ℹ️ Fast-loading version for search engines - Click here for the interactive version
Document Type: Tax Law Article
Law: Income Tax Law (Royal Decree No M/1 - 21 Feb 2004)
Article Number: 20
Country: 🇸🇦 KSA
Location: Chapter 5 - Expenses of Earning Income
Order: 20

Article 20 - Contributions to Authorized Retirement Funds

Article 20 - Contributions to Authorized Retirement Funds

Chapter 5 - Expenses of Earning Income

Article 20 - Contributions to Authorized Retirement Funds

  1. [Except for capital companies, the employer’s contributions on behalf of the employee to a statutory pension fund in accordance with the Kingdom’s regulations may be deducted, provided that the allowable deduction per employee does not exceed 25% of the employee’s income before accounting for the employer’s contributions.

  2. Capital companies are allowed, for tax purposes, to deduct their contributions to retirement funds, social insurance funds and any fund established to provide employees end of service benefits or compensation for their medical charges; provided that:

    1. The deduction shall not exceed the value of the non-funded obligations of these funds and the accrued amounts thereto as of the beginning of the fiscal year in which the deduction is made.

    2. Such funds must be separate legal entities, whether established in the Kingdom or abroad.

    Capital companies must provide the Authority with information regarding such funds, in accordance with what is specified by the Regulations.

  3. No deduction is allowed in respect of employees' contributions to retirement funds.][19]

Footnotes

[19]Amended by RD No M/131 dated 29/12/1438H (20 September 2017) with effect from 1 January 2018. Prior to the amendment, the clause read as follows:

  1. '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.

  2. The deduction allowed under paragraph (a) of this Article for each employee shall not exceed 25% of his income, prior to calculating the employer's contributions.

  3. The employee's contributions to an authorized retirement fund may not be deducted.'