold by taxable persons. Value Added Tax (VAT) is applied in more than 160 countries around the world as a significant source of income, and is an essential pillar in our country's budget
Yes, government supplies are subject to VAT, and the taxable person is responsible for collecting and filing appropriate tax returns.
Domestic transportation of passengers within Saudi Arabia shall be subject to a VAT standard rate if not part of an international flight.
In general, all goods and services are subject to VAT in the Kingdom, some are exempt as provided in the VAT Implementing Regulations. For further information on exempt supplies, please refer to chapter five of VAT Implementing Regulations.
It depends on the nature of the sale. If the seller carries out an economic activity, VAT applies. If an individual sells a personal car, then it is not subject to VAT. If an intermediary manages the auction and charges a commission without owning the goods, then it is a service and the commission expense is subject to a VAT fixed rate.
All taxable persons whose annual taxable supplies exceeds the mandatory Registration threshold of 375,000 SAR are legally required to register on GAZT for VAT.
-The registration phase for enterprises with revenues of less than 1,000,000 SAR has been extended until the end of the year 2018, in accordance with the transitional provisions stipulated in Article 79 of the Implementing Regulations of VAT Law.
-Taxable persons (natural/legal) with an annual taxable supply of goods and services in excess of SAR 187,500 are eligible for voluntary registration.
-Taxable persons (natural/legal) whose annual taxable value is less than 187,500 SAR are not eligible for registration.
In general, taxable persons (natural/legal) will not incur additional costs than they would have incurred before the tax was applied for goods and services purchased from other taxable persons in general. The costs should not change, because the taxable persons (natural/legal) are able to deduct the input tax from their output tax according to the stated provisions of the Agreement, Law, and Regulation. As such, the final consumer (the final stage of the supply chain) will bear the tax and will not be able to deduct the VAT.
Any taxable person whose taxable supplies exceed the mandatory registration threshold of 375,000 SAR and is not registered at GAZT for VAT will be subject to fines.
To ensure compliance with regulations, GAZT conducts extensive audits and tax compliance procedures with the aim of reducing the number of non-compliant enterprises. In addition, GAZT, in coordination with the Ministry of Commerce and Investment, conducts nationwide campaigns to penalize unregistered enterprises and urge them to register for VAT.
Registration on GAZT for VAT does not affect the competitive advantage against non-taxable enterprises and persons within the same sector. When registering in VAT, the taxable person pays VAT on the inputs to the suppliers within the supply chain, and 5% VAT should be charged on the taxable supplies provided to the customers, with the ability to deduct/refund the tax due on the inputs from the tax collected on the output. In comparison, non-taxable enterprises bear VAT on inputs where they cannot deduct/refund this tax, and therefore pass on this cost to their customers, as a part of the cost of supplies.
Pursuant to the provisions of Article 14 of the Implementing Regulations of VAT Law, VAT is levied on imported products to Saudi Arabia.
Recharge cards are considered electronic vouchers with cash value. The issuance of this type of voucher is not considered as a supply for VAT purposes.
Real estate supplies are part of taxed economic activities, including renting or licensing any commercial property or other property not classified as a residential property. The rental of residential property is exempt from tax.
The website of the General Authority of Zakat and Tax (GAZT) provides more information and details about VAT. For further inquiries, contact a VAT customer service agent through social media channels or via our Direct Line.
For more detailed information, please visit the technical instructions page on the GAZT website.
In the event of any conflict between the Provisions of VAT Law and Regulations and the content of this page, VAT Law and Regulations will prevail.
Any filed objection will be processed within 90 days from its submitted date.
The computers and their parts are exempted from customs duties, and VAT is calculated.
Mobile devices are exempted from customs duties, and VAT is calculated.
Yes, it is allowed to import cold weapons of all kinds for individuals that are of a personal nature. As for companies, the commercial registry is required for the same activity.
