Tax and Zakat Accounting

  

Q1. Depreciation rates used in financial accounting shall not be used in tax accounting whereas tax law gives tax credits to tax payers by using accelerated depreciation rates for some groups of assets 

.

Required: State depreciation rates under the Article 17 of the Saudi Income. 

  

Q2. The paragraph (e) in the article 17 of the Saudi income tax explained how depreciation expense is calculated for any group of assets. 

Required:

a. Discuss In Detail This Article 

b. Give a numerical example explaining the applicability of the paragraph (e) in the article 17 of the Saudi income tax.

  

Q3. Resident Bank fully owned by Sweden investors has the following selected items drawn from its accounting books (Amounts in Saudi Riyal) 

Account

Amount

Deductible   

Non-deductible   

 

Allowance   For Loan Losses 

840,000

 

Employees’   share in retirement fund.

190,000

 

Bad   debt (written off) 

18,340

 

Donations   to the Help the Poor Organization (non-licensed in Saudi) 

11,350

 

Depreciation   for New computers purchased to be used on research and development 

35,100

 

Old   employees’ reunion party expenses

3,000

 

Bank’   share in retirement fund within the limit in the law.

145,000

 

Loss   on denoted assets 

8,000

 

Income   tax paid to tax and zakat authority 

150,000

Required: check mark items in the table below either deductible or non-deductible under income tax law in the kingdom.