نظام ضريبة الدخل

المادة 1

The following words and phrases, wherever mentioned in this Law, shall have the meanings next to them unless the context requires otherwise: The Minister: Minister of Finance The Department: Department of Zakat and Income. Tax: Income tax imposed in accordance with this Law. Person: Any natural or corporate person. Taxpayer: Any person subject to tax in accordance with this Law. Activity: A commercial activity in all its forms, or any vocational, professional or other similar activity for profit. This includes the use of movable and immovable property. Royalties: Payments received for use of or the right to use intellectual rights, including, but not limited to, copyright, patents, designs, industrial secrets, trademarks and trade names, know-how, trade secrets, business, goodwill, and payments received against the use of information related to industrial, commercial or scientific expertise, or against granting the right to exploit natural and mineral resources. The Kingdom: Lands and territorial waters of the Kingdom of Saudi Arabia, its air space and its rights in the zone divided between it and the State of Kuwait. This includes marine or semi-marine areas that are under the sovereignty, sovereignty rights or jurisdiction of the Kingdom in accordance with International Law. Capital company: A joint stock company, a limited liability company, or a company limited by shares. For purposes of this Law, investment funds shall be considered capital companies. Partnership: A general partnership, a silent partnership, or a limited partnership. Resident: A natural person, a company that satisfies the residency conditions stipulated in Article Three of this Law, any governmental department or ministry, or public entity, or any other corporate person or entity formed in the Kingdom. Nonresident: Any person who does not satisfy the requirements of the status of a resident. Saudi citizen: A person holding Saudi nationality or who is treated as such. Commercial books: Set of commercial books kept by the taxpayer in which all commercial transactions are recorded as described by Royal Decree No. (M/61) dated 17/12/1409H and its implementing regulations issued by Ministerial Decision No. (699) dated 29/7/1410H, amended by Ministerial Decision No. (1110) dated 24/12/1410H or any subsequent amendments. Regulations: Implementing regulations of this Law. Any word or phrase with no specific definition in this Chapter shall have the same definition it has in other Laws applicable in the Kingdom provided that such definition is not inconsistent with the provisions of this Law.

المادة 2

(a) A resident capital company with respect to shares of non-Saudi partners. (b) A resident non-Saudi natural person who conducts business in the Kingdom. (c) A nonresident who conducts business in the Kingdom through a permanent establishment. (d) A nonresident with other taxable income from sources within the Kingdom. (e) A person engaged in the field of natural gas investment. (f) A person engaged in the field of oil and hydrocarbons production.

المادة 3

(a) A natural person is considered a resident in the Kingdom for a taxable year if he meets any of the two following conditions: (1) He has a permanent place of residence in the Kingdom and resides in the Kingdom for a total period of not less than thirty (30) days in the taxable year. (2) He resides in the Kingdom for a period of not less than one hundred eighty three (183) days in the taxable year. For purposes of this paragraph, residence in the Kingdom for part of a day is considered residence for the whole day, except in case of a person in transit between two points outside the Kingdom. (b) A company is considered resident in the Kingdom during the taxable year if it meets any of the following conditions: (1) It is formed in accordance with the Companies Law. (2) Its central management is located in the Kingdom.

المادة 4

(a) A permanent establishment of a nonresident in the Kingdom, unless otherwise stated in this Article, consists of the permanent place of the nonresident's activity through which it carries out business, in full or in part, including business carried out through its agent. (b) The following are considered a permanent establishment: (1) Construction sites, assembly facilities, and the exercise of supervisory activities connected therewith. (2) Installations, sites used for surveying natural resources, drilling equipment, ships used for surveying for natural resources as well as the exercise of supervisory activities connected therewith. (3) A fixed base where a nonresident natural person carries out business. (4) A branch of a nonresident company licensed to carry out business in the Kingdom. (c) A place is not considered a permanent establishment of a nonresident in the Kingdom if used in the Kingdom only for the following purposes: (1) Storing, displaying or delivering goods or products belonging to the nonresident. (2) Keeping a stock of goods or products belonging to the nonresident for the purpose of processing by another person. (3) Purchasing goods or products for the sole purpose of collection of information for the nonresident. (4) Carrying out other activities of preparatory or auxiliary nature for the interests of the nonresident. (5) Drafting contracts for signature in connection with loans, delivery of goods or activities of technical services. (6) Performing any series of activities stated in subparagraphs (1) to (5) of this paragraph. (d) A nonresident partner in a resident partnership is considered an owner of a permanent establishment in the Kingdom, in the form of an interest in a partnership.