The importing motorcycles formalities: if they are less than 150cc need an invoice and an origin certificate. If they are more than 150cc they need an export certificate and conform to Saudi specifications and standards. It is not allowed to enter motorcycles without a chassis number. It does not require a specific year of manufacture to import motorcycles.
Gulf citizens are allowed to import two vehicles annually.
Yes, it is permitted to be imported up to a maximum of 2 liters per person every three months from the date of import, and customs duties will be implemented to the imported quantity.
yes, it is permitted to import only one device every three months.
The resident has the right to import one car every 3 years.
It is allowed to import animals, provided that there is a health certificate to ensure that there are no epidemic diseases and that prior approval is provided by the Ministry of Environment, Water and Agriculture.
The individuals are allowed to import surveillance cameras according to the following controls: The cameras shall be imported for a personal purpose, listed in the names of individuals, shall not be imported in commercial quantities, and shall not be imported for a spy characteristic.
The goods are exempted from customs duties provided that: - Its value shall not exceed (3000) Saudi riyals or its equivalent. - The luggage and gifts shall be a personal and non-commercial nature. - The imports shall not be forbidden or restricted goods according to the unified customs law, and they shall not be among the items included in the prohibited and restricted in this site.
The presence of origin certificate is not required for customs clearance of products that have a fixed indication of origin that is difficult to remove without leaving a visible effect.
All remote-control aircraft are restricted goods that require clearance from the General Authority of Civil Aviation.
The customs duties exemption to import is 500 grams for an adult passenger, if the exempted amount exceeded, customs duties and tax will be implemented to the entire quantity up to a maximum of 2kilos per person every three months. More than that is not allowed enter and passengers are permitted to re-export within the legal period.
It is necessary to disclose and fill out the declaration form for travelers when he/she enters or leaves the country and if he/she is carrying 60 thousand Saudi riyals or more and the equivalent amount of money, jewelry or precious metals.
In order for the sign-in process to take place in the website, a pre-authorized username must be provided. If a username already exists on the old GAZT website or a post address, you can use in your user registration process on the new website.
Article 68 of the Income Tax Regulations and Article (63) of the Implementing Regulations stipulates that when paying any expenses from a source in Saudi Arabia by a resident to a non-resident establishment (whether a GCC establishment or a non-GCC establishment), the expenses paid are subject to withholding tax, and its rate is defined by the type of services provided as stipulated in the Law and Regulations.
If the services of the advertising company abroad are restricted to promoting the company's local products through TV channels without having a role in designing films or developing of any related marketing research, the expenses paid are not considered to have been obtained from a source in Saudi Arabia, as stipulated in paragraph (A / 8) of Article 5 of the Income Tax Law; because these expenses have occurred from services and therefore are not subject to a withholding tax. If the marketing of the company was developed within Saudi Arabia, all services concluded, in this case, are subject to a withholding tax.
The entity that deducted the amount has to provide the entity deducted from (the beneficiary) a certificate confirming the amount paid and the amount of the tax that has been deducted. Therefore, the company that deducts the tax and transfers it to GAZT for the reinsurance premiums will provide the beneficiary company with such a certificate.
If the non-resident establishment or anyone on its behalf carries out any kind of activity in relation to these equipment inside KSA such as operating, supervising, maintaining, or previewing the equipment, It is therefore deemed as a permanent establishment as stipulated in the provisions of paragraph (B) of Article 4 of the Tax Law, whereas if the non-resident establishment is not involved in the activities previously stated, rent will be subject to Withholding Tax as stipulated in the provisions of Article 68 of the Tax Law and Article 63 of the Implementing Regulations.
If such purchase involves the transfer of all rights, in this case, it is considered a purchase of goods not subject to Withholding Tax. But If it is purchased or leased to be used in local broadcasting and was licensed by the seller without granting the buyer the full legal right of such materials, it is considered a royalty payment and will be subject to a 15% Withholding Tax.
