Article 65 of the Saudi Government Tenders and Procurement Law
المادة 65 من نظام المنافسات والمشتريات الحكومية · الفصل الثالث: المقابل المالي
The total value of a government contract includes all the costs of performing it, including fees and taxes, and neither they nor taxes on the contractor's profits or employees' incomes may be waived or paid for them except by a special legal provision.
Official text (Arabic)
This article has not been amended since the law was issued.
تكون القيمة الإجمالية للعقد شــاملة جميع تكاليف تنفيذه وفقاً لشروطه، بما في ذلك قيمة الرسوم والضرائب التي يدفعها المتعاقد، ولا يجوز الإعفاء منها أو إعفاء أرباح المتعاقدين مع الجهة الحكومية أو دُخول موظفيهم من الضريبة أو دفعها عنهم عدا ما استثني بنصّ نظاميّ خاصِّ.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 65 explained in plain English
This Article answers an important question for anyone submitting a bid to a government entity: what does the price include?
First: what the value includes. The total value of the contract includes all the costs of performing it under its terms, including the fees and taxes that the contractor pays. The bidder must therefore count these costs within his price, because the text makes them part of the total value.
Second: the ban on exemptions. The Article prohibits the following:
- Exemption from the fees and taxes included in the contract value.
- Exempting the profits of those contracting with the government entity from tax.
- Exempting the incomes of the contractors' employees from tax.
- The government entity paying these taxes on their behalf.
Third: the exception. What is covered by a special legal provision is excepted; that is, an exemption does not arise by agreement between the entity and the contractor, but requires a legal provision that establishes it.
The Article does not specify the types or rates of taxes, since other laws regulate that. It comes within the chapter on financial consideration, after Article 64, which makes payment in Saudi riyals, and before Article 66, which allows an advance payment against a bank guarantee. If there is doubt about the tax treatment of a particular contract, it is advisable to consult a lawyer who specializes in government contracts.
Practical example
An establishment in Medina submitted a bid to maintain government buildings, and did not include in its price the fees it will pay during performance, assuming the entity would bear them. Under this Article the total value is deemed to include those fees and taxes, and the entity does not pay them on its behalf unless there is a special legal provision.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 65 of the Saudi Government Tenders and Procurement Law
Does the bid price in a government tender include taxes and fees?
Yes. The total value of the contract includes all the costs of performance, including the fees and taxes the contractor pays.
Can the government entity exempt the contractor from tax?
Exempting from tax, or paying it on behalf of the contractor or his employees, is not permitted except where excepted by a special legal provision.
Does the Article cover the income tax of the contractor's employees?
Yes. It bars exempting the incomes of the contractors' employees from tax or paying it for them except by a special legal provision.
More articles on Payments, Price Adjustment and Change Orders
- Article 64
Contract values in government contracts are paid in Saudi riyals, and the entity may specify one or more other currencies in the tender documents with the Ministry of Finance's prior approval.
تدفع قيمة العقود بالريال السعودي، ويجوز أن تحدد الجهة الحكومية في وثائق المنافسة عملة أخرى أو أكثر على أن يكون ذلك بموافقة مسبقة من الوزارة.
- Article 66
The Article allows the government entity to pay its contractor an advance payment against a bank guarantee equal to its value, as the Regulations explain.
للجهة الحكومية أن تدفع للمتعاقد معها دفعة مقدمة مقابل ضمان بنكي مساوٍ لهذه القيمة، وفقاً لما توضحه اللائحة.
- Article 67
The Article refers the method of paying the contractor's dues from the government entity to what the Implementing Regulations of the Law explain.
تصرف مستحقات المتعاقد مع الجهة الحكومية وفقاً لما توضحه اللائحة.
- Article 68
The Article bars amending the prices of contracts and framework agreements up or down except in three specific cases, and refers the conditions and procedures to the Regulations.
لا يجوز تعديل أسعار العقود أو الاتفاقيات الإطارية بالزيادة أو النقص إلا في الحالات الآتية: 1- تغير أسعار المواد أو الخدمات الرئيسة الداخلة في بنود المنافسة والت
- Article 69
The Article allows the government entity, within its actual needs, to issue change orders increasing the contract by up to 10% of its value or reducing it by up to 20%, as the Regulations explain.
للجهة الحكومية -في حدود احتياجاتها الفعلية- إصدار أوامر تغيير بالزيادة في العقد بما لا يتجاوز (10%) من قيمته، ولها إصدار أوامر تغيير بالتخفيض بما لا يتجاوز (20%
- Article 86
The Article creates a committee, by decision of the Minister of Finance, competent over grievances of bidders and contractors and price adjustment requests; its decisions bind the entity, and the complainant provides a guarantee.
1- تكوّن بقرار من الوزير لجنة أو أكثر من المختصين، لا يقل عددهم عن خمسة ويحدد فيه رئيس اللجنة ونائبه، ويُنص في القرار على عضو احتياطي أو أكثر. ويعاد تشكيل هذه ا
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.