المادة 5

(a) Income is considered accrued in the Kingdom in any of the following cases: (1) If it is derived from an activity which occurs in the Kingdom. (2) If it is derived from immovable property located in the Kingdom, including gains from the disposal of a share in such immovable properties and from the disposal of shares, stocks or partnership in a company the property of which consists mainly, directly or indirectly of shares in immovable properties in the Kingdom. (3) If it is derived from the disposal of shares or a partnership in a resident company. (4) If it is derived from lease of movable properties used in the Kingdom. (5) If it is derived from the sale or license for use of industrial or intellectual properties used in the Kingdom. (6) Dividends, management or directors' fees paid by a resident company. (7) Amounts paid against services rendered by a resident company to the company's head office or to an affiliated company. (8) Amounts paid by a resident against services performed in whole or in part in the Kingdom. (9) Amounts for exploitation of a natural resource in the Kingdom. (10) If the income is attributable to a permanent establishment of a nonresident located in the Kingdom, including income from sales in the Kingdom of goods of the same or similar kind as those sold through such a permanent establishment, and income from rendering services or carrying out another activity in the Kingdom of the same or similar nature as an activity performed by a non-resident through a permanent establishment. (b) Place of payment of the income shall not be taken into account in determining its source. (c) For purposes of this Article, a payment made by a permanent establishment of a nonresident in the Kingdom is considered as if paid by a resident company.

المادة 6

(a) The tax base of a resident capital company is the shares of non-Saudi partners in its taxable income from any activity from sources within the Kingdom minus expenses permitted under this Law. (b) The tax base of a resident non-Saudi natural person is his taxable income from any activity from sources within the Kingdom minus expenses permitted under this Law. (c) The tax base of a non-resident who performs an activity within the Kingdom through a permanent establishment is his taxable income arising from or related to the activity of such establishment minus expenses permitted under this Law. (d) The tax base of each natural person is determined independently. (e) The tax base of a capital company is determined separately of its shareholders or partners.

المادة 7

(a) The tax rate of the tax base is twenty percent (20%) for each of the following: (1) A resident capital company. (2) A non-Saudi resident natural person who conducts business. (3) A nonresident person who conducts business in the Kingdom through a permanent establishment. (b) The tax rate of the tax base for a taxpayer engaged only in natural gas investment activities is thirty percent (30%). (c) The tax rate of the tax base for a taxpayer engaged in the production of oil and hydrocarbon materials is eighty five percent (85%). (d) Withholding tax rates are those specified under Article Sixty Eight of this Law.

المادة 8

Taxable Income is the gross income including all revenues, profits and gains of any type and of any form of payment resulting from carrying out an activity, including capital gains and any incidental revenues, minus exempted income.

المادة 9

(a) The gain or loss from the disposal of an asset is the difference between the compensation received for the asset and its cost base. (b) No gain or loss on disposal of a depreciable asset is taken into account other than what is stated in Article Seventeen of this Law. (c) In determining taxable income, a natural person may not take into account gain or loss on disposal of an asset that is not for use in the activity. (d) The cost base of an asset purchased, produced, manufactured, or constructed by the taxpayer itself is the amount paid or incurred by the taxpayer in cash or in kind in the process of acquiring the asset. (e) Where a taxpayer disposes of a part of an asset, the cost base of the asset is apportioned between the part retained and the part disposed of in accordance with their market value at the time of purchase of the asset. (f) Expenses incurred to alter or improve a non-depreciable asset are added to the cost base of the asset. (g) The compensation value for disposal of an asset against assets in rem is based on the market value of those assets in rem, including exemption from debt on the asset. (h) Where a taxpayer disposes of an asset by way of gift or inheritance, the disposer is treated as having received compensation equal to the market value of the asset at the time of disposal, unless paragraph (i) of this Article is applicable. (i) If the asset disposed of is encumbered by debt exceeding its market value, the taxpayer disposing of the asset is treated as having received compensation equal to the value of such debt. (j) In determining the tax base, no gain or loss is taken into account on an involuntary disposal of an asset to the extent that the compensation value is used in purchasing an asset of the same kind within one year of the involuntary disposal. (k) The cost base of a replacement asset described in paragraph (j) of this Article is determined with reference to the cost base of the replaced asset. (l) Where an asset owned by a taxpayer is converted to personal use or otherwise ceases to be used in the generation of income, the taxpayer is deemed to have disposed of the asset for its market value, with the recognition of the resulting gain but not the loss.