Any repair work carried out by the non-resident company which does not have a permanent establishment in Saudi Arabia will be subject to a 5% withholding tax as technical and consultancy services regardless of the place of service, as stipulated in the provisions of paragraphs (1) and (3) of Article 63 of the Tax Law.
The share of the Saudi branch from the insurance policy paid to the company's head office is subject to a 5% withholding tax as a premium; provided that it does not include any amounts for services delivered by the head office.
The non-resident company is obligated to register at GAZT and file annual tax returns on fixed dates as stipulated in the provisions of Article (60) of the Tax Law and Article (57) of its Implementing Regulations. In line with the same regulations, such companies are obligated to provide GAZT with fundamental information about the contracts concluded with the private sector and inform GAZT with any amendments thereto during the statutory and tax compliance calendar. Besides, it has to adhere to the provisions of Article 68 of the Tax Law and Article (63) of the Implementing Regulations concerning withholding tax on amounts paid to non-residents establishment -not covered by the tax exemption decree- to be submitted by the resident establishment to GAZT according to the statutory and tax compliance calendar.
The interest on the loan paid to the bank that manages the loan is not subject to withholding tax if the establishment in question is a resident. In this case, the establishment is obligated to include such interest in its tax return and file it to be subject to income tax or zakat as the case may be. When the bank that manages the loan pays loan interest to non-resident banks, then it has to deduct the tax from its total amount. If the manager is a non-resident bank, the interest received on the loan is subject to withholding tax.
Such a resident company is subject to Zakat as per the share of the GCC natural person, whether resident or not, and the dividends distributed to that person by the resident company will be subject to withholding tax if the person is not a resident.
If the head office abroad provides technical services to its branch in Saudi Arabia, which in turn provides this service to clients, the cost of such services is subject to a 15% withholding tax.
Dividends paid by the Saudi Limited Liability Company to the non-resident GCC Company will, in this case, be subject to withholding tax irrespective of the nationalities of the company's owners and their place of residence.
If a branch of a foreign company has overpayments paid to GAZT following a final termination, and this branch transfers funds to its head office which is subject to the withholding tax, it can use these overpayments to pay the withholding tax and can also deduct such overpayments from advance payments.
The law does not permit a non-resident beneficiary to whom the amounts subject to the withholding tax have been paid to file a tax return to GAZT and to pay tax on that base, since the rate for the withholding tax is defined on the basis of a percentage of the total amount paid.
Withholding tax is a direct tax deducted from all returns earned by a non-resident from any source in Saudi Arabia. The tax rate is specified in the Implementing Regulations of the Income Tax Law.
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Shipping costs from Saudi Arabia to collection points abroad-paid to non-resident shipping companies- will be subject to Withholding Tax as stipulated in the provisions of Article 5 (A / 8) of the Income Tax Law.
For shipping costs from assembly points outside the Kingdom to all parts of the world -paid to non-resident companies- if the company is committed to delivering the packages to its final delivery locations abroad, the shipment of packages in this case from the assembly points abroad to the final delivery locations Is an extension of the process of shipping from the Kingdom to the external assembly points, i.e., it represents a single continuous process, therefore, its revenue is subject to Withholding Tax.
If, however, the obligation of the shipper ends only by delivering the shipment to the external port without obligation to deliver it to the final customer's premises, the shipment from the external port to the final customer's premises, in this case, becomes an independent operation and the income earned is not the result of the same activity in the Kingdom; therefore, it will not be subject to Withholding Tax.
The date of the payment decides the Withholding Tax. As for the multiplicity of ports, it is explicit that the tax is deducted by the shipping agent regardless of the port.
The withholding tax is levied on the net profits of the non-resident partner after deducting the tax due by the resident company on this partner’s share of the profits. For example, If the share of the non-resident partner in the total profits realized after the reserves are SR 1,000,000, the income tax due on the Company is at 20% of this person’s share and worth SR 200,000, therefore the withholding tax is levied on the distributable net profit to the non-resident partner which is SR 800,000.
