Accounting Information System AIS
Employee Expenses and Deferred Compensation; Accounting Periods and Methods
Article 20: Contributions to an authorized retirement fund
Contributions to an Authorized Retirement Fund
(a) An Employer’s contributions to an authorized retirement fund established in accordance with the laws of the Kingdom may be deducted in favor of the employee
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Article 20: Contributions to an authorized retirement funds
Contributions to an Authorized Retirement Fund
(b) the deduction allowed in paragraph (a) of this article shall not exceed 25% of each employee’s income, prior to calculating the employer’s contribution
(c) The employee’s contributions to an authorized retirement fund may not be deducted
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Article 21: Carrying forward losses
(a) a net operating loss may be carried forward to the taxable year following the year in which the loss is incurred. The carried forward loss shall be deducted from the tax base of the following taxable years until the cumulative loss is fully offset. The regulations shall specify the maximum limits allowed to be annually deducted.
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Article 21: Carrying forward losses
(b) a net operating loss is equal to the excess of the deductions allowed under this Chapter which are in excess of the taxable income for the taxable year
(c) to calculate the net operating loss for a natural person, the deductions and income for activity only shall be taken into consideration
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Article 22: Taxable Year
(a) The taxable year is the State’s fiscal year.
(b) a taxpayer may use a twelve month period other than the one specified in paragraph (a) of this Article as a taxable year, in accordance with the restrictions specified in the regulations
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Article 22: Taxable Year
(c) see Article 22 for further explanation of about a short year and a long year in accordance with the regulations
(d) Groups of related companies as defined in Article 64 of this Law, shall use the same taxable year.
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Article 23: Method of Accounting
(a) A taxpayer’s method of accounting must clearly reflect the taxpayer’s income.
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Article 23: Method of Accounting
(b) The gross income and expenses of a resident company, and any other taxpayer who keeps or is required by law to keep commercial books according to the accounting principles generally accepted in the Kingdom, are determined according to such books after adjustments of the accounts so as to conform to the rules of this Law
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Article 23: Method of Accounting
(c) For taxation purposes, a natural person may record his transactions on a cash or accrual basis. However, if his gross income from business for a taxable year exceeds the amount specified in the regulations, he must use the accrual method in all succeeding taxable years.
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Article 23: Method of Accounting
(d) A company which keeps or is required by Law to keep commercial books must record income and expenses on an accrual basis. Otherwise, it may for taxation purposes, use either the cash or accrual method.
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Article 23: Method of Accounting
(e) Except for a change from the cash basis to the accrual basis required in accordance with paragraph (c) or (d) of this Article, a taxpayer may change its method of accounting upon obtaining the Department’s consent.
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Article 23: Method of Accounting
(f) If a taxpayer changes his method of accounting, it must perform adjustments to items of income and deduction, or to debt or any other items in the taxable year following the change, so that no item is omitted, or included more than once.
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Article 24: Cash-Basis Accounting
A taxpayer who uses the cash basis method in its books and records shall register the received income when received or made available, and the paid expenses when paid
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Article 25: Accrual-Basis Accounting
A taxpayer who uses the accrual method shall record income and expenses when they are due
An amount becomes payable to the taxpayer when the taxpayer is entitled to receive it, even if payment is postponed or pain in installments
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Article 25: Accrual-Basis Accounting
(c) An amount becomes payable by the taxpayer when all the facts determining liability have occurred
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