المادة 10

The following types of income are exempt from income tax: (a) Capital gains realized from disposal of securities traded in the stock market in the Kingdom in accordance with restrictions specified in the Regulations. (b) Gains resulting from disposal of property other than assets used in the activity.

المادة 11

In determining the tax base of each taxpayer, a deduction is allowed for donations paid during the taxable year to public agencies or philanthropic societies licensed in the Kingdom which are nonprofit organizations and are allowed to receive donations.

المادة 12

All regular and necessary expenses of earning taxable income, paid or accrued, incurred by the taxpayer during the taxable year are deductible in determining the tax base, with the exception of outlays of a capital nature and other nondeductible expenses according to Article Thirteen of this Law and other provisions of this Chapter.

المادة 13

No deduction is allowed for the following: (a) Expenses not connected with the earning of taxable income. (b) Any amounts paid or benefits offered to a shareholder, a partner or any of their relatives which constitute salaries, wages, awards or the like, or those which do not satisfy the conditions for transactions among independent parties against properties or services. (c) Recreation expenses. (d) Expenses of a natural person for personal consumption. (e) Income tax paid in the Kingdom or in another country. (f) Fines and financial penalties paid or payable to any party in the Kingdom, excluding those paid for breach of contractual conditions and obligations. (g) Any bribe or similar amounts considered a criminal offense under the laws of the Kingdom, even if paid abroad.

المادة 14

(a) A taxpayer may deduct bad debts arising from sales of goods or services that have been previously declared as a taxable income of the taxpayer. (b) A bad debt may be deducted when stricken off the taxpayer's books when there is suitable evidence proving the impossibility of collecting it, as specified in the Regulations.

المادة 16

Research and development expenses connected with the earning of taxable income may be deducted. Expenses for purchase of land or equipment used for research may not be deducted. Such equipment shall be subject to depreciation under Article Seventeen of this Law.

المادة 17

(a) Except for land, a depreciation may be deducted for a taxpayer's depreciable tangible or intangible assets which lose value because of wear and tear or obsolescence and which are wholly or partly used in the generation of taxable income, and remain to have a value after the end of the taxable year. (b) Depreciable assets are classified into groups and depreciation rates as follows: (1) Stationary buildings: five percent (5%). (2) Movable industrial and agricultural buildings: ten percent (10%). (3) Factories, machines, engines, hardware and software (computer software) and equipment, including passenger and cargo vehicles: twenty five percent (25%). (4) Expenses for geological surveying, drilling, exploration, and other preliminary work to exploit natural resources and develop their fields: twenty percent (20%). (5) All other tangible and intangible depreciable assets not included in pervious categories, such as furniture, planes, ships, trains and goodwill: ten percent (10%). (c) The depreciation deduction for each group is determined in accordance to paragraphs (d) to (l) of this Article. (d) The depreciation deduction for each group is calculated by applying its depreciation rate determined in accordance with paragraph (b) of this Article against the balance of the value of such group at the end of the taxable year. (e) The balance of the value of each group at the end of the taxable year is the total of the balance of the value of the group at the end of the previous taxable year after the depreciation deduction in accordance with this Article for the previous taxable year, and fifty percent (50%) of the cost base of assets in use added to the group in the current and previous taxable years after the deduction of fifty percent (50%) of the compensation received from the assets disposed of during the current and previous taxable years, provided that the balance does not become in the negative. (f) If the taxpayer converts its assets to personal use or if the asset ceases to be used in the generation of taxable income, this action by the taxpayer is deemed to be a disposal of the asset for its market value. (g) When fifty percent (50%) of the compensation of the assets disposed of during the current and previous taxable years exceeds the balance of the value of the group at the end of the taxable year, regardless of the amount of such compensation, the value of the group shall be reduced to zero and the excess is included in the taxpayer's taxable income. (h) If the balance of the value of the group at the end of the year, after allowing for the deduction in accordance with paragraph (d), is less than one thousand (1,000) riyals, the amount of the balance may be deducted. (i) Where all the assets in a group are disposed of, the balance of the group may be deducted at the end of the year. (j) Where a land is bought or sold with constructions thereon, the value shall be reasonably apportioned to arrive at a separate value of the construction. (k) In case a part of the assets is used for the generation of taxable income, a depreciation deduction is allowed for a part of the asset value against the part of the asset used in the generation of the taxable income. (l) As an exception to the provisions of the previous paragraphs, assets under Build, Operate and Transfer (BOT) or Build, Own, Operate and Transfer (BOOT) contracts may be depreciated over the contract period or over the remaining period of the contract, if acquired or renewed during that period.

