The following expenses are not deductible:

1. Salaries, wages, and equivalent payments, whether in cash or in kind, paid to owners, partners or shareholders (except shareholders in joint stock company), or to any of their family members including parents, spouses, children or siblings.

2. Compensation, whether in cash or in kind, paid to a partner, shareholder, or any of their family members (parents, spouses, children or siblings) for property or services provided to the company, in excess of the fair market value of such property or services at the time of the transaction.

3. Entertainment expenses, such as those for parties, sport events, recreational activities, entertainment trips and similar items.

4. Any expenses for a natural person's personal consumption, such as personal withdrawals, family support expenses, or education expenses for family members.

5. Income tax and related fines and penalties paid or payable to the Kingdom or to other countries.

6. Fines or financial penalties paid or payable to any party in the Kingdom, such as traffic fines, or fines for causing damage to public utilities.

   This does not include fines or penalties paid for breach of contractual obligations, such as fines on delayed or defaulted completion of contracts. Such fines are deductible provided they are documented by the contracting party and the income from such penalties is reported in the year of recovery.

7. Any bribes or similar amounts that is considered an illegal practice in the Kingdom, even if paid abroad.

8. Insurance Commission in excess of 3 percent of total premiums collected in the Kingdom through the agent or others, regardless of whether the agent is a partner in the insurance company or not.

9. The employee's share in statutory retirement funds, such as the Pension Fund, Social Insurance or Saving Funds.

10. Payments made by branches operating in the Kingdom to their wholly-owned foreign head offices in return for:

    1. Royalties or commissions;

    2. [Loan Returns or any other financial fees paid by branches of foreign banks in Saudi Arabia to their Head Offices abroad]^[11];

    3. Indirect administrative and general expenses allocated on an estimated basis.

11. [The value of goods supplied or services rendered to the taxpayer by related parties to the extent that such value exceeds the prices used between independent parties. The Authority shall issue the rules for determining the arm's length pricing of transactions between related parties, in accordance with the generally accepted international standards.]^[12]