If the payment stated is paid to a non-resident person who carries on a business in Saudi Arabia through this person’s permanent establishment, and that amount paid to this person is relevant to the business activity that the permanent establishment is conducting, then such a payment will be estimated in defining this person’s tax base and will not be subject to withholding tax.
Upon payment of such expenses to agents or representatives of the airlines, it will not be subject to the withholding tax. Such expenses will be estimated in the company's record in GAZT.
Yes, if the user is currently unable to complete their new registration or their update/change to the information in the registration form, then they can save it as a draft and send it later.
Shipping costs from Saudi Arabia to collection points abroad-paid to non-resident shipping companies- will be subject to Withholding Tax as stipulated in the provisions of Article 5 (A / 8) of the Income Tax Law.
For shipping costs from assembly points outside the Kingdom to all parts of the world -paid to non-resident companies- if the company is committed to delivering the packages to its final delivery locations abroad, the shipment of packages in this case from the assembly points abroad to the final delivery locations Is an extension of the process of shipping from the Kingdom to the external assembly points, i.e., it represents a single continuous process, therefore, its revenue is subject to Withholding Tax.
If, however, the obligation of the shipper ends only by delivering the shipment to the external port without obligation to deliver it to the final customer's premises, the shipment from the external port to the final customer's premises, in this case, becomes an independent operation and the income earned is not the result of the same activity in the Kingdom; therefore, it will not be subject to Withholding Tax.
The date of the payment decides the Withholding Tax. As for the multiplicity of ports, it is explicit that the tax is deducted by the shipping agent regardless of the port.
The withholding tax is levied on the net profits of the non-resident partner after deducting the tax due by the resident company on this partner’s share of the profits. For example, If the share of the non-resident partner in the total profits realized after the reserves are SR 1,000,000, the income tax due on the Company is at 20% of this person’s share and worth SR 200,000, therefore the withholding tax is levied on the distributable net profit to the non-resident partner which is SR 800,000.
If the payment stated is paid to a non-resident person who carries on a business in Saudi Arabia through this person’s permanent establishment, and that amount paid to this person is relevant to the business activity that the permanent establishment is conducting, then such a payment will be estimated in defining this person’s tax base and will not be subject to withholding tax.
Upon payment of such expenses to agents or representatives of the airlines, it will not be subject to the withholding tax. Such expenses will be estimated in the company's record in GAZT.
Article 68 of the Income Tax Regulations and Article (63) of the Implementing Regulations stipulates that when paying any expenses from a source in Saudi Arabia by a resident to a non-resident establishment (whether a GCC establishment or a non-GCC establishment), the expenses paid are subject to withholding tax, and its rate is defined by the type of services provided as stipulated in the Law and Regulations.
If the services of the advertising company abroad are restricted to promoting the company's local products through TV channels without having a role in designing films or developing of any related marketing research, the expenses paid are not considered to have been obtained from a source in Saudi Arabia, as stipulated in paragraph (A / 8) of Article 5 of the Income Tax Law; because these expenses have occurred from services and therefore are not subject to a withholding tax. If the marketing of the company was developed within Saudi Arabia, all services concluded, in this case, are subject to a withholding tax.
The entity that deducted the amount has to provide the entity deducted from (the beneficiary) a certificate confirming the amount paid and the amount of the tax that has been deducted. Therefore, the company that deducts the tax and transfers it to GAZT for the reinsurance premiums will provide the beneficiary company with such a certificate.
If the non-resident establishment or anyone on its behalf carries out any kind of activity in relation to these equipment inside KSA such as operating, supervising, maintaining, or previewing the equipment, It is therefore deemed as a permanent establishment as stipulated in the provisions of paragraph (B) of Article 4 of the Tax Law, whereas if the non-resident establishment is not involved in the activities previously stated, rent will be subject to Withholding Tax as stipulated in the provisions of Article 68 of the Tax Law and Article 63 of the Implementing Regulations.
