Article 14 - Adjustments for Stock-based Compensation

At the election of the Filing Constituent Entity, for the purposes of determining the Constituent Entity Income or Loss of a Constituent Entity located in the Kingdom, a Filing Constituent Entity may substitute the amount allowed as a deduction in the computation of its Taxable Profit or Loss for the amount expensed in its financial accounts with regards to a cost or expense paid with stock-based compensation.

Where a stock-option granted by a Constituent Entity expires without being exercised, the Constituent Entity shall include the total amount previously deducted in the computation of its Constituent Entity Income or Loss for all previous Fiscal Years in respect of that stock-option as additional income in the Fiscal Year in which the option expired.

Where the election referred to in Paragraph A of this Article is made for a Fiscal Year after part of the amount of stock-based compensation expense of a transaction has been recorded in the financial accounts but before the date on which the option is exercised, the Constituent Entity shall include in the computation of its Constituent Entity Income or Loss for that Fiscal Year an amount equal to the difference between the total amount of stock-based compensation cost or expense that has been deducted in the computation of its Constituent Entity Income or Loss in previous Fiscal Years and the total amount of stock-based compensation cost or expense that would have been deducted in the computation of its Constituent Entity Income or Loss in previous Fiscal Years had the election been in place.

The election referred to in paragraph A of this Article is a Five-Year Election which can be made in accordance with Article 20 of the Law and shall apply to all Constituent Entities located in the Kingdom.

Where the election referred to in Paragraph A of this Article is revoked, the Constituent Entity shall include in the computation of its Constituent Entity Income or Loss for the revocation year the amount that was deducted pursuant to the election that is in excess of the financial accounting expense accrued in respect of stock-based compensation that has not been paid.