Accounting Information System AIS
Introduction to the Taxes System in Saudi Arabia; Persons Subject to Income Tax
MCQ from the slides
Article 1 includes definitions for use when using interpreting the income tax law
Each word will carry the meaning beside it unless the context indicates otherwise
Please refer to the meanings throughout the course
Article 1: Definitions
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A resident capital company
A resident non-Saudi natural person who conducts business in the Kingdom
A non resident who conducts business in the Kingdom through a permanent establishment
A non resident with other taxable income from sources within the Kingdom
Article 2: Persons Subject to Taxation
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A person engaged in the field of natural gas investment
A person engaged in the field of oil and hydrocarbons production
Article 2: Persons Subject to Taxation, Continued
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A natural person is considered a resident if he meets any of the following conditions:
He has a permanent place of residence in the Kingdom and resides in the Kingdom for a total period of not less than 30 days
He resides in the Kingdom for a period of not less than 183 days in the taxable year
Article 3: Concept of Residency
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A company is considered a resident in the Kingdom during the taxable year if it meets any of the following conditions:
It is formed in accordance with the Companies Law
Its central management is located in the Kingdom
Article 3: Concept of Residency
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A permanent establishment of a non resident consists of the permanent place of the non resident’s activity through which it carries out business, including business carried out through its agent
Article 4: Permanent Establishment
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The following are considered a permanent establishment:
Construction sites, assembly facilities, and supervisory activities connected therewith
Installations or sites used for surveying for natural resources including drilling equipment and ships used for surveying
A fixed base where a non resident natural person carries out business
A branch of a non resident company licensed to carry out business in the Kingdom
Article 4: Permanent Establishment
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A place is not considered a permanent establishment of a non resident in the Kingdom if it is used for the following purposes:
Storing, displaying, or delivering goods belonging to the non resident
Keep a stock of goods belonging to the non resident for the purpose of processing by another person
Purchasing goods for the sole purpose of collection of information for the non resident
Carrying out other activities of preparatory nature for the interests of the non resident
Article 4: Permanent Establishment
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A place is not considered a permanent establishment of a non resident in the Kingdom if it is used for the following purposes:
Drafting contracts for signature in connection with loans, delivery of goods or technical services
Performing any series of activities stated in the above list
Article 4: Permanent Establishment, Continued
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Article 5 lists 10 primary sources of income that are considered accrued in the Kingdom
The place of payment of the income shall not be taken into account in determining its source
A payment made by a permanent establishment of a non resident in the Kingdom is considered as if paid by a resident company
Article 5: Source of Income
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(a) The tax base of a resident capital company is the shares of non-Saudi partners in its taxable income from any activity from sources within the Kingdom minus expenses permitted under this law
Article 6: Tax Base
Sources - Expenses
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(b) The tax base of a resident non-Saudi natural person is his taxable income from any activity from sources within the Kingdom minus expenses permitted under this law
Article 6: Tax Base
Sources - Expenses
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(c) The tax base of a non resident who performs an activity within the Kingdom through a permanent establishment is his taxable income arising from or related to the activity of such establishment minus expenses permitted under this law
Article 6: Tax Base
Income - Expenses
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(d) the tax base of each natural person is determined separately
(e) the tax base of a capital company is determined separately of its shareholders or partners
Article 6: Tax Base
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(a) the tax rate of the tax base is 20 percent (20%) for each of the following:
A resident capital company
A non Saudi resident natural person who conducts business
A non resident person who conducts business in the Kingdom through a permanent establishment
Article 7: Tax Rates
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(b) the tax rate of the tax base for a taxpayer engaged only in natural gas investment activities is 30 percent
(c) the tax rate of the tax base for a taxpayer engaged in the production of oil and hydrocarbon materials is 85 percent
Article 7: Tax Rates
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