If such purchase involves the transfer of all rights, in this case, it is considered a purchase of goods not subject to Withholding Tax. But if it is purchased or leased to be used in local broadcasting and was licensed by the seller without granting the buyer the full legal right of such materials, it is considered a royalty payment and will be subject to a 15% Withholding Tax.
Any repair work carried out by the non-resident company which does not have a permanent establishment in Saudi Arabia will be subject to a 5% withholding tax as technical and consultancy services regardless of the place of service, as stipulated in the provisions of paragraphs (1) and (3) of Article 63 of the Tax Law.
The share of the Saudi branch from the insurance policy paid to the company's head office is subject to a 5% withholding tax as a premium; provided that it does not include any amounts for services delivered by the head office.
The non-resident company is obligated to register at GAZT and file annual tax returns on fixed dates as stipulated in the provisions of Article (60) of the Tax Law and Article (57) of its Implementing Regulations. In line with the same regulations, such companies are obligated to provide GAZT with fundamental information about the contracts concluded with the private sector and inform GAZT with any amendments thereto during the statutory and tax compliance calendar. Besides, it has to adhere to the provisions of Article 68 of the Tax Law and Article (63) of the Implementing Regulations concerning withholding tax on amounts paid to non-residents establishment -not covered by the tax exemption decree- to be submitted by the resident establishment to GAZT according to the statutory and tax compliance calendar.
The interest on the loan paid to the bank that manages the loan is not subject to withholding tax if the establishment in question is a resident. In this case, the establishment is obligated to include such interest in its tax return and file it to be subject to income tax or zakat as the case may be. When the bank that manages the loan pays loan interest to non-resident banks, then it has to deduct the tax from its total amount. If the manager is a non-resident bank, the interest received on the loan is subject to withholding tax.
Such a resident company is subject to Zakat as per the share of the GCC natural person, whether resident or not, and the dividends distributed to that person by the resident company will be subject to withholding tax if the person is not a resident.
If the head office abroad provides technical services to its branch in Saudi Arabia, which in turn provides this service to clients, the cost of such services is subject to a 15% withholding tax.
Dividends paid by the Saudi Limited Liability Company to the non-resident GCC Company will, in this case, be subject to withholding tax irrespective of the nationalities of the company's owners and their place of residence.
If a branch of a foreign company has overpayments paid to GAZT following a final termination, and this branch transfers funds to its head office which is subject to the withholding tax, it can use these overpayments to pay the withholding tax and can also deduct such overpayments from advance payments.
The law does not permit a non-resident beneficiary to whom the amounts subject to the withholding tax have been paid to file a tax return to GAZT and to pay tax on that base, since the rate for the withholding tax is defined on the basis of a percentage of the total amount paid.
Withholding tax is a direct tax deducted from all returns earned by a non-resident from any source in Saudi Arabia. The tax rate is specified in the Implementing Regulations of the Income Tax Law.
The tax return for every tax period (two months) should be filed within fifteen days of the period’s due date. The tax due in the return shall be paid within fifteen days as of the end of the tax return period.
As a transitional phase, excise tax will be levied on stored goods that have been already offered as a consumed commodity in Saudi Arabia and have been stored for commercial purposes by any person as if the date of the law coming into force, or the date of imposing the excise tax or the date of issuing a resolution resulted in an increase of the tax rate levied on effective excise goods or its tax base. This applies provided that such goods are not suspended due to customs duties or levied excise taxes and are not owned by any government entity. The owner of any goods to whom the transitional provisions apply shall file a one-time transitional declaration and pay the tax due to GAZT within 45 days from the due date even if such owners are not obliged to register for excise tax at GAZT.
