GTL Summary:

Article 5 of the KSA Income Tax Law establishes the criteria for determining when income is considered to have accrued within the Kingdom, making it subject to taxation. Income is deemed KSA-sourced if it derives from activities or immovable property within the Kingdom, or from the disposal of shares in a resident company. This also includes income from leasing movable property, licensing intellectual property used in KSA, and exploiting natural resources. Furthermore, dividends, management fees paid by resident companies, and income attributable to a non-resident's permanent establishment are included. The article explicitly states that the place of payment is irrelevant in determining the income's source.

Document Type: Tax Law Article
Law: Income Tax Law (Royal Decree No M/1 - 21 Feb 2004)
Article Number: 5
Country: 🇸🇦 KSA
Location: Chapter 2 - Taxpayers
Order: 5
Last updated at: 2025-12-19 09:23:03 UTC

Chapter 2 - Taxpayers

Article 5 - Source of Income

  1. Income shall be 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 in the Kingdom.

    6. Dividends or 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 affiliate thereof.

    8. Amounts paid by a resident against services performed in whole or in part in the Kingdom.

    9. Amounts for the exploitation of a natural resource in the Kingdom.

    10. If the income is attributable to a permanent establishment of a non-resident 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.

  2. The income's place of payment shall not be taken into account in determining its source.

  3. For the purposes of this Article, a payment made by a permanent establishment of a non-resident in the Kingdom shall be considered as if paid by a resident company.

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