Article 47 - Eligible Payroll Costs

For the purposes of applying the provisions of the Law, Eligible Payroll Costs are employee compensation expenditure, including salaries, wages and other expenditure that provide a direct and separate personal benefit to the employee, such as health insurance, stock-based compensation, pension contributions, payroll taxes and employer social security contributions with the exception of both of the following:

1. Costs that are capitalised and included in the carrying value of Eligible Tangible Assets.

2. Costs attributable to a Constituent Entity's International Shipping Income or Qualified Ancillary International Shipping Income that is excluded from the computation of the Constituent Entity Income or Loss. Attribution of such costs should be made in accordance with the principles applied in Article 27 of these Regulations.

Eligible Employees comprise both of the following:

1. Full-time or part-time employees of a Constituent Entity.

2. Independent contractors participating in the ordinary operating activities of the Multinational Enterprise Group under the direction and control of the Multinational Enterprise Group.

For the purposes of Article 46 of these Regulations, an Eligible Employee shall be considered to perform activities for a Constituent Entity located in the Kingdom where that Eligible Employee is located in the Kingdom for more than 50% of their working time in a Fiscal Year.

Notwithstanding the provisions of Paragraph C of this Article, where an Eligible Employee is located in the Kingdom for 50% or less of their working time in a Fiscal Year, but spends any of their working time in the Kingdom during that Fiscal Year, this Eligible Employee shall be considered to perform activities for a Constituent Entity located in the Kingdom for the Fiscal Year, but the maximum amount of Eligible Payroll Costs for that Eligible Employee for the Fiscal Year shall be calculated in accordance with the formula