1. [The Authority shall have the right to examine taxpayer's books and records in the field, to have the information it needs for the purpose of applying this Law, whether about the taxpayer himself or to obtain information about another taxpayer or for satisfying its obligations in applicable tax treaties. A fine of SR 3,000 is imposed on any taxpayer who refuses to cooperate with the concerned Authority's employee assigned to conduct the examination or enable him to perform his duties properly. The Authority also has the right to resort to the competent authorities to compel the natural or corporate person to provide the required information.

   In case the taxpayer fails to co-operate in providing the required information to the Authority, the Authority has the right to complete its procedures related to the taxpayer's assessment or otherwise as it deems appropriate according to the information available to it.

2. All persons, whether natural or corporate, a taxpayer or not, including charitable organisations, endowments, institutions, public authorities and government agencies, must provide the Authority with the following:

   1. Information requested by the Authority related to the enforcement of the provisions of the Income Tax Law and the provisions of the tax treaties in force in the Kingdom, or to fulfil obligations pursuant to applicable tax treaties.

   2. Information on all contracts (excluding contracts with a value of less than SR 100,000) concluded with any person in the private sector, and any amendments to those contracts, within a period of three months from the date of signing the contract. These institutions shall also notify the Authority of the contract suspension date and reason, if any, and of any rights arising for either party due to the suspension, within thirty days of the suspension date. The Authority has the right to request for a copy of the contract, and each party breaching its contractual obligations shall be jointly liable, with the taxpayer, for any tax claim or fines due on the contract.

3. In the event of not providing the Authority with the required information and forms for the purpose of applying the provisions of international agreements of which the Kingdom is a party, the penalties set out in the Regulation for Treatment of Non-Disclosure of Information for Tax Purposes, issued by Cabinet Resolution No. 706 dated 30/11/1438H (22 August 17) shall apply.

4. [Managers/directors of finance and project management departments in government agencies and public institutions shall be responsible for informing the Authority with the required information regarding contracts signed with the private sector at the date prescribed in Paragraph (2/b) of this Article. Those who fail to comply shall be subject to the penalties set out in the relevant regulations]^[46]

1. The Department has the right to perform a field audit to ensure fulfilment by the taxpayer of obligations under the Income Tax Law.

2. Without prejudice to the provisions of other regulations, a field examination may be conducted for a taxpayer for the purpose of gathering information about another taxpayer.

   The field examination shall be carried out during the working hours of the person subject to the examination, and the taxpayer is required by law to provide the information as requested by the Authority. The Authority also has the right to conduct the field examination of all the books and records of a taxpayer without prior notice.

3. The field examination may be performed at the taxpayer’s premises or the Authority’s offices based on an official notice by the Department. In the event that any books, records or documents are taken from the business premises, a receipt to that effect must be given to the taxpayer. An auditor from the Department may also visit the taxpayer’s location to verify the nature of the taxpayer’s business.

4. If a taxpayer keeps their books and records on an electronic media, they must provide the Authoriy’s auditor(s) with a hard (paper) copy of the requested information when requested.

5. [If a taxpayer, subject to field audit, does not cooperate in providing the requested information, the Authority shall coordinate with the competent authorities to compel it to cooperate and provide the required information. The Authority may also retain those documents if there is reason to believe that the taxpayer may attempt to conceal, destroy or tamper with them.]^[47]

6. Upon completion of the audit, the documents shall be returned to the taxpayer within 15 days from the end of the audit. The Authority may keep copies of documents or entries, as needed.

7. If the Authority does not agree with the taxpayer’s declaration, it will notify the taxpayer of the amendments made to the tax return, reasons thereof, and the amount of tax and penalties resulting from such amendments, and of the taxpayer’s rights to object. The notice shall be delivered by registered mail or any other means that confirms receipt of the notice by the taxpayer.

8. Without prejudice to the provisions of Article 65(b) of the Income Tax Law, the return is considered accepted by the Authority if five years have passed from the end of the prescribed deadline for submission without the taxpayer having received any notice from the Authority regarding the return.

9. Mathematical and material errors may be corrected within ten years from the end of the deadline for submitting the tax return for the relevant tax year. The correction could be requested for by the taxpayer, or as a result of detection by the Authority or audit agencies.

