What business expenses can I deduct to reduce my taxable income in Saudi Arabia?

Article 12 of the Saudi Income Tax Law allows a deduction for all regular and necessary expenses incurred to earn taxable income during the tax year, whether paid or accrued. This is a broad category that typically includes rent, salaries, utilities, professional fees, marketing costs, and other genuine operating expenses directly connected to your business.

Beyond general expenses, specific deductions are also available for: donations to licensed nonprofit organizations in the Kingdom (Article 11); bad debts that were previously declared as taxable income and have been written off (Article 14); research and development costs connected with earning taxable income (Article 16); depreciation of tangible and intangible business assets (Article 17); repair and improvement costs for depreciable assets (Article 18); and employer contributions to authorized retirement funds (Article 20).

However, Article 13 explicitly disallows certain deductions, including expenses unrelated to earning taxable income, amounts paid to shareholders or partners beyond fair market value, and personal or non-business expenditures. Keeping thorough, well-organized records with supporting invoices and contracts is essential, as ZATCA may audit your deduction claims. Working with a licensed Saudi accountant will help you maximize legitimate deductions while remaining compliant.