Taxation of international executives
When are tax returns due? That is, what is the tax return due date?
Only individuals earning business income from self employment are required to register with the Tax authorities and file income tax returns.
Tax returns are due within 120 days from the end of financial year. For a December year end taxpayer, the due date is 30 April.
What is the tax year-end?
Most taxpayers adopt December year-end.
What are the compliance requirements for tax returns in Saudi Arabia?
Individuals are considered residents in saudi Arabia if they meet on of the following tests :
< See definition of resident >
Coreporate income tax of 20%.
Non resients receiving income from Saudi source may be subject to withholding tax at rates ranging from 5% to 20% depending on the nature of the service:
|Royalties, consultancy and technical services and international telecommunication services paid to head office or an affiliated company||15%|
|Payments against services to the head office or to a related party||15%|
|Consultancy and technical services and telecommunication services (other than payments to head office or an affiliate), rent, air tickets or airfreight or sea freight, dividends, interest on loans, insurance or re-insurance premiums||5%|
|Any other payments||15%|
What are the current income tax rates for residents and non-residents in Saudi Arabia?
20% flat rate
See WHT table
For the purposes of taxation, how is an individual defined as a resident of Saudi Arabia?
Individuals are considered residents in saudi Arabia if they meet on of the following tests:
Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.
What if the assignee enters the country before their assignment begins?
Days of presence before start of assignment will count towards residency days.
Are there any tax compliance requirements when entering or leaving the country1?
Non residents who are shreholders in Saudi resident companies (other than companies listed on the Saudi stock exchange) and who sell their shares may be subject to capital gain tax on the disposition of these shares.
Do the immigration authorities in Saudi Arabia provide information to the local taxation authorities regarding when a person enters or leaves Saudi Arabia?
Tax Authorities in Saudi may communicate with immigration to obtain informaiton about the entry and exot dates of individuals to determine PE exposure and residency.
Will an assignee have a filing requirement in the host country after they leave the country and repatriate?
Do the taxation authorities in Saudi Arabia adopt the economic employer approach2 to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Saudi Arabia considering the adoption of this interpretation of economic employer in the future?
Are there a de minimus number of days3 before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
What categories are subject to income tax in general situations?
Business income from self employment.
Individuals are generally not subject to tax on any income earned from Saudi Arabia in their capacity as employees.
Are there any concessions made for expatriates in your country?
Is salary earned from working abroad taxed in Saudi Arabia? If so, how?
Are investment income and capital gains taxed in your country? If so, how?
No. Unless individual is earning this income as a self employed.
Are there capital gains tax exceptions in your country? If so, please discuss.
What are the general deductions from income allowed in your country?
All regular and necessary expenses to generate the incime subject to tax provided that the expenses are:
What are the tax reimbursement methods generally used by employers in your country?
How are estimates/prepayments/withholding of tax handled in your country? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
N/A for individuals.
Self employed individuals may be required to pay 75% of their current year taxes in three equal instalments if their prior year tax liability exceed SAR 2m ($533,333).
When are estimates/prepayments/withholding of tax due in your country? For example, monthly, annually, both, and so on.
June 30, September 30 and December 31.
Is there any Relief for Foreign Taxes in your country? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
What are the general tax credits that may be claimed in your country? Please list below.
Self employed individuals paying corporate income tax may claim any WHT deducted from their payments as credit against the corporate income tax.