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Saudi Arabia: Amendments to Article (63) of the Income Tax By-Laws

30 August, 2022

In brief

Amendments to Article (63) of the Income Tax By-laws

On August 25, Zakat, Tax and Customs Authority (ZATCA) announced proposed amendments of Article (63) of the Income Tax By-laws, as a part of the ongoing transformation and development of the tax practice in the Kingdom of Saudi Arabia (KSA).

In detail

  • Article (63), in particular, addresses the Withholding Tax imposed on non-residents who earn income from a source in KSA.

  • The proposed amendments are to paragraph (5) of the aforementioned article, which is related to international telecommunication services, and by doing so, ZATCA has clarified which type of international telecommunication services are in scope and subject to withholding tax under the international telecommunication definition.

  • Services that are not in the scope of withholding tax as per the amendments: 

    • Payments against passing, transferring or delivering call services; AND

    • Payments against roaming services. 

  • The content of Article (63) paragraph (5) defining telecommunications services based on the proposed amendments will be as follows:

"Payments for international telecommunications services: refer to any amounts paid to a non-resident party in exchange for services related to the provision of international telecommunications services from the Kingdom, excluding amounts paid for a local telecommunications company's use of an international telecommunications company's network to pass, transfer, or deliver calls made by a subscriber residing in the Kingdom, when requesting an international connection, and any amounts paid to the international telecommunications companies for international roaming services.”

The Takeaway

Telecommunication companies are recommended to assess the withholding tax impact on the services excluded from the withholding tax scope under the proposed amendments. 
 

Contact us

Mohamad Najjar

Partner, Indirect Tax , PwC Middle East

Tel: +966 56 367 9392

Mohammed Yaghmour

Middle East Tax & Legal Services Leader, PwC Middle East

Tel: +966 56 704 9675

Mohammed Al-Obaidi

Zakat and Tax Leader, PwC Middle East

Tel: +966 50 525 6796

Yaseen AbuAlkheer

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Mohammad Hussein Amawi

Partner, Zakat and Tax, PwC Middle East

Tel: +966 55 800 9697

Chadi Abou Chakra

Middle East Indirect Tax Network Leader, PwC Middle East

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Fehmi Mounla

Partner - Managed Services & Compliance Lead, PwC Middle East

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Khurram Iqbal

Partner, Zakat and Tax, PwC Middle East

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Mohammed Alkhashi

Partner, Tax, PwC Middle East

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Mohamed Harby

Partner, Zakat and Tax, PwC Middle East

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Fayez Aldebs

Partner, Zakat and Tax, PwC Middle East

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Ebrahim Karolia

Partner, International Tax and M&A Services, PwC Saudi Arabia

Tel: +966 11 211 0400 ext. 1771

Suleman Mulla

Partner, International Tax, PwC Middle East

Tel: +966 54 122 8051

Wael Osman

Tax & Zakat Partner, PwC Middle East

Tel: +966 13 849 6311

Mugahid Hussein

Partner, Zakat and Tax, PwC Middle East

Tel: +966 54 425 6573

Hafez Yamin

Partner, Indirect Tax, PwC Middle East

Tel: +966 54 033 7096

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