المادة 18

(a) Expenses incurred by the taxpayer for the repair or improvement of depreciable assets in each group may be deducted. (b) The amount of expenses deductible in accordance with paragraph (a) of this Article for each year shall not exceed four percent (4%) of the balance of the value of the group at the end of that year. (c) The amount exceeding the limit stated in paragraph (b) of this Article shall be added to the balance of the value of the group.

المادة 19

(a) Expenditures for geological surveying and preliminary work for the extraction of natural resources are deducted in the form of amortization expenses at the depreciation rate determined in paragraph (b) of Article Seventeen of this Law, where these expenses constitute an independent group. (b) This Article also applies to expenses of intangible assets incurred by the taxpayer in acquisition of rights to geological surveying and the processing and exploitation of natural resources.

المادة 20

(a) An employer's contributions to an authorized retirement fund established in accordance with the laws of the Kingdom may be deducted in favor of the employee. (b) The deduction allowed under paragraph (a) of this Article in respect of each employee shall not exceed twenty five percent (25%) of each employee's income, prior to calculating the employer's contributions. (c) The employee's contributions to an authorized retirement fund may not be deducted.

المادة 21

(a) A net operating loss may be carried forward to the taxable year following the year in which the loss is incurred. The carried-forward loss shall be deducted from the tax base of the following taxable years until the cumulative loss is fully offset. The Regulations shall specify the maximum limits allowed to be annually deducted. (b) A net operating loss is the deductions allowed under this Chapter which are in excess of the taxable income for the taxable year. (c) To calculate the net operating loss for a natural person, the deductions and income for activity only shall be taken into consideration.

المادة 22

(a) The taxable year is the State's fiscal year. (b) A taxpayer may use a twelve-month period other than the one specified in paragraph (a) of this Article as a taxable year, in accordance with the restrictions specified in the Regulations. (c) If a taxpayer changes its taxable year, the interval between the last full taxable year prior to the change and the starting date of the new taxable year shall be considered as a short independent fiscal period. The first year of a new taxpayer or the last year of a taxpayer in case of discontinuation or liquidation may be a short independent fiscal year, unless it is stipulated to be a long fiscal year in accordance with Companies Law. (d) Groups of related companies, as defined in Article Sixty Four of this Law, shall use the same taxable year.

المادة 23

(a) A taxpayer's method of accounting must clearly reflect the taxpayer's income. (b) The gross income and expenses of a resident company, and any other taxpayer who keeps or is required by Law to keep commercial books according to the accounting principles generally accepted in the Kingdom, are determined according to such books after adjustment of the accounts so as to conform to the rules of this Law. (c) For taxation purposes, a natural person may record his transactions on a cash or accrual basis. However, if his gross income from business during a taxable year exceeds the amount specified in the Regulations, he must use the accrual method in all succeeding taxable years. (d) A company which keeps or is required by Law to keep commercial books must record income and expenses on an accrual basis. Otherwise, it may, for taxation purposes, use either the cash or accrual method. (e) Except for a change from the cash basis to the accrual basis required in accordance with paragraphs (c) or (d) of this Article, a taxpayer may change its method of accounting upon obtaining the Department's consent. (f) If the taxpayer changes its method of accounting, it must perform adjustments to items of income and deduction or to debt or any other items in the taxable year following the change, so that no item is omitted nor included more than once.

المادة 24

A taxpayer who uses the cash method in its books and records shall register the received income when received or made available, and the paid expenses when paid.

