New Income Tax Act for non-Saudi and Gulf Cooperation Council (GCC) companies
In its weekly session held
on 20/11/1424 (12/1/2004), The Cabinet endorsed a new income tax law for
non-Saudi and Gulf Cooperation Council (GCC) companies and individuals doing
business in the Kingdom.
The main guidelines of the new taxation law are as follows:
First: The subject Individuals companies: 1. Non-Saudi partnerís shares in a Saudi-based association of capital
2. Non-Saudi legal resident who runs business in the Kingdom
3. Non-resident who runs business in the Kingdom through a permanent facility
4. Non-resident who earns other income from sources in the Kingdom
5. A person who runs business in the field of natural gas
6. A person who runs business in the field of oil and hydro carbonic materials
The activity meant and covered in this law shall stand for all forms of trade,
vocational or handcraft activities, or any similar activity aimed at deriving
profit, including movable and immovable properties.
The Law fixed the rates of tax as follows:
1- 20% tax rate per unit for each of:
a. Saudi-based association of capital.
b. Non-resident legal persona who runs business.
c. Non-resident persona who runs business in the Kingdom through a permanent
2- Tax rate per unit for those designated to invest in the field of natural gas
only is 30%.
3- Tax rate per unit for those designated to run business in the field of
producing oil and hydro carbonic materials is 85%.
Fourth: The Law will come into effect after 90 days of its publication in the
official gazette, when it will nullify the current income tax law which was
issued under the Royal Decree No 3321 dated 21/1/1371 and its subsequent