GTL Summary:

This Ministerial Resolution constitutes the Executive Bylaws for the KSA Income Tax Law. The provided Article 11 specifically details the regulations for carrying forward adjusted operational losses. It allows taxpayers to offset future profits against losses indefinitely, capped at 25% of the annual profit reported in the tax return. The bylaws establish key restrictions, prohibiting the carry-forward of losses incurred before 2000, during tax holidays, or from exempt activities. Furthermore, losses must be determined through audited accounts. For capital companies, a change in ownership of 50% or more nullifies prior losses for carry-forward purposes.

Document Type: ERS - Executive Regulations
Law: Income Tax Law (Royal Decree No M/1 - 21 Feb 2004)
Decision Number: executive-regulations-1535-article-11
Year: 2019
Country: 🇸🇦 KSA
Official Name: Article 11 - Loss Carry-Forward
Last updated at: 2026-01-05 08:39:39 UTC

Article 11 - Loss Carry-Forward

  1. The taxpayer has the right to carry forward adjusted operational losses, in accordance with the provisions of the Income Tax Law and these Regulations, for tax purposes to the tax years following the loss year, by reducing the profits in subsequent years until the full recovery of accumulated operating losses, without being bound by a specific time period, provided that the maximum deductible in any tax year does not exceed 25 percent of the annual profit as reported in the taxpayer's return.

  2. The provision of paragraph (1) above does not apply to operating losses incurred by the taxpayer prior to the effective date of the Council of Minister's Resolution No. 3 dated 5/01/1421 H, corresponding to 10/04/2000, or operational losses incurred during a tax holiday, or operational losses incurred from an exempt activity under the Income Tax Law in case where the taxpayer has both taxable and exempt activities.

  3. Losses that are not determined through properly audited accounts by a certified public accountant licensed in the Kingdom cannot be carried forward.

  4. A capital company may not carry forward losses if there is a change in ownership or control of 50% or more, except for losses incurred after the change, and subject to applicable carry forward rules.

  5. In the case of a natural person, operational loss shall be the difference between business income and related expenses only.

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