المادة 25

(a) A taxpayer who uses the accrual method shall record income and expenses when they are due. (b) An amount becomes payable to the taxpayer when the taxpayer is entitled to receive it, even if payment is postponed or paid in installments. (c) An amount becomes payable by the taxpayer when all facts determining liability have occurred.

المادة 26

(a) For a taxpayer who uses the accrual method, income and expenses relating to a long term contract shall be calculated on the basis of the percentage of the work accomplished during the taxable year. (b) The percentage of work accomplished is determined by comparing the costs of the contract incurred during the taxable year with the total estimated cost of the contract. (c) For purposes of this Article, the term 'long term contract' means a contract for manufacture, installation, construction or performing services related thereto, and whose execution is not completed within the year in which execution started, with the exception of the contract expected to be completed within six months of the actual starting date of work cited in the contract.

المادة 27

(a) A taxpayer who maintains a stock shall establish and maintain inventories for such a stock. (b) The cost of goods sold during the taxable year shall be deducted. (c) The cost of goods sold during a taxable year is determined by adding the cost of goods purchased during the year to the opening stock and subtracting the value of the closing stock. (d) A taxpayer who uses the cash method shall calculate the cost of stock by use of the prime (direct) cost method or the absorption costing method, but a taxpayer using the accrual method shall calculate the cost of stock by use of the absorption costing method only. (e) The value of the closing stock is the book or market value, whichever is lower at that date. A taxpayer shall calculate the book value of the stock by use of the weighted average method. However, it may use another method, after obtaining a written permission from the Department, and it may not change the method chosen except with the consent of the Department.

المادة 28

Income or expenses relating to jointly-owned property are apportioned among partners in proportion to their respective shares in the property.

المادة 29

(a) If calculation of the tax base or gross income involves non-cash properties, services, or other benefits, their fair market value is calculated as of the date it was recorded in the books for taxation purposes. (b) The market value of non-cash property transferred to an employee or any other service provider is determined without regard to any restriction on transfer of ownership.

المادة 30

(a) Gross income and tax base are calculated in Saudi riyal. (b) If calculation of income involves an amount in a currency other than the Saudi riyal, the amount shall be calculated for taxation purposes in Saudi riyal at the exchange rate declared by the Saudi Arabian Monetary Agency on the date of the transaction.

المادة 31

The gross income of a taxpayer shall include any payment from which the taxpayer benefits directly or indirectly, as well as any payment dealt with according to its instructions, if such payment is considered income of the taxpayer if paid to the taxpayer directly.

المادة 32

Compensation amounts received shall take the status of what is compensated for.

المادة 33

(a) If a taxpayer recoups expenses, loss, or previously permitted bad debt, the amount recouped is included in the gross income for the year in which it is recouped and shall take the status of the income related to expenses. (b) For the purpose of this Article, expenditure shall be considered recouped in the absence of the basis for the expenditure.

المادة 34

(a) If branches of foreign airline, sea or land freight and transportation companies operating in the Kingdom do not submit proof of their tax base in accordance with this Law, such tax base shall be determined as follows: (1) The tax base for branches of foreign airlines operating in the Kingdom shall be considered five percent (5 %) of the gross income realized in the Kingdom from tickets, cargo, mail or any other income. Such branches shall declare their gross income in the Kingdom at the times specified by Law. (2) The tax base of foreign freight, land and sea transportation companies operating in the Kingdom shall be considered five percent (5 %) of income realized in the Kingdom from charges for freight or any other income. Such branches are required to declare their income in the Kingdom at the times specified by Law. (b) The Minister shall have the power to authorize certain other sectors to use estimated taxation to determine their tax base and rates in accordance with the Regulations.

المادة 35

In case the conditions of a treaty or an international agreement to which the Kingdom is party are inconsistent with articles and provisions of this Law, the

المادة 36

Article 36: General Provisions (a) Taxes shall be imposed on partners in partnerships and not on the company itself. However, the company is required to file a tax declaration for the purpose of information showing the amount of income, profit, loss, expenses, debts, and other items or tax related matters of the partnership for the taxable year. The declaration shall be subject to procedural rules, including fines imposed on tax declarations in accordance with this Law. (b) The partnership, rather than its partners, shall be responsible for choosing the taxable year, the accounting method, the inventory method and any other accounting policies consistent with this Law. It shall also be responsible for filing notifications and statements required in relation to its types of activity. (c) The provisions of this Law concerning capital companies shall apply to shares of limited partners in limited partnerships.