   “Mathematical and material errors” refers to errors arising from arithmetic operations, such as addition, subtraction, multiplication and division, or of posting an erroneous number or similar errors.

10. The Authority may correct an error in the application of the Income Tax Law and regulations within five years from the end of the deadline for submitting the tax return for the relevant tax year, either upon request by the taxpayer, or as a result of detection by the Authority or by the audit agencies.

1. A taxpayer has the right to object to the assessment or reassessment issued by the Authority within the statutory period of 60 days of receipt of the assessment or reassessment letter. The objection must be submitted with a reasoned memorandum to the notifying department or committee.

   If the end of the objection period falls within an official holiday, the objection shall be accepted if filed during the first working day immediately after such a holiday.

2. The Authority shall review the objection submitted, and if it is convinced of its validity, based on the justifications and documents submitted, it may accept the objection, in full or in part, and notify the taxpayer of the reassessment accordingly. If the dispute continues between the Authority and the taxpayer, the Authority shall refer the objection to the Preliminary Objection Committee.

3. The objection shall not be considered formally accepted unless the taxpayer has paid the due amounts for undisputed items, or unless there is an agreed-upon arrangement with the Authority to pay the due tax in instalments. In such a case, the payment and instalment request must be made and approved within the legally prescribed period for objection.

4. The Authority and the taxpayer may appeal the decision of the Preliminary Objection Committee to the Appellate Committee within 60 days of notice of such resolution. If the end of the appeal period falls within an official holiday, the appeal shall be accepted if filed on the first working day immediately after such a holiday. Both parties may also appeal the resolution of the Appellate Committee before the Board of Grievances within 60 days from the date of notification of the resolution.

1. Preliminary Objection Committees shall be formed to adjudicate tax disputes that arise between the Authority and taxpayers. Each Preliminary Objection Committee shall consist of a chairman and at least three members. The members of the committee must be specialised in accounting, law and taxation. At least one or them must be an employee from the Authority. The grades of the members should not be less than grade 10 or equivalent grade in accordance with Civil Service Regulations.

2. A Preliminary Objection Committee shall be reconstituted every four years provided that one member or more is (are) retained for an additional term or terms.

3. The Chairperson of the Committee shall inform both the Zakat, Tax and Customs Authority and the taxpayer of the date set by the Committee to hear their arguments and allow them to present any supporting documents. The notification must be accompanied by a copy of the memorandum submitted by the Authority regarding the objection. If the objecting taxpayer is a foreign entity with no representative in the Kingdom, the notification shall be delivered to the taxpayer through the Ministry of Foreign Affairs at least 90 days before the scheduled hearing.

4. If either party or both parties fail to attend the session, the Preliminary Objection Committee may issue its decision based on the facts and documents presented to it. The Committee may postpone the hearing for reasons it deems valid, up to two times at most.

5. Presence of majority of the Preliminary Objection Committee members, including the Chairman or his Deputy, is required to convene a session.

6. The Preliminary Objection Committee shall first examine the admissibility of the objection from a procedural standpoint, whether this pertains to its submission within the statutory deadline, legal authority of representation for each party, or the payment of tax due on items not subject to objection, before proceeding to examine the objection on substantive grounds.

7. The Preliminary Objection Committee issues its resolution by majority vote. In case of a tie, the side with which the Chairman votes shall win.

8. The amount of tax assessed in the Committee's decision shall not be less than the amount acknowledged by the taxpayer or their representative, nor shall it exceed the amount assessed by the Authority.

9. The Committee shall notify both the Authority and the taxpayer of its decision by a registered official letter or by any other means that provide receipt of delivery. The decision of the Preliminary Committee shall be deemed final unless either party appeals it within 60 days of receipt.

10. The Zakat and Income Authority must implement the Preliminary Committee's decision, and amend the assessment accordingly, and shall notify the taxpayer thereof, even if the decision has been appealed.

