GTL Summary:

This Resolution constitutes the Executive Bylaws for the KSA Income Tax Law, providing detailed implementation rules. The provided Articles focus on exempt income, specifically outlining the conditions for tax exemption on capital gains from the disposal of securities traded on the Saudi stock market and those dually listed abroad. It further clarifies the tax treatment of dividends, stipulating that distributions received by a resident capital company are exempt provided the company holds at least a 10% stake in the investee company for a minimum of one year, ensuring a clear framework for investment-related income.

Document Type: ERS - Executive Regulations
Law: Income Tax Law (Royal Decree No M/1 - 21 Feb 2004)
Decision Number: executive-regulations-1535-article-7
Year: 2019
Country: 🇸🇦 KSA
Official Name: Article 7 - Exempt Income
Last updated at: 2026-01-05 08:39:39 UTC

Article 7 - Exempt Income

  1. [Capital gains resulting from the disposal of securities traded in the stock market in the Kingdom shall be exempt from tax, whether through sale, trading or otherwise, subject to the following conditions:

    1. The disposal should be compliant with the Capital Market Law in the Kingdom.

    2. The disposed investments did not exist before the enforcement of the Income Tax Law as per Article 74 of these Regulations.

  2. Capital gains resulting from the disposal of securities traded in the stock market outside the Kingdom shall also be exempt from tax, whether through sale, trading or otherwise, subject to the following conditions:

    1. The securities are also traded in the Saudi Stock Exchange.

    2. The disposed investments did not exist before the enforcement of the Income Tax Law as per Article 74 of these Regulations.

  3. Dividends, whether in cash or in kind (such as distribution of shares or bonus shares), shall also be exempt from tax if they are earned from investments by a resident capital company in resident or non- resident companies, provided the following conditions are met:

    1. The investments by the resident capital company in the capital of the investee company is 10% or more for the years in which the distributions were made.

    2. The ownership of these investments, with a minimum threshold of 10%, has been held for at least one year during the year in which the distributions were made.][8]

Footnotes

[8]Amended by MR No. 1727 dated 25/05/1439H (11 Feb 2018). Prior to the amendment, Article 7 read as follows:

"A Capital gain realized from disposal of securities traded in the Stock Market in the Kingdom is exempt income if it meets the following:

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