No Match Found
A strong and unprecedented step down the way of reforming and developing the tax system and landscape has been launched by Zakat, Tax and Customs Authority “ZATCA” on Wednesday, October 25, 2023.
ZATCA has introduced a proposed almost brand new comprehensive Tax Law and Zakat & Tax Procedures Law for public consultation through Istitlaa Portal for 60 days until Monday, December 25, 2023.
The objective of the project is to develop and update the current tax law to be in line with the international best practices, considering the best practices in the pioneering G20 countries as well as the other pioneering countries.
Also, the proposed new income tax law has been introduced to be consistent with Kingdom’s vision and goals of encouraging foreign investment as well as domestic economic growth, in addition to supporting tax compliance and transparency and being compatible with the direction of international cooperation organizations in order reflect the Kingdom’s pioneering role in the international tax cooperation.
The proposed new tax law may be summarized as follows:
The proposed new tax law in a nutshell
In line with ZATCA’s approach of being up to date and competent with the comparative tax regulations, ZATCA has taken the initiative to propose a new tax law according to the international best practices, the proposed new tax law includes the following key updates, among others:
Changing the tax treatment of the partnerships.
Transparent tax treatment of the investment funds in line with their Zakat treatment.
Stating alternative methods of tax computation for the Micro-Enterprise (i.e., infinitesimal) taxpayers.
Stating special provisions regarding the following:
Transferring the residency to and out of the Kingdom as per articles 30 and 31.
Tax treatment of the merger and demerger transactions.
Cases of non-coincident tax treatment of financial instruments between different jurisdictions.
Tax treatment of the taxes paid outside the Kingdom.
Overview of the proposed new tax law
The proposed new tax law includes five main sections as follows:
Section 1: General provisions.
Section 2: Taxation of Legal Persons.
Chapter 1: Persons subject to tax.
Chapter 2: Taxable Income.
Chapter 3: Tax base.
Chapter 4: Special provisions.
Chapter 5: Computation of the due tax.
Section 3: Taxation on the income of the non-Saudi natural persons.
Section 4: Withholding tax.
Section 5: Other provisions.
As a new tax law is proposed, a through read and detailed analysis has to be carried out to assess the potential tax and compliance implications on the overall business environment. Therefore, Tax and Zakat payers are highly recommended to cooperate with ZATCA and provide their feedback regarding the proposed amendments through the Istitla portal: (https://istitlaa.ncc.gov.sa/ar/Finance/GAZT/Pages/default.aspx) in order to support ZATCA in its positive endeavors to develop the tax environment in Saudi in line with the Kingdom’s Vision 2030.
For further discussion about this and how this can impact your business, feel free to reach out to us for support
Tax & Legal Services Leader, PwC Middle East
Tel: +971 50 225 6909
Zakat and Tax Leader, PwC Middle East
Tel: +966 50 525 6796
Chadi Abou Chakra
Middle East Indirect Tax Network Leader, PwC Middle East
Tel: +966 11 211 0400 Ext: 1858
ITX Partner | TLS Middle East Consumer Markets leader, PwC Middle East
Tel: +966 54 110 0432
Tax Digital Solutions Partner, PwC Middle East
Tel: +966 54 033 7096
Partner, Indirect Tax , PwC Middle East
Tel: +966 56 367 9392