Chapter 1 - Taxable Income

Article 16

Depreciation is deductible based on the rules set by the accounting standards in force in the state, provided the deductible depreciation for assets owned by the taxpayer, including buildings constructed on others' property, does not exceed the following maximum rates:

Assets	Maximum Rates
Intangible Assets:
Pre-operating expenses	50%
Capitalized research and development expenses	20%
Trademarks, patents, and similar	15%
Tangible Assets:
1. Buildings and constructions (excluding land value):
Durable buildings and constructions	5%
Light prefabricated buildings	10%
Roads, bridges, railways, and electrified railways	5%
Pipelines, tanks, and wharves	5%
Pipelines and equipment inside the refinery and small tanks	10%
Networks and canals	5%
2. Means of Transport:
Goods and passenger transport means, including cars, vehicles, tractors, trailers, cranes, and motorcycles	20%
Ships and boats	10%
Aircraft and hovercrafts	20%
Railway transport means and electrified railway transport means	10%
3. Machinery, Equipment, and Fixtures:
Computers, software, and peripherals	33.33%
Machinery, equipment, and electrical appliances	20%
Industrial machinery, equipment, and fixtures	20%
Public works and construction machinery and equipment	20%
Drilling tools	15%
Air conditioners	25%
Elevators and escalators	15%
Office furniture and equipment	15%
Gas production, transmission, and distribution equipment	5%
Electricity and water production, transmission, and distribution equipment	5%
Other machinery, equipment, and fixtures	15%
5. Hotels, Inns, Resorts, Restaurants, Cafés, and Rest Areas:
Cooking and laundry machines	20%
Glassware	50%
Other tableware	25%
Furniture, furnishings, and decorations	25%
Pools and their complements	15%

Depreciation of major repair expenses incurred by the taxpayer on the assets mentioned in clause (1) of this Article is deductible at the same maximum rates set for the repaired asset.
The taxpayer may fully depreciate fixed assets with a value not exceeding 5,000 riyals during the first tax year of use.
The net book value of assets destroyed or decommissioned is deductible from the net income of the year in which they are destroyed or decommissioned, provided supporting documents are maintained. The income arising from the disposal of these assets is taxable in the year it is realized.
The taxpayer may apply one and a half times the maximum depreciation rates for machinery, equipment, and fixtures used in industrial activities operated in two shifts, or double those rates if operated in three or more shifts.