Topics: Tax, Income tax, Taxation in the United States Pages: 21 (6414 words) Published: May 22, 2013

Saudi Arabia, located in the Middle East between the Arabian Gulf and the Red Sea, is the birthplace of Islam and home to Islam's two holiest shrines, in Makkah and Madinah. The modern Saudi state was founded in 1932 after a 30-year campaign to unify most of the Arabian Peninsula. Saudi Arabia is divided into 13 provinces, with Riyadh as the capital. The official language of Saudi Arabia is Arabic, and the currency is the Saudi riyal (SAR). The country is a leading producer of oil and natural gas. The government continues to pursue economic reform and diversification, particularly since Saudi Arabia's accession to the World Trade Organization (WTO) in December 2005, and promote foreign investment. A burgeoning population, aquifer depletion, and an economy largely dependent on petroleum output and prices are all ongoing governmental concerns. Saudi Arabia possesses about 20% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in the Organization of Petroleum Exporting Countries (OPEC). The petroleum sector accounts for roughly 80% of budget revenues, 45% of gross domestic product (GDP), and 90% of export earnings. Saudi Arabia is encouraging the growth of the private sector in order to diversify its economy and to employ more Saudi nationals. Diversification efforts are focusing on power generation, telecommunications, natural gas exploration, and petrochemical sectors. Roughly 7 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors. The government has begun establishing six ‘economic cities’ in different regions of the country to promote economic development. Saudi Arabia’s economy is expected to grow significantly due to a substantial surplus achieved in recent years. This was primarily because of high oil prices, which provided Saudi Arabia with ample financial reserves to carry out some huge economic development projects. PwC Saudi Arabia supports clients with the local knowledge and skills of its people and with access to a broad range of other professionals across the PwC global network of firms. PwC Saudi Arabia has more than 500 professionals offering assurance, tax, and advisory services at several locations.

Corporate - Overview |
The corporate tax summaries, written by our local PwC specialists, include a discussion of recent significant corporate tax developments within a country, as well as country-specific information on corporate income taxes, corporate residence, other taxes impacting corporate entities, branch income, income determination, deductions, group taxation, tax credits and incentives, withholding taxes, and tax administration. To read more about a particular corporate tax topic in this country, please select the topic from the menu on the left. Corporate - Significant developments |

Withholding tax (WHT) on technical and consulting services provided by related parties The High Appeal Committee (HAC) has ruled recently that 5% WHT is applicable on payments to non-resident related parties for technical and consulting services fees instead of 15%. The appeal arguments were purely based on the local regulations and certain mismatches in the interpretation of the regulations between the Department of Zakat and Income Tax (DZIT) and the taxpayer. In general, the tax appeal rulings in Saudi Arabia do not necessarily constitute part of the regulations. However, taxpayers can still claim their rights based on such rulings when they become final. The ruling is not yet final since the DZIT has filed an appeal against the HAC ruling with the Board of Grievance (BOG). The BOG process may take longer than expected before concluding on this issue. The expectation is that the DZIT may issue further clarification to make it clear once and for all that the rate should be 15% as per the current application or reduce it to 5%. Until that unknown time, the...
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