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Document Type: Tax Law Article
Law: Income Tax Law (Royal Decree No M/1 - 21 Feb 2004)
Article Number: 3
Country: 🇸đŸ‡Ļ KSA
Location: Chapter 2 - Taxpayers
Order: 3

Article 3 - Concept of Residency

Article 3 - Concept of Residency

Chapter 2 - Taxpayers

Article 3 - Concept of Residency

  1. A natural person shall be 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 30 days in the taxable year.

    2. He resides in the Kingdom for a period of not less than 183 days in the taxable year.

    For the purposes of this paragraph, residence in the Kingdom for part of a day shall be considered residence for a whole day, except in case of a person in transit between two points outside the Kingdom.

  2. A company shall be considered a 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.[6]

Footnotes

[6]Minister of Finance Resolution No. 2194 dated 12/07/1432H, concerning the determination of the meaning of 'principal place of management' as referred to in this paragraph, states the following:

  1. 'Principal place of management' means the place where the chairman, the board of directors, and senior management officers regularly establish the high-level policies, and make the key administrative, managerial, and commercial decisions necessary to carry out the company's activities in general, provided that the principal place of management is in the Kingdom when at least two of the following conditions are met:

    1. Meetings of the board of directors are regularly held in the Kingdom in which high-level policies and key decisions related to the company's management and operation in the Kingdom are taken.

    2. Key executive decisions related to company management are made in the Kingdom by senior executives such as the CEO and other executive management officers.

    3. Most of the company's day-to-day operations are carried out in the Kingdom, including those of its senior executives.

  2. If the company is a financial company, then for the purposes of this paragraph it shall be subject to all applicable rules and requirements for financial companies operating in the Kingdom, whether their activities and operations are conducted within or outside the Kingdom.