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Saudi Arabia tax alert

DZIT’s clarification on taxability

October 3, 2012 - Saudi Arabia’s Department of Zakat and Income Tax (DZIT)’s clarification on taxability of listed companies and withholding tax (WHT) on dividend payment to non-resident has been issued with details below:

1. Taxability of listed companies

The Department of Zakat and Income Tax (DZIT) has clarified that companies listed on the Saudi Stock Exchange (Tadawul) are subject to tax/zakat according to the shareholding per their Articles of Association as long as not all shares of the company are traded on Tadawul. However, if all shares are traded on Tadawul including the founders’ shares then these companies will consider the shareholders’ records with the Capital Market Authority at the end of the year without considering the shareholders entering and leaving the company via daily trade.

2. Identification of the shareholders of listed companies in terms of GCC nationals or foreigners for deduction of WHT on dividend

The DZIT has clarified that the article 3 of the tax regulations describing the concept of residency will apply for the purpose of deducting WHT on dividend to GCC nationals and non-resident shareholders. Moreover, the shareholders record with the company is supposed to show the names of shareholders, nationalities and residential status.

3. Responsibility of deducting withholding tax (WHT)

The DZIT has also clarified that responsibility of deducting WHT on dividend payment is on the person who actually pays the dividend to non-resident shareholders i.e. listed companies or mediator (investment companies having custodian license from CMA appointed by shareholders) as the case may be.

 

Contacts

Name:
Nauman Ahmed
Company:
Deloitte & Touche Bakr Abulkhair & Co
Job Title:
Middle East Tax Leader
Phone:
Email
nahmed@deloitte.com
Name:
Farhan Farouk
Company:
Deloitte & Touche Bakr Abulkhair & Co
Job Title:
Phone:
Email
ffarouk@deloitte.com
Name:
Osama Nobani
Company:
Deloitte & Touche Bakr Abulkhair & Co
Job Title:
Phone:
Email
onobani@deloitte.com
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