11. If the taxpayer wishes to appeal the decision of the Preliminary Objection Committee, the taxpayer has to comply with the following:

    1. Payment of the tax liability due to the Authority as per the Preliminary Committee resolution, or submission of a bank guarantee for the full payable amount, valid for a period of not less than one year, automatically renewable, cashable after the final resolution at the exclusive discretion of the Department and compatible with the format approved by the Saudi Arabian Monetary Agency. This shall be a condition for the admissibility of the the appeal in terms of form.

    2. Submission of a substantiated statement of appeal, along with any supporting documents, in addition to submission of proof of payment or a copy of the bank guarantee to the Appeal Committee, for the purpose of registering the appeal within the legally prescribed period.

    3. The bank guarantee shall not be released nor cash payment refunded unless a final decision is issued on the dispute.

1. When proposing the formation of the Appellate Committee referred to in Article 67(b) of the Income Tax Law, it must be ensured that the Committee consists of a chairman and at least four members specialised in law, accounting and taxation.

2. A meeting of the Committee shall not be deemed valid unless a majority of its members are present, provided that either the Chairman or Deputy is among them.

3. The Committee shall first consider whether the objection complies with formal requirements, whether related to its submission within the statutory deadline, proper legal representation of each party, or the payment of the tax due on the non-appealed items, or the provision of a bank guarantee in accordance with the format approved by the Saudi Arabian Monetary Agency; this shall be done before examining the appeal on substantive grounds.

4. The Committee shall issue its decision after hearing the arguments of both parties and after reviewing their claims and supporting documents. In the absence of consensus, the decision shall be issued by majority vote, provided that the amount determined shall not be less than the amount declared by the taxpayer / representative nor more than the tax assessed by the Authority.

5. The Appellate Committee may seek the advice of experts or consultants at a fee to be determined on case-by-case basis. The compensation shall be specified in the assignment letter.

6. The Appellate Committee shall provide the Authority and the taxpayer with a copy of its decision by a registered official letter or by other means that provides for receipt of delivery.

7. The Appellate Committee's decision shall be final and binding on both parties, unless it is contested before the Board of Grievances.

8. A Ministerial Decision shall be issued specifying the remunerations of the chairmen, members and assistants of Preliminary and Appellate Committees.

1. [A non-resident]^[48] shall be subject to tax on any amount received from any source in the Kingdom, and the tax shall be withheld from the gross amount at the following rates:

   Type of payment	Rate
   Management fees	20%
   [Royalties, payments made to the Head Office or an Associated company against technical or consultancy services or international telecommunication services][49]	15%
   [Payments made for technical or consultancy services or international telecommunication services (other than those paid to the Head Office or an Associated company), rent, airline tickets, air or sea freight, dividend distribution, loans fee [interest], and insurance or reinsurance premiums.][50]	5%
   Other payments	15%

2. "Management fees" means payments made under management services contracts, such as hotel management contracts, ship management contracts, etc.

3. "Technical and consulting services' means any kind of technical, scientific or technological services, including studies and research in different fields, surveying work of a scientific, geological or industrial nature, consultancy or supervisory services, or any kind of engineering services including related designs.

4. ["Payments for airline tickets and air / sea freight" means any payment for the purchase of air tickets or the costs of air or sea freight paid in the Kingdom to air or sea transport companies or their agents or representatives in the Kingdom. This does not include payment made for shipping goods from outside to the Kingdom's ports.]^[50]

5. "International telecommunications services" means any amounts paid to a non-resident party in return for services related to provision of international telecommunications services from the Kingdom.

6. "Dividend distribution" means any distribution by a resident company to a non- resident shareholder, and any profits transferred from a permanent establishment to related parties; subject to the following:

   1. Dividends by companies engaged in natural gas investment, oil and hydrocarbons are not subject to withholding tax.

   2. A partial or full liquidation of a company is deemed a dividend distribution to the extent that it exceeds the paid-in capital.

   3. The distributed company's subjection to income tax shall not preclude imposition of withholding tax on its dividends.

7. "Other payments" means payments from a source in the Kingdom to a non-resident for services other than services mentioned in paragraph (1) of this Article.

8. A withholding tax shall be imposed at the rates specified in paragraph (1) of this Article on the full amount paid to the non-resident, regardless of expenses incurred to generate the income, and notwithstanding full or partial allowance/disallowance as a deduction of such payment; it shall also be imposed on payments attributed to contracts concluded before the effective date of the Income Tax Law.

