GTL Summary:

This Resolution constitutes the Executive Bylaws for the KSA Income Tax Law, providing detailed implementation rules. The provided Article 37 specifically addresses deductible expenses for taxpayers in the natural gas investment sector. It clarifies that deductible expenses are determined under Article 12 of the Income Tax Law and Article 9 of these Bylaws. The text explicitly defines royalty and surface rental as deductible on an accrual basis. Furthermore, it prohibits the cross-allocation of expenses from the natural gas investment base to the oil and hydrocarbons base, stipulating that allocation methods are set by the Ministry of Energy.

Document Type: ERS - Executive Regulations
Law: Income Tax Law (Royal Decree No M/1 - 21 Feb 2004)
Decision Number: executive-regulations-1535-article-37
Year: 2019
Country: 🇸🇦 KSA
Official Name: Article 37 - Deductible Expenses
Last updated at: 2026-01-05 08:39:39 UTC

Article 37 - Deductible Expenses

  1. [Deductible expenses from the income of the taxpayer engaged in natural gas investment are those expenses deductible under Article 12 of the Income Tax Law and Article 9 of these Regulations. Royalty and surface rental amounts are considered deductible and are determined on an accrual basis.

  2. It is not permissible to allocate expenses relating to the natural gas investment base to the expenses relating to the oil and hydrocarbons production base of the taxpayer engaged in both oil and hydrocarbons production and natural gas investment.

  3. The method of allocating expenses between both bases shall be determined as specified by the Ministry of Energy, Industry and Mineral Resources.][27]

Footnotes

[27]Amended by Ministerial Resolution No. 2568 dated 5/9/1440H (10/5/2019). Prior to amendment, Article 37 read as follows:

'Expenses deductible from income which is subject to the natural gas investment tax are those expenses deductible under Article 12 of the Income Tax Law. Royalty and surface rental amounts are considered deductible and are determined on an accrual basis.'

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