-Tobacco products - 100% of the retail price
-Energy drinks – 100% of the retail price
-Soft drinks – 50% of retail price
-Sweetened drinks – 50% of retail price
-Electronic smoking devices and accessories as well as liquids used in such smoking devices and accessories.
-There is a late payment penalty.
-There is a penalty for late tax return filing or registration or for providing incorrect information.
Any carbonated drinks, except unflavored soft drinks. Soft drinks also include any concentrations, powder, gel or any extracts that can be transformed into soft drinks.
An excise or excise tax, at varying rates, is any duty on manufactured goods that are deemed harmful to general health and/or the environment. Currently, there is a 50% excise tax levied on soft drinks, and 100% on energy drinks, tobacco, and electronic cigarettes. Additionally, there is a 50% excise tax on sweetened beverages.
The GCC adopts the following definition.
Definition: any product with added sugar or any other sweeteners and produced in the form of ready-to-drink, concentrated, powder, gel, extracts or any other form that can be transformed into a drink.
The excise tax rate levied on sweetened beverages is 50%.
Excise tax is levied on all sweetened drinks regardless of its sugar percentage, i.e., beverages are subject to excise tax whether sweetened with sugar or any other alternatives at any percentage.
Excise tax is not levied on sweetened beverages that contain 75% or more milk.
Yes.
The excise tax on sweetened products will come into force as of 1 December 2019.
-Register on GAZT website and follow approved forms.
-Obtain the required licenses.
-File tax returns.
-Complete all required payments within fifteen days from the scheduled date of filing returns.
Any drinks marketed or sold as energy drinks that may contain stimulant ingredients or provide mental or physical stimulation. This includes, for example, but not limited to caffeine, taurine, ginseng, and guarana, and any other ingredients that have the exact or a similar effect of the listed ingredients. Energy drinks also include any concentrates, powder, gel or extracts that can be transformed into energy drinks.
Tobacco products are all products listed in Chapter 24 of the Unified Customs Tariff for GCC (such as cigar – cigarettes).
This is the final price of an excise commodity or good when it is sold to the end-user in the defined and announced form, and as written on the commodity by the importer, the producer or the taxable person or in accordance with the standard pricing developed by GAZT.
This is a specified area where any licensed entity is authorized to produce, dispatch, store or receive any excise commodity or goods under a tax suspension status.
A tax suspension status is a situation under which excise duties and levies are suspended.
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In order for the sign-in process to take place in the website, a pre-authorized username must be provided. If a username already exists on the old GAZT website or a post address, you can use in your user registration process on the new website.
Yes, if the user is currently unable to complete their new registration or their update/change to the information in the registration form, then they can save it as a draft and send it later.
The tax return for every tax period (two months) should be filed within fifteen days of the period’s due date. The tax due in the return shall be paid within fifteen days as of the end of the tax return period.
As a transitional phase, excise tax will be levied on stored goods that have been already offered as a consumed commodity in Saudi Arabia and have been stored for commercial purposes by any person as if the date of the law coming into force, or the date of imposing the excise tax or the date of issuing a resolution resulted in an increase of the tax rate levied on effective excise goods or its tax base. This applies provided that such goods are not suspended due to customs duties or levied excise taxes and are not owned by any government entity. The owner of any goods to whom the transitional provisions apply shall file a one-time transitional declaration and pay the tax due to GAZT within 45 days from the due date even if such owners are not obliged to register for excise tax at GAZT.
-Tobacco products - 100% of the retail price
-Energy drinks – 100% of the retail price
-Soft drinks – 50% of retail price
-Sweetened drinks – 50% of retail price
-Electronic smoking devices and accessories as well as liquids used in such smoking devices and accessories.
-There is a late payment penalty
-There is a penalty for late tax return filing or registration or for providing incorrect information.
Any carbonated drinks, except unflavored soft drinks. Soft drinks also include any concentrations, powder, gel or any extracts that can be transformed into soft drinks.
