Article 13 of the Saudi Income Tax Law
المادة 13 من نظام ضريبة الدخل · الفصل الخامس: مصاريف تحقيق الدخل
The article lists the expenses that may not be deducted from the tax base, such as expenses unrelated to income, amounts to partners and their relatives, entertainment, fines, bribes and income tax.
Official text (Arabic)
This article has not been amended since the law was issued.
لا يجوز حسم المصاريف التالية :
أ - المصاريف غير المرتبطة بتحقيق الدخل الخاضع للضريبة .
ب - أي مبالغ مدفوعة أو مزايا مقدمة للمساهم أو الشريك أو لأي قريب لهما إذا كانت تمثل رواتب أو أجورا أو مكافآت، وما في حكمها ، أو لا تتوفر بها شروط التعاملات بين أطراف مستقلة مقابل ممتلكات أو خدمات .
ج - المصاريف الترفيهية .
د - أي مصاريف للشخص الطبيعي عن استهلاكه الشخصي .
هـ - ضريبة الدخل المسددة في المملكة أو في دولة أخرى .
و - الغرامات أو الجزاءات المالية المسددة أو واجبة السداد لأي جهة في المملكة باستثناء المبالغ المسددة مقابل الإخلال بشروط والتزامات تعاقدية .
ز - أي رشاوى أو مبالغ مشابهة والتي يعد ارتكابها عملا جنائيا بمقتضى أنظمة المملكة حتى لو تم دفعها بالخارج .
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 13 explained in plain English
After Article 12 allowed deducting ordinary and necessary expenses of earning income, this article sets out the expenses that may not be deducted at all when calculating the tax base, namely:
- Expenses not connected with earning taxable income.
- Amounts or benefits provided to a shareholder or partner or to any relative of theirs in two cases: if they represent salaries, wages, bonuses and the like, or if they are in return for property or services and do not meet the conditions of dealings between independent parties.
- Entertainment expenses.
- A natural person's expenses for his personal consumption.
- Income tax paid in the Kingdom or in another country.
- Fines or financial penalties paid or payable to any body in the Kingdom, except amounts paid for breach of contractual terms and obligations; the prohibition does not cover the latter.
- Bribes or similar amounts whose commission is a criminal act under the laws of the Kingdom, even if paid abroad.
The purpose of this provision is to prevent reducing the tax base by expenses unconnected with the activity, or by payments to partners and their relatives that do not represent dealings between independent parties. To know how a particular expense is classified, it is advisable to consult a lawyer specialized in tax and commercial matters.
Practical example
A limited liability company in Dammam paid a traffic fine for one of its cars, and also paid a contractual penalty to a customer because it was late delivering a project under the contract. The traffic fine may not be deducted, but the contractual penalty is not covered by the prohibition in paragraph (f).
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 13 of the Saudi Income Tax Law
Are government fines deducted from income tax?
No. Fines and financial penalties paid or payable to any body in the Kingdom are not deductible, except amounts paid for breach of contractual terms and obligations.
May a partner's salary in the company be deducted?
No. Amounts paid to a shareholder or partner or to any relative of theirs that represent salaries, wages, bonuses and the like are not deductible.
Is income tax paid in another country deducted?
No. Income tax paid in the Kingdom or in another country is not deductible.
Is a bribe paid abroad deducted?
No. Bribes and similar amounts whose commission is a criminal act under the laws of the Kingdom are not deducted even if paid abroad.
More articles on Deductible Expenses and Losses
- Article 11
The article allows donations paid during the tax year to public bodies or licensed non-profit charities permitted to receive donations to be deducted when determining the tax base.
يجوز لتحديد الوعاء الضريبي لكل مكلف حسم التبرعات المدفوعة خلال السنة الضريبية إلى هيئات عامة ، أو جمعيات خيرية مرخص لها بالمملكة لا تهدف إلى الربح، ويجوز لها تل
- Article 12
The article allows deducting all ordinary and necessary expenses of earning taxable income, paid or accrued during the tax year, except capital expenses and what the Law prohibits.
جميع المصاريف العادية والضرورية لتحقيق الدخل الخاضع للضريبة ، سواء كانت مسددة أو مستحقة ، والمتكبدة خلال السنة الضريبية هي مصاريف جائزة الحسم عند احتساب الوعاء
- Article 14
The article allows deducting bad debts arising from sales of goods or services previously declared as revenue, once written off the books with suitable evidence that collection is impossible under the Regulations.
أ - يجوز للمكلف حسم الديون المعدومة الناتجة عن بيع بضاعة أو خدمات سبق التصريح بها إيرادا في دخل المكلف الخاضع للضريبة . ب - يجوز حسم الدين المعدوم عند شطبه من د
- Article 15
The article prohibits deducting any reserves or provisions, except provisions for doubtful debts in banks, and leaves it to the Regulations to set the rules and controls for these provisions.
لا يجوز حسم أي احتياطيات أو مخصصات خلاف مخصصات الديون المشكوك في تحصيلها في البنوك ، وتحدد اللائحة قواعد وضوابط تحديد هذه المخصصات .
- Article 16
The article allows deducting research and development expenses connected with earning taxable income, and bars deducting the purchase of land or research equipment, as equipment is depreciated under Article 17.
يجوز حسم مصاريف البحوث والتطوير المرتبطة بتحقيق الدخل الخاضع للضريبة ، ولا يجوز حسم مصاريف شراء الأرض أو المعدات التي تستخدم في أغراض البحث حيث تستهلك المعدات و
- Article 20
The article allows deducting an employer's contributions for an employee to a statutory pension fund up to 25% of the employee's income, and does not allow deducting the employee's own contributions.
أ - يجوز حسم مساهمات صاحب العمل لصالح المستخدم في صندوق تقاعد نظامي مؤسس وفقا لأنظمة المملكة. ب - لا يتجاوز الحسم المسموح به بمقتضى الفقرة ( أ ) من هذه المادة ع
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.