المادة 37

Article 37: Taxation on Partners (a) In determining the tax base of a partner, income, deductions, losses, and debt derived or accrued against the partnership retain their status as to geographic source and type of income, gains, deductions, losses, and debt. (b) A partner's share in a partnership's income, loss, expenses, and debt shall be taken into account for the purpose of determining the tax base of the partner's taxable year in which the partnership's taxable year ends. The partner's loss which exceeds his cost base is suspended until the partner acquires sufficient cost base to offset the loss or until the partner's share is disposed of. (c) The loss of the related party disallowance rule stated in paragraph (d) of Article Sixty Three of this Law shall not be applicable to the partner's share of losses and expenses in a partnership in accordance with paragraph (b) of this Article. A partnership's loss suspended according to paragraph (d) of Article Sixty Three shall not be distributed among the partners until its conditions are fulfilled. The conditions shall be considered fulfilled in case a loss is incurred in distribution upon complete disposal of the partner's share.

المادة 38

Article 38: Cost Base of the Partner's Share (a) The cost base of a partner's share in a partnership shall be determined by the amount the partner pays against his share plus the cost base of properties he contributed to the company. (b) The cost base increases by the amount of a partner's share in a partnership's income (along with his exempt income) included in the partner's gross income. (c) The cost base decreases, but not below zero, by the cost of distributions from the partnership to the partner and by the partner's share of partnership losses, and expenses as well as nondeductible expenses of the partnership, except for capital items. (d) Debt incurred by the partnership, including the debt against its properties, increases each partner's cost base according to his share in the partnership. However, debt incurred by some partners in the partnership, in their personal status, shall increase the cost base for these partners only.

المادة 39

Article 39: Cost Base of Partnership's Assets (a) The initial cost base of properties contributed to a partnership shall be equal to the cost base of the contributing partner. (b) If a partner retires from a partnership and receives a distribution causing him to make profit by disposing of his share in the partnership, the cost base of the partnership's profiting assets shall be adjusted by increasing the amount of profit made, provided that the value of such assets does not exceed their market value. Cost base adjustments are distributed among assets according to the percentage difference between the cost base and the market value. (c) If a partner retires from a partnership and receives a distribution causing him to incur a loss by disposing of his share in the partnership, the cost base of the partnership's losing assets shall be adjusted by reducing the value of the loss incurred, provided that the cost base of such assets is not less than zero. Cost base adjustments are distributed among assets in accordance with the percentage difference between the cost base and the market value. (d) For purposes of paragraphs (b) and (c) of this Article, a profiting asset is the asset that has a cost base lower than the market value and a losing asset is the asset that has a cost base higher than the market value.

المادة 40

Article 40: Transfer of Property to a Partnership (a) No gain or loss shall be calculated for a transfer of a partner's asset to a partnership against acquiring a share in such partnership. (b) The partner is considered an owner of a share in the partnership equal to the difference between the value of the asset transferred by him to the partnership according to market prices and the amount paid to him. If the amount paid to him exceeds the market price, the excess amount shall be considered as distribution to the partner by the partnership.

المادة 41

Article 41: Transfer of Asset Ownership from a Partnership to a Partner (a) A partnership's transfer of a non-cash asset to a partner therein, including liquidation of the partner's share, is treated as a disposal of the asset by the partnership, with declaration of gain or loss on the transfer date. (b) A partner shall take the cost base of the asset which equals the market value of the asset. (c) A partner is deemed to have received a distribution of profit from the partnership with a value equal to the market price for the ownership of the asset transferred to him without paying its cost. The partner is treated as having disposed of part or all of his share in the partnership, if the estimated distribution exceeds the partner's cost base in the partnership. If the distribution is a complete disposal of a partner's share, and is less than the partner's cost base, the difference between the cost base and distribution may be deducted on the basis that it is a loss resulting from his disposal of his share.

المادة 42

Article 42: Change of Partners in a Partnership (a) If a partner or partners enter into or retire from a partnership which results into its reconstitution, all its assets shall be considered transferred to the new partnership against shares in this partnership. (b) A reformation of a partnership occurs when the entry or retirement of a partner or partners results in a change in the partnership's membership exceeding fifty percent (50%) of its formation in the year preceding the change.

