Annual income tax return for foreign-owned and mixed companies: 20 percent CIT on the foreign share plus Zakat on the Saudi share

We split profit by ownership, compute 20 percent income tax on the foreign share and Zakat on the Saudi share, plan advance payments, attach audited accounts and file one clean return on time.

SAR 7,500Annual

For: Companies with any non-Saudi, non-GCC shareholder, branches and permanent establishments of foreign companies, and resident non-Saudi individuals carrying on business.

What we need from you

Audited financial statements
Required with the return for mixed and foreign companies
Shareholding by nationality during the year
Split of tax and Zakat
Related party transactions list
TP disclosure form (SA-TP-01)
WHT returns filed during the year
Reconcile with payments abroad
Prior year tax liability
Advance payments test
Depreciation and provisions schedules
Tax adjustments
Losses carried forward
Set off against profit

What we discuss

Did the shareholding change during the year?
Split may need to be time-weighted
Are there head office charges or management fees?
Deductibility and 20 percent WHT
Was prior year tax high enough to need advance payments?
Three payments of 25 percent if the formula is SAR 500,000 or more
Any related party loans or services?
Transfer pricing documents
Any items booked as expenses but not deductible?
Tax add-backs

What we file

Tax and Zakat split
Example: adjusted profit SAR 1,000,000, foreign share 60%: CIT 20% x 600,000 = SAR 120,000; Saudi share 40% goes to the Zakat base
Advance payment test
Prior year tax SAR 2,400,000 x 25% = SAR 600,000 > SAR 500,000, so three payments due
File the income tax and Zakat return

What you get

Filed return and SADAD numbers
Tax computation pack
Advance payment schedule for next year

The law

Income Tax Law (Royal Decree M/1 of 1425H), corporate income tax: 20 percent on net adjusted profits of the non-Saudi, non-GCC share Source
Income Tax Law and Zakat Regulation, mixed ownership: Non-Saudi, non-GCC share pays 20 percent income tax; Saudi and GCC share pays Zakat Source
Income Tax Law and Implementing Regulations, returns and advance payments: Return and final payment within 120 days of year end; advance payments of 25 percent of prior year tax unless below SAR 500,000 Source
Art 77, Income Tax Law: Delay fine of 1 percent of unpaid tax for each 30 days; 25 percent of the tax difference for incorrect returns Source
Income Tax Law, assessment time limits: ZATCA can assess within 5 years of the filing deadline, or 10 years if no return or intent to evade Source

Questions people ask

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