Update on Saudi Zakat & Income Tax LawsICAP – KSA Chapter

27 January 2014

© 2014 KPMG Al Fozan & Al Sadhan, a partnership registered in Saudi Arabia, is a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

The change over the last decade or so

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Jurisdiction Until a decade ago Now

Saudi Arabia Majority local ownership required in all businesses

Except for trading, agriculture and real estate, businesses can be a 100% foreign owned

Trading, agriculture and real estate businesses can be up to 75% foreign owned

The rest of the GCC

Majority local ownership required in all businesses

Except for free zones (where restricted activities can be carried out), majority local ownership required in all businesses

© 2014 KPMG Al Fozan & Al Sadhan, a partnership registered in Saudi Arabia, is a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

Doing business in Saudi Arabia

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Recent Economy Rankings by the World Bank (covering 189 countries)(Source: http://www.doingbusiness.org/rankings)

Ease of Doing Business – KSA stands at No. 26

Protecting investors – KSA stands at No. 22

Ease of paying taxes – KSA stands at No. 3

© 2014 KPMG Al Fozan & Al Sadhan, a partnership registered in Saudi Arabia, is a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

Upsurge in Saudi budgetary spending over the last few years

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KSA expenditure budget over the last few years

 FY 04

FY 05

FY 06

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

Human Resource Development 56

70

87

96

105

122

137

148

168

Transport & Communications 6

9

10

11

12

15

16

17

21

Economic Resource Development 7

11

12

14

16

22

29

33

36

Health & Social Development 18

23

27

31

34

40

47

52

61

Infrastructure Development 3

3

5

5

6

8

8

9

11

Public Administration and Other 50

52

63

62

63

79

92

94

111

© 2014 KPMG Al Fozan & Al Sadhan, a partnership registered in Saudi Arabia, is a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

Upsurge in Saudi business and Zakat / tax over the last few years

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DZIT revenues over the last few years (Amounts in SR billions)

© 2014 KPMG Al Fozan & Al Sadhan, a partnership registered in Saudi Arabia, is a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

Saudi Zakat & Tax system

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Areas of improvement

Consistency of approach

Filing exhibits with tax returns even if not applicable

Tax and Zakat payment receipts

Issuance of annual Zakat certificate

DZIT circulars and notifications

Appellate decisions

Fatawa

DZIT Website