المادة 43

Article 43: General Provisions (a) A tax shall be imposed on the shares of general partners in a partnership limited by shares, as in a partnership. Henceforth, the general partners' shares are deducted in determining the tax base of the partnership. The provisions of this Law which are applicable to partnerships shall apply to the shares of general partners in partnerships limited by shares. (b) In case of a change of fifty percent (50%) or more in the ownership or control of a capital company, the share of a non-Saudi may not be deducted in losses incurred prior to the change in accordance with Article Twenty One of this Law in taxable years following the change.

المادة 44

Article 44: A natural gas investment tax shall be imposed on every person engaged in natural gas investment, gas liquids and condensates within the Kingdom, its exclusive economic region or its continental shelf.

المادة 45

Article 45: (a) Natural gas investment activities shall mean drilling, production, collection, treatment, processing, fractionation of natural gas liquids, production and gathering of gas condensates as well as transportation of natural gas, its liquids and gas condensates. (b) Transportation shall mean transporting natural gas from purification plants to processing and fractionation plants or from any such plants to end user facilities, as well as transporting gas condensates and its liquids. That does not include local distribution networks and pipelines constructed by non-gas producers beyond the official sale points. (c) Gas condensates shall mean condensates in their natural form, which are hydrocarbons that exist in a single gaseous phase in reservoirs with original temperatures in the range between the critical and maximum temperatures, where it is possible for the substance to have two phases side by side and which are extracted from wells completed in gas condensate reservoirs and become liquid at standard conditions of temperature and pressure.

المادة 46

Article 46: Income from natural gas investment activities shall be the gross income derived from the sale, exchange or transfer of natural gas and its liquids, gas condensates, including sulfur and other products, as well as any other incidental or non-operational income derived from the taxpayer's primary activity, regardless of its type or source, including income derived from the utilization of excess energy in a facility subject to natural gas investment tax.

المادة 47

Article 47: The natural gas investment tax base shall be the gross income referred to in Article Forty Six of this Law, minus the expenses deductible under this Law. The amounts of royalties and surface rentals shall be considered as deductible expenses.

المادة 48

Article 48: The natural gas investment tax rate for any taxable year shall be determined on the basis of the internal rate of return on the cumulative annual cash flows of the taxpayer derived from natural gas investment activities. The tax rate applicable to natural gas investment tax base of the taxpayer shall be in accordance with the following table: [table of IRR % and NGIT % values as set out in the Law]. Cumulative annual cash flows shall mean the aggregation of the annual cash flows of the taxpayer subject to the natural gas investment tax for each year starting from the first year of its tax declaration in which the taxpayer was subject to the natural gas investment tax until the year preceding the year in which the tax declaration is due for presentation. The internal rate of return shall mean the discount rate that causes the net present value of these cumulative annual cash flows (after being discounted to the start of the first year of such cash flows) to equal zero, and then rounded to the nearest tenth of a percent (0.1%).

المادة 49

Article 49: The annual cash flows shall be calculated by adjusting the natural gas investment tax base as follows: (a) Adding back any operational losses carried forward from previous years. (b) Adding back non-cash items deducted for the purpose of determining the taxpayer's base. (c) Adding back all financing fees and other bank service fees. (d) Subtracting capital cash expenditures except financing fees and other bank service fees. (e) Subtracting the natural gas investment tax and companies income tax actually paid.

المادة 50

Article 50: (a) Income tax stipulated under paragraph (b) of Article Seven of this Law shall be applied to the natural gas investment tax base of a taxpayer subject to natural gas investment tax. (b) The income tax amount paid by a taxpayer for natural gas investment tax base in accordance with paragraph (a) of this Article shall be deducted from the natural gas investment tax to be paid by the taxpayer.

المادة 51

Article 51: (a) For the purpose of calculating the natural gas investment tax, the taxpayer's natural gas investment tax base for each gas exploration and production contract or agreement with the Government shall be deemed independent of the natural gas investment tax base or any other gas exploration and production contract or agreement. The taxpayer shall file separate tax declaration and audited closing accounts for each gas exploration and production contract or agreement. (b) A taxpayer's natural gas investment tax base shall be deemed independent of the tax base for its other activities that are not related to its natural gas investment activity. The taxpayer shall file a tax declaration and audited closing accounts for its natural gas investment tax activity separate from its other activities.