9. The person liable for withholding tax must comply with the following:

   1. Submission of a monthly withholding statement in accordance with the form prescribed by the Authority during the first 10 days of the month following the month in which payment was made to the recipient.

   2. Submission of information relating to the withholding transactions carried out by the taxpayer on an annual basis, according to the form prescribed by the Authority, within a period not exceeding 120 days of the end of the fiscal year, except for partnerships, which must submit the form within 60 days from the end of their fiscal year.

   3. Maintenance of relevant records to verify compliance with the withholding provisions. Such records shall at a minimum include the name and address of the recipient, type and amount of payment and the amount withheld. These records shall be retained for at least ten years after the date of payment. If the the case is still under consideration by the Authority or by any other competent Committees, the records should be kept until the consideration is over or a final decision is issued.

1. "Advance payment of tax" as referred to in Article 70 of the Income Tax Law means that the taxpayer pays, on account of their annual tax liability, an amount in advance at the legally prescribed early dates, notwithstanding Article 60(b) and Article 69 of the Income Tax Law, under the following conditions:

   1. The taxpayer has generated revenue during the tax year.

   2. The advance payment must amount to 25 percent of the taxpayer's tax due, as calculated based on the tax return for the previous tax year, minus the withheld tax for the current year relating to the previous tax year. "Tax liability for the previous year" means the tax determined under the provisions of the Income Tax Law and these Regulations. "Withheld tax" means the tax that has been withheld from the taxpayer on income derived from a source in accordance with Article 68 of the Law.

   3. The payment shall be made in three equal instalments on the last day of the sixth, ninth and twelfth months of the tax year.

   4. In case of delay in paying an instalment on its due date, a penalty of 1% per month shall be added for every 30 days of delay.

   5. Collection and recovery provisions of the Income Tax Law shall apply to late payment of advance payment of tax.

2. The Department may reduce advance payments in proportion with the drop in income if it is satisfied that the taxpayer's income for the tax year will be at least 30 percent less than the amount of income for the preceding tax year.

3. The taxpayer must pay the first instalment in full by its specified due date. If the taxpayer wishes to reduce the subsequent instalments, a written request must be submitted to the Authority stating the justification for the request and supported by documentary evidence. The Authority has to make a decision with respect to the request within 30 working days of the date of receipt of such request.

4. The provisions of this Article are without prejudice to respective effective arrangements with companies engaged in the production of oil and hydrocarbons.

1. A taxpayer may request payment of payable amounts of tax and penalties in instalment according to the following:

   1. A taxpayer should submit a written request to the Zakat, Tax and Customs Authority, stating the amount of tax liability, the respective financial period(s), reasons for inability to pay on time, justifications for the request, and a specific instalment plan proposal (number of instalments, instalment amount, and advance payment (if any)). The Department should consider the taxpayer's request and respond to it within 30 days.

   2. The instalment period should not exceed the year(s) for which the accumulated tax is due.

   3. The installments should not include any taxes and penalties withheld at source by the taxpayer and required to be remitted to the public treasury in accordance with Article 68 of the Law.

   4. The instalment approval shall become void if a taxpayer fails to pay two consecutive instalments, or if it becomes clear that public treasury is vulnerable to loss. The taxpayer shall be notified of the cancellation of the instalment arrangement in an official letter from the Authority. In such case, the taxpayer shall immediately pay all amounts due in full.

2. A late payment penalty shall be imposed on the tax paid through instalments from the due date in accordance with Article 77(a), at a rate 1 percent of underpayment of tax.

3. The due tax shall be adjusted first from any amounts received from the taxpayer and then penalties. This provision also applies to other payments under the account.

4. The Director General of the Zakat, Tax and Customs Authority is authorised to approve payment in instalments of payable taxes and penalties that do not exceed one million Saudi Riyals.

1. The taxpayer is entitled to request refund of any amounts paid in excess of what is due in accordance with the provisions of the Income Tax Law, provided that the refund request is made within five years from the tax year for which the excess payment was made. The refund request should be submitted by the taxpayer or by a duly authorized representative.

2. The Authority shall review the refund request and verify the existence of the overpaid amounts. The Authority shall respond to the request, approving or rejecting the refund within 30 days from the date of receiving the refund request.

3. A refund request shall not be considered if there are outstanding returns that have not been filed with the Authority by the taxpayer.

4. No claim for a refund of amounts paid in excess shall be considered in cases of objection or appeal, except after the issuance of a final decision confirming the entitlement of the taxpayer to such amounts, and submission of a claim to that effect by the taxpayer.

5. If the Authority delays in refunding overpaid amounts beyond 30 days from the date of receiving the request, it shall pay compensation at a rate of 1% of the amount from the date of receipt of the refund request, until the date of actual refund. No compensation shall be calculated for any period of delay less than thirty days.

1. A penalty shall be imposed for failure to file the return in the following cases:

   1. Failure to file the return within 120 days from the end of the fiscal year.

   2. Failure to file the return using the legally prescribed return form, even if the return is submitted within the statutory deadline.

   3. Failure to pay payable tax as per the return, even if the return is submitted within the statutory deadline and using the approved form.

   4. Failure to notify the Department of cessation of activity and to file the return and pay tax accordingly within 60 days of cessation.

   5. Failure to file the information return by a partnership within 60 days from the end of its fiscal year.

2. In case of failure to file the return by the specified deadline, the higher of the following two penalties shall apply:

   1. 1% of the total revenues, with a maximum of 20.000 Saudi riyals.

   2. According to the following rates:

      • 5% of the unpaid tax if the delay does not exceed 30 days after the due date;

      • 10% of the unpaid tax if the delay is more than 30 days but does not exceed 90 days after the due date;

      • 20% of the unpaid tax if the delay is more than 90 days but does not exceed 365 days after the due date;

      • 25% of the unpaid tax if the delay is more than 365 days after the due date.

3. "Unpaid tax' means the difference between the amount paid by the taxpayer within the statutory deadline and tax due under the provisions of the Income Tax Law.

   This includes any adjustments made by the Authority which have become final in accordance with Article 71(2) of these Regulations.

   This also applies to contested cases, where the penalty is calculated from the legally prescribed date for filing and payment.

1. In addition to the penalties set forth in the previous Article, 1 percent of underpayment of tax for each 30 days of the delay shall be added in the following cases:

   1. Delay in payment of the tax payable as per the return.

   2. Delay in payment of tax payable per the Authority's assessment.

   3. Delay in payment of advance payments due at the end of the 6th, 9th and 12th months of the taxpayer's fiscal year.

   4. Delay in payment of tax approved to be paid in instalments from the due date specified under Article 71 of the Law.

   5. Delay in payment of the tax required to be withheld, which is due after the first ten days of the month following the month in which the payment to the beneficiary was made, as stipulated in Article 68 of the Income Tax Law. Responsibility for the payment lies with the withholding entity.

2. The delay penalty of 1 percent on unpaid tax shall not apply if the period of delay is less than 30 days from the due date.

3. Making an estimated assessment on a taxpayer shall not preclude application of the non-filing penalty and the delay penalty, whenever the conditions for their imposition are met.

The provisions of fraud penalty specified under Article 77(b) of the Income Tax Law shall apply to a withholding taxpayer who conceals information or presents incorrect information. The responsibility for payment of this penalty shall lie with the withholding party.

For purposes of Article 79(d) of the Income Tax Law, tax liability and penalties shall be waived by a decision of the Minister in the following cases:

1. Bankruptcy of a taxpayer pursuant to a judicial ruling.

2. Death of a natural person and proof that there was no property left to recover the debt.

3. Absence of movable or immovable property of a liquidated capital company to recover debt.

4. Debt amounts for which all recovery actions have been undertaken without success.

1. A taxpayer who owes final dues to the Authority shall be required to pay them within 30 days from the date of the first demand, followed by a second demand requiring payment within another 30 days, both issued through official notices.

2. Payable amounts are considered final in the following cases:

   1. The taxpayer has agreed with the assessment.

   2. The legally prescribed period for payment has passed and the taxpayer has failed to make payment of the payable amount.

   3. The legally prescribed period for objection to a assessment issued by the Authority has passed.

   4. A final resolution has been issued by the Preliminary Objection Committee, Appeal Committee or the Board of Grievances.

3. If a taxpayer has failed to comply with the first and second demand letters, the taxpayer shall be notified in an official notice of the intention to sieze the taxpayer's movable and immovable property and any legally attachable property, unless the payment is made within 20 days from the date of such notice.

4. The Saudi Arabian Monetary Agency (SAMA) shall be provided with a copy of the notice of intent to seize, in order to suspend any withdrawals from the taxpayer's bank accounts.

5. The Authority shall initiate the seizure of the taxpayer's movable and immovable property, in whole or in part by writing to the:

   1. Saudi Arabian Monetary Agency (SAMA) to seize the taxpayer's money in local banks, to the extent of payable amount of tax and penalties, and transfer them to the Authority's account upon request.

   2. Customs Authority to seize the taxpayer's imports, to the extent of payable amount of tax and penalties.

   3. Ministry of Finance to seize any amounts due to the indebted taxpayer, to the extent of payable amount of tax and penalties.

   4. Ministry of Justice to halt any disposal of the taxpayer's immovable property.

6. Anyone who has been subjected to a seizure must hand over the seized assets to the Authority upon its request. This provision also applies to a third party who owes any amount to the taxpayer on or after the date of receipt of the notice of levy.

7. If the indebted taxpayer is a natural person, the seizure shall be placed on the taxpayer's personal movable and immovable property related to the taxpayer's activity to the extent of the taxpayer's liability. This provision also applies to a taxpayer who is a general partner in a partnership or in a company limited by shares. A taxpayer in debt who is a partner in a capital company shall be liable to the extent of his share in the capital of the company.

8. Once the seizure procedures are complete and the notice period expires, the taxpayer's movable and immovable property shall be sold to the extent of the taxpayer's liability in accordance with applicable legal procedures.

9. The proceeds from the sale shall be applied first against the expenses of the seizure and sale, then against the tax liability and penalties. Any remaining amount shall be returned to the taxpayer.

10. Furthermore, the Department has the right to coordinate with other competent agencies to stop the taxpayer from bidding for governmental work, bringing labor into the country, obtaining or renewing licenses to carry out business.

11. If the taxable person who owns a sole proprietorship dies, and there are outstanding dues to the Authority, such dues must be settled before distributing the estate. Otherwise, the heirs shall be required to pay each of their shares accordingly.

12. A taxpayer shall be provided with a copy of the document related to any action taken against him.

13. Upon collection of all its dues, the Authority shall immediately notify all concerned agencies to suspend all procedures taken against the taxpayer.

The Authority's employees of outstanding performance shall be granted awards as incentives based on recommendations by the Authority's Director General of the Authority according to the following criterion:

1. An exceptional performance in the review and audit of taxpayers' returns and accounts that results in detection or saving for the public treasury. Entitlement to such amounts must be definitively established.

2. Detection, collection, and making final delivery to public treasury, of a tax liability that was previously written off, lost or unknown.

3. The award will be up to a three-month salary and shall be proportionate to the efforts exerted and amounts recovered, as follows:

   • One-month-salary award for amounts saved from SR. 50.000 to 250.000

   • [Two-month-salary award for amounts saved from SR. 250.001 to 1.000.000.]^[52]

   • Three-month-salary award for amounts saved of more than one million SR.

A committee shall be formed at the Authority to review cases referred for awards to evaluate performance involved and propose proper awards based on achievements and supporting documents.

The provisions of the Income Tax Law issued by Royal Decree no. M/1, dated 15/01/1425 H come into effect as of 13/06/1425 H, corresponding to 30/07/2004 as stipulated in Article 80 of the Income Tax Law published in the Official Gazette, issue no. 3990, dated 11/03/1425 H, corresponding to 30/04/2004. These Regulations shall also be deemed effective from the effective date of the Law.

The provisions of the Income Tax Law and Regulations apply to tax years that start after 13/6/1425H, corresponding to 30/07/2004.

Withholding tax provisions referred to in Article 68 of the Income Tax Law apply to payments made on or after 13/6/1425 H, corresponding to 30/7/2004.