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Document Type: Tax Law Article
Law: Income Tax Law (Royal Decree No M/1 - 21 Feb 2004)
Article Number: 7
Country: 🇸🇦 KSA
Location: Chapter 3 - Tax Base and Tax Rates
Order: 7

Article 7 - Tax Rates

Article 7 - Tax Rates

Chapter 3 - Tax Base and Tax Rates

Article 7 - Tax Rates

  1. The tax rate of the tax base shall be 20% for each of the following:

    1. A resident capital company.

    2. A non-Saudi resident natural person who conducts business.

    3. A non-resident person who conducts business in the Kingdom through a permanent establishment.

  2. [The tax rate on the tax base for a taxpayer engaged only in natural gas investment activities shall be 20%.][11]

  3. [The tax rate on the tax base for a taxpayer engaged in the production of oil and hydrocarbons shall be as follows:

    1. Fifty percent (50%) for a taxpayer whose total capital investments in the Kingdom exceed three hundred and seventy-five billion Saudi riyals.

    2. Sixty-five percent (65%) for a taxpayer whose total capital investments in the Kingdom exceed three hundred billion Saudi riyals and do not exceed three hundred and seventy-five billion Saudi riyals.

    3. Seventy-five percent (75%) for a taxpayer whose total capital investments in the Kingdom exceed two hundred and twenty-five billion Saudi riyals and do not exceed three hundred billion Saudi riyals.

    4. Eighty-five percent (85%) for a taxpayer whose total capital investments in the Kingdom do not exceed two hundred and twenty-five billion Saudi riyals.

    For the purposes of applying this paragraph, the term “total capital investments” means the aggregate accumulated value of fixed assets, including property, plant, equipment, and installations, and other tangible and intangible assets, including the costs of exploration and development activities for oil and hydrocarbon substances, prior to the deduction of depreciation and amortization.][12]

  1. Withholding tax rates are those specified under Article 68 of this Law.

  2. [The tax payable by a person engaged in the production of oil and hydrocarbons in addition to investing in natural gas in the Kingdom shall be the sum of his taxes from both tax bases as per paragraphs (b) and (c) of this Article.][13]

Footnotes

[11]Amended by RD No M/70 dated 11/07/1439H (28 March 2018) with effect from 1 January 2018. Prior to the amendment, the clause read as follows:

'The tax rate of the tax base for a taxpayer engaged only in natural gas investment activities is 30%'

The tax rate stated in this paragraph shall also apply to the tax base of the taxpayer deriving income from the separation of associated gas from oil production, for persons subject to tax in accordance with paragraph (2) of Article 6 of the Law, for a period of five (5) years starting from 01/01/2020. If such persons fail to comply with the obligations specified in paragraph (9) of Article 6 of the Law, relating to the separation of associated gas from oil production activities, during the five (5) years commencing from 01/01/2020, then the tax due on them under paragraph (c) of Article 7 of the Law shall be collected in accordance with Royal Decree No. M/13 dated 18/01/1441H.

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

'The tax rate of the tax base for a taxpayer engaged in the production of oil and hydrocarbon materials is eighty five percent (85%)'

[13]Inserted by RD No M/70 dated 11/07/1439H (28 March 2018) with